By Apoorva Mandhani, Symbiosis Law School, Pune.

Cross border mergers and acquisitions have significantly increased over the past decade, fuelled by the era of globalization, as a response to the pressures of an increasingly consolidating world economy. Cross border mergers and acquisitions now pose as an elementary feature of the global business landscape.

Motives for cross-border mergers and acquisitions:

    • Growth and diversification

    • To enter into new markets or product segments

    • To gain access to funding resources

    • To obtain tax benefits

    • To acquire competency or capability

Merger review policy under Competition Act, 2002-


Adhering to the modern competition law regimes, Competition Act, 2002 introduces three enforcement areas:

    • Prohibition of anti-competitive agreements (Section 3 of Competition Act, 2002)

    • Prohibition of abuse of dominance (Section 4 of Competition Act, 2002)

    • Merger regulation (Section 5 and 6 of Competition Act, 2002)

Under the principles of competition law and policy, the ‘Effects Doctrine’ allows not only domestic competition laws to be applicable to foreign firms, but also domestic firms located outside the state’s territory, when their behavior or transaction produce an “effect” within the domestic territory1. The “nationality” of firms is irrelevant for the purposes of functions under this Act.2

Regulation of Combinations:

Section 5 of the Act, which deals with combinations, lays down asset and turnover thresholds for parties to a combination. These thresholds, if exceeded, subject the combination to review. The thresholds are defined separately for assets and turnover inside and outside India. This seems to suggest that mergers of foreign firms will also be subjected to review.

The assets and turnover thresholds for a combination under different clauses of Section 5, as modified by the Section 20 (3) notification3 are as follows4:


The Government has, for a period of 5 years exempted ‘Group’ exercising less than 50% of voting rights in other enterprise from the provisions of Section 5 of the Act.

Except for these threshold limits, the Act makes no distinction between the impact that can brought about by domestic and foreign players5.

Mandatory reporting:

Section 6 (1) of the Act imposes a prohibition on a ‘combination’, ‘which causes or is likely to cause an appreciable adverse effect on competition within the relevant market in India,6 and further declares such a combination ‘void’.

Section 6 (2) (b) of the Act lays down ‘the execution of any agreement or other document for acquisition’ as one of the events that will trigger the necessity of notification. Concerns have been raised regarding the nature of such ‘other document’ that will attract mandatory notification.7

After the 2007 amendment to the Competition Act, a mandatory obligation has been cast on the merging enterprise to notify a proposed transaction to the Competition Commission of India (“CCI”) when it exceeds the prescribed thresholds. After receipt of such information, the CCI has investigative powers in relation to combinations under sections 20, 29, 30 and 31 of the Act.

The CCI has been mandated to form a prima facie opinion on whether a combination has caused or is likely to cause an appreciable adverse effect on competition in India, within 30 days of filing.

The amendment also prescribes that no combination shall come into force until two hundred and ten days have passed from the day on which the notice was given to the CCI; or the Commission has passed orders under section 31 approving, rejecting or modifying the terms of the proposed combination. 

Schedule I to the Combination Regulations of 2011 currently lists down ten categories of combinations which are ‘ordinarily not likely to cause an appreciable effect on competition in India’ and thus in such cases notice under Section 6(2) ‘need not normally be filed.’ 

CCI’s extra-territorial powers:

Section 32 of the Competition Act explicitly allows the Competition Commission to examine a combination already in effect outside India8 and pass orders against it provided that it has an ‘appreciable adverse effect’ on competition in India.9 An ‘appreciable adverse effect’ on competition means anything that reduces or diminishes competition in the market

Cross Border mergers have been included within the regulatory and investigative domain of the Competition Commission. This provision, read along with Section 18 of the Act, which lays down the duties of the Commission, provides teeth to the Act. It lays the foundation for establishing a robust mechanism for sustaining competition in the market.

Appreciable Adverse Effect:

The Act condemns an agreement or a dominant position or a combination only when it has or is likely to have an appreciable adverse effect on competition in the relevant market in India. Section 20(4) is indicative of the factors or the circumstances when ‘appreciable adverse effect on competition’ can be inferred.

The interpretation of the term ‘appreciable adverse effect on competition’ is hence crucial for exercise of powers of CCI on cross border mergers and acquisitions.

Entry 10 of Schedule I, read with Regulation 4 of Competition Commission of India (Procedure in regard to the transaction of business relating to combinations) Regulations, 2011 clarifies that for a combination to cause an appreciable adverse effect on the competition in India, it should pose a significant local nexus and effect on markets in India.

The term, ‘significant local nexus’ has however, not been defined.


The CCI would, for the purpose of exercising its extra territorial powers, most certainly need the cooperation and help of the regulatory authorities of other countries.

Section 18 of The Competition Act, 2002, enables the Competition Commission of India, to enter into any memorandum or arrangement with the prior approval of the Central Government, with any agency of any foreign country. This option can be utilized for the purpose of availing co-operation on the issue.

A modern Mutual Legal Assistance Treaty10 is also seen as a way to strengthen the investigatory powers of participating competition agencies and authorize exchanges of otherwise protected confidential information.11 India holds MLATs with 22 countries, for assistance in criminal matters. New MLATs, exclusively dedicated to the competition regime may facilitate co-operation.

1. T. Ramappa, “Competition Law in India: Policy, Issues and developments”, (New Delhi: Oxford University Press) Edi. 2nd, 2009, pg. 275

2. Priyanka Wasan, “Effect Doctrine In Cross Border Mergers”,

3. The last Section 20(3) notification was S.O. 480(E), dated Mar. 4, 2011 (Ministry of Corporate Affairs, Government of India), n/pdf/Notifications_4mar2011.pdf (last visited July 10, 2015), whereby the Central Government in consultation with the CCI enhanced, on the basis of wholesale price index, the value of assets and turnover, by fifty percent for the purposes of Section 5  of the Act. 

4. “Provisions relating to combinations”,

5. Ajay Kr. Sharma, “Cross Border Merger Control By The Competition Commission Of India: Law And Practice”,

6. ‘Relevant Market’ is defined in Section 2(r) of the Competition Act, 2002, as the market which may be determined by the Commission with reference to the relevant product market or the relevant geographic market or with reference to both the markets.’ Section 2(s) defines “relevant geographic market”; and Section 2(t) defines “relevant product market”.

8. Shalin, Cross Border Mergers: Implications under the Competition Act, 2002 ”,

9. Rav Pratap Singh, “Implications Of Cross Border Mergers Under Indian Competition Law – A Comparative Analysis With US & EC Jurisdictions”,

10. Gautam Shahi, “Effects Doctrine: Evolution and Execution”,