CCI allows companies to voluntarily divest assets for M&A approvals.
In a move that could reduce the time taken to get regulatory clearances for mergers and acquisitions, the Competition Commission of India has allowed companies to voluntarily submit a proposal to divest some assets so as to allow their transactions to go through.
The antitrust regulator said in a statement on Wednesday it had allowed the parties to a transaction to submit “remedies voluntarily in response to the notice issued under Section 29(1) of the Act”.
“If such remedies are considered sufficient to address the perceived competition harm, the combination can be approved. This amendment is expected to expedite disposal of such combination cases,” the CCI said.
Section 29(1) of the Competition Act of 2002 comes into play when the CCI thinks that “a combination is likely to cause, or has caused an appreciable adverse effect on competition within the relevant market in India”. In such a case, the CCI issues a notice, asking the merging entities why it should not investigate the matter.
Typically, in such situations, the CCI asks one or both parties to divest a part of their respective businesses in specific regions.
KK Sharma, chairman of KK Sharma Law Offices, told VCCircle that although stipulations allowing companies to voluntarily divest parts of their businesses were in place even before the latest amendment, they were not explicitly stated.
“This new change has made that explicit, making it easier for companies to comply with the competition regulation,” said Sharma, a former CCI official. “This is a good move. It will bring down the time it typically takes for a combination to go through,” he added.
The CCI statement also said the regulator had allowed companies to re-file their applications in cases where there was an information gap. “With this amendment, the parties could address the deficiencies without facing invalidation by the CCI,” it said.