How do anti-trust laws affect mergers and acquisitions in India?

Anti-trust laws in India, governed by the Competition Act, 2002, play a crucial role in mergers and acquisitions (M&A). The Competition Commission of India (CCI) oversees these transactions to ensure they do not adversely affect market competition. Any M&A deal that meets specific financial thresholds must be notified to the CCI, which then evaluates if the merger would lead to an “appreciable adverse effect on competition” (AAEC)​​.

The CCI’s review process includes a detailed investigation lasting up to 210 days, although recent amendments aim to reduce this to 150 days. During this period, the CCI examines factors such as market share, market concentration and potential barriers to entry for other competitors. If the CCI identifies potential anti-competitive effects, it can block the transaction or require modifications to address these concerns​​.

Non-compliance with CCI regulations can result in significant penalties, including fines up to 10% of a company’s turnover, which can be based on global turnover for multinational corporations. This underscores the importance of adhering to anti-trust laws during M&A activities​.

To navigate these complexities, engaging a merger and acquisition lawyer is essential. A merger and acquisition lawyer can assist in ensuring compliance with CCI regulations, preparing necessary documentation and providing strategic advice to mitigate anti-competitive concerns. This legal expertise is crucial for facilitating a smoother and legally compliant M&A process.