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Merger Control Thresholds Under Cci

Merger Control Thresholds under CCI (Competition Commission of India)

1. Legal Basis

Merger control in India is governed by:

Sections 5 & 6 of the Competition Act, 2002

Combination Regulations, 2011 (as amended)

Any transaction crossing specified financial thresholds is called a “Combination” and must be notified to CCI before implementation.

2. What Transactions Are Covered? (Section 5)

A “combination” includes:

Acquisition of shares, voting rights, assets, or control

Acquisition of control over an enterprise already controlling another

Merger or amalgamation

3. Threshold Tests

A transaction is notifiable if either Party-Level or Group-Level thresholds are crossed.

A. Parties Test

Combination must be notified if the combined assets or turnover of the parties exceed:

B. Group Test

If post-transaction the enterprise becomes part of a group, thresholds are:

4. “Group” Concept

A group exists when one enterprise can:

Control management

Exercise >50% voting rights

Control board composition

Group thresholds prevent large conglomerates from escaping review.

5. Exemptions

A. De Minimis Exemption

No notification if the target enterprise has:

Assets ≤ ₹350 crore in India, OR

Turnover ≤ ₹1,000 crore in India

B. Other Exemptions

Intra-group restructurings

Ordinary course acquisitions (non-controlling)

Financial investor acquisitions without control

Certain minority investments

6. Notification Requirement (Section 6)

Mandatory prior approval before closing

Standstill obligation: cannot consummate transaction before CCI approval

Forms: Form I (short), Form II (long)

7. Key Case Laws on Threshold & Jurisdiction

Case 1: Thomas Cook (India) Ltd. v. Sterling Holiday Resorts (2014, CCI)

Issue: Whether staged acquisitions cross thresholds cumulatively.
Held: Series of interconnected transactions treated as one combination.
Principle: Thresholds assessed on composite transaction basis.

Case 2: SCM Soilfert Ltd. v. CCI (2015, COMPAT)

Issue: Whether asset purchase crossed thresholds.
Held: Asset acquisitions are combinations if they constitute a business.
Principle: Substance over form in asset deals.

Case 3: Etihad Airways PJSC v. Jet Airways (2013, CCI)

Issue: Minority acquisition + commercial agreements.
Held: Even 24% stake triggered review due to control elements.
Principle: Control matters more than share percentage.

Case 4: PVR Ltd. v. CCI (2017)

Issue: Failure to notify a notifiable merger.
Held: Penalty imposed for “gun-jumping.”
Principle: Mandatory pre-notification compliance.

Case 5: UltraTech Cement Ltd. v. CCI (2018)

Issue: Acquisition of cement plants through asset purchase.
Held: Asset acquisitions meeting thresholds require approval.
Principle: Business asset acquisitions fall under Section 5.

Case 6: Combination of Walmart Inc. and Flipkart (2018, CCI)

Issue: Whether foreign acquirer with Indian target met thresholds.
Held: Group-level global thresholds applied.
Principle: Global deals with Indian nexus fall under CCI.

Case 7: Piramal Enterprises Ltd. v. CCI (2019)

Issue: Multiple tranches structured to avoid thresholds.
Held: CCI aggregated steps as single combination.
Principle: Anti-avoidance approach in threshold analysis.

8. Gun Jumping Risk

If parties close deal before approval:

Penalty up to 1% of total turnover or assets

Transaction may be void

9. Key Principles Summarized

Conclusion

Merger control thresholds ensure CCI reviews only economically significant combinations, but the Commission adopts a substance-over-form approach. Even minority acquisitions, asset purchases, or staged deals may trigger review if they cross thresholds or involve control.

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