Combinations under the Competition Act, 2002: A Complete Guide to Merger Control in India

In the fast-paced world of corporate deals, mergers, acquisitions, and amalgamations are powerful tools for growth. However, unchecked consolidation can harm competition, raise prices, reduce choices, and stifle innovation. That’s where India’s Competition Act, 2002 steps in.

The Act regulates “Combinations” — a term that broadly covers mergers, acquisitions, and amalgamations — to ensure they do not cause an Appreciable Adverse Effect on Competition (AAEC) in the Indian market. The Competition Commission of India (CCI) is the watchdog responsible for reviewing and approving (or modifying/blocking) such transactions.

What is a “Combination” under the Competition Act?

Section 5 of the Competition Act defines a combination as:

· Acquisition of control, shares, voting rights, or assets of one or more enterprises by one or more persons; or

· Acquiring control over an enterprise when the acquirer already controls another enterprise in a similar or identical business; or

· Merger or amalgamation of enterprises.

In simple terms, any transaction that leads to a significant change in control or market structure qualifies as a combination if it crosses certain financial thresholds.

Combinations are typically classified into three types:

· Horizontal — Between competitors at the same level (e.g., two smartphone manufacturers merging).

· Vertical — Between entities at different levels of the supply chain (e.g., a raw material supplier acquiring a manufacturer).

· Conglomerate — Between unrelated businesses (e.g., a tech company acquiring a food brand).

Notification Thresholds: When Do You Need CCI Approval?

Not every deal requires CCI clearance. Only those exceeding the prescribed thresholds under Section 5 trigger mandatory notification.

1. Asset and Turnover Thresholds (Enterprise & Group Level)

Category	India-only Threshold	Global Threshold (with India component)
Enterprise Level	Assets > ₹2,000 Cr OR Turnover > ₹6,000 Cr	Assets > $1 Bn (India component ≥ ₹1,000 Cr) OR Turnover > $3 Bn (India ≥ ₹3,000 Cr)
Group Level	Assets > ₹8,000 Cr OR Turnover > ₹24,000 Cr	Assets > $4 Bn (India ≥ ₹1,000 Cr) OR Turnover > $12 Bn (India ≥ ₹3,000 Cr)

(Note: These are the revised thresholds notified by the Government. Always verify the latest figures on the CCI website, as they are reviewed periodically.)

2. De Minimis Exemption (Small Target Exemption)

Transactions are exempt from notification if the target enterprise has:

· Assets in India ≤ ₹450 crore, or

· Turnover in India ≤ ₹1,250 crore.

This exemption was revised in March 2024 and is valid for two years (till March 2026). It aims to ease the burden on smaller deals and promote ease of doing business.

3. Deal Value Threshold (DVT) – The New Game Changer (Effective September 2024)

Introduced by the Competition (Amendment) Act, 2023, this is a major shift. Even if asset/turnover thresholds are not met, a transaction becomes notifiable if:

· The value of the transaction (including direct/indirect, immediate/deferred consideration) exceeds ₹2,000 crore, and

· The target enterprise has “substantial business operations” in India.

“Substantial business operations” is determined by metrics such as significant revenue, users, or customers in India (detailed criteria are provided in the CCI (Combinations) Regulations, 2024).

This threshold is particularly relevant for digital, tech, and startup acquisitions where targets may have low assets/turnover but high strategic value.

Regulation of Combinations – Section 6

Section 6 prohibits combinations that cause or are likely to cause an AAEC in the relevant market. The CCI assesses factors such as:

· Market share and concentration

· Barriers to entry

· Countervailing buyer power

· Likelihood of coordinated or unilateral effects

· Efficiencies that may benefit consumers

If a combination raises concerns, the CCI may approve it unconditionally, with modifications (structural or behavioral remedies), or prohibit it.

The Approval Process and Timelines

1. Pre-filing Consultation (optional but recommended)

2. Filing of Notice: Using Form I (simpler deals) or Form II (complex deals). Fees: ₹30 lakh (Form I) or ₹90 lakh (Form II).

3. Prima Facie Review: CCI must form an opinion within 30 days. If no prima facie concerns, the deal is deemed approved.

4. Phase I / Phase II Review: Total timeline capped at 150 days (reduced from 210 days post-2023 Amendment) — one of the fastest in the world.

5. Green Channel Route: For certain non-overlapping or low-risk transactions, automatic approval upon filing (subject to conditions).

Certain transactions listed under the Competition (Criteria for Exemption of Combinations) Rules, 2024 (e.g., intra-group transactions, minority investments below certain levels, bonus issues) are ordinarily exempt.

Key Recent Developments (2023–2024)

· Competition (Amendment) Act, 2023: Introduced DVT, reduced timelines, broadened definition of “control” (to include material influence), and strengthened penalties.

· CCI (Combinations) Regulations, 2024: Streamlined filing, clarified deal value calculation, and updated exemption criteria.

· Focus on digital markets, killer acquisitions, and gun-jumping (penalties for consummating deals without approval).

Why Does This Matter?

For businesses:

· Timely CCI approval is critical — closing a deal without it can attract heavy penalties (up to 1% of the deal value or global turnover).

· Proper structuring (e.g., using exemptions or Green Channel) can save time and cost.

For consumers and the economy:

· The regime prevents monopolies while allowing efficient combinations that drive innovation, investment, and growth.

Conclusion:

India’s merger control regime is evolving rapidly, especially with the introduction of the Deal Value Threshold and focus on digital markets. The framework now balances ease of doing business with robust competition safeguards. For professionals, understanding exemptions, thresholds, and procedural nuances is not just beneficial—but essential in navigating modern M&A transactions.

Illustration 1: Horizontal Combination

Example:Two telecom companies merge.

Illustration:

If Company A and Company B, both telecom operators, merge, this is a horizontal combination as they operate at the same level. The CCI will examine whether the merger reduces competition and increases prices.

Illustration 2: Vertical Combination

Example:Manufacturer + supplier

Illustration:

If a steel manufacturer acquires an iron ore supplier, it is a vertical combination. The CCI will assess whether competitors are denied access to raw materials.

Illustration 3: Conglomerate Combination

Example:Unrelated industries

Illustration:

If a software company acquires a food delivery business, it is a conglomerate combination. The competition impact is usually minimal unless there are data or ecosystem advantages.

Illustration 4: De Minimis Exemption

Example:

If a large company acquires a startup with assets of ₹300 crore, the transaction is exempt from notification under the de minimis exemption.

Illustration 5: Deal Value Threshold (DVT)

Very important modern example

Example:

A global tech giant acquires an Indian startup for ₹3,000 crore. Even if the startup has low turnover, the deal must be notified because:

· Value > ₹2,000 crore

· Startup has significant Indian users

Illustration 6: Gun Jumping

Example:

If parties complete a merger before CCI approval, they may face penalties up to 1% of the transaction value.

Illustration 7: Green Channel

Example:

If two companies in completely unrelated industries (e.g., pharma and textiles) merge with no overlaps, they may use the Green Channel route for automatic approval.

 Suggested Add-on Section (High Value)

Landmark Case Illustration

Add this for credibility:

Sun Pharma–Ranbaxy Case (2014):CCI approved the merger subject to divestment of certain products to prevent excessive market concentration.