Author Name:   SharmaSaumya

Competition Act, 2002 was enacted to check or prevent anti-competitive activities in Indian markets. One of the means to ensure this is by bringing transparency in various market activities or dealings, for which the law provides for requirement of notice of proposed combination under Section 6...

Competition Act, 2002 was enacted to check or prevent anti-competitive activities in Indian markets. One of the means to ensure this is by bringing transparency in various market activities or dealings, for which the law provides for requirement of ‘notice’ of proposed combination under Section 6 of the Competition Act, 2002.

II. Definitions:
The term ‘combination of enterprises and persons or enterprises ’ has been defined under Section 5 of the Competition Act, 2002, as amended by the Competition (Amendment) Act, 2007 (“Act”) to mean “acquisition of one or more enterprises by one or more persons or merger or amalgamation of enterprises”. Enterprise is defined under Section 2 (h). Further, such combinations by way of acquisition; or acquiring control; or merger or amalgamation relates to fixing the threshold limits as to the assets and turnover in each such case which is increased by fifty percent vide Notification dated March 4, 2011.

III. Regulation of Combinations:
Section 6 relates to Regulation of Combinations, primarily restricts any person or enterprise by rendering such a combination void, by virtue of sub-section (1), which “ causes or is likely to cause an appreciable adverse effect on competition within the relevant market in India.” Sub section (2) of Section 6 creates a requirement of notice of a combination which is not rendered void pursuant to sub-section (1). Section 6 further provides that such notice is to be given within thirty days of “approval of the proposal relating to merger or amalgamation”, or “execution of any agreement or other document for acquisition.” This provision is furthered by “The Competition Commission of India (Procedure in regard to the transaction of business relating to combinations) Amendment Regulations, 2012” (“Regulation, 2012”) dated 23 February, 2012 amending the Competition Commission of India (Procedure in regard to the transaction of business relating to combinations) Regulations, 2011 (“Regulation 2011”).

IV. Notice:
Notice under Section 6 (2) is to be duly filed in Form I as specified in Schedule II of Regulations, 2011, and must be verified and accompanied by evidence of payment of requisite fee by the parties to the combination; or in Form II, in case of certain instances. In case of merger or amalgamation, the notice is to be jointly filed by the parties to the combination. Commission may require parties to the combination to provide any additional information, which is required by the Commission during the course of inquiry. Further, the Commission may require the parties to furnish information under Form II, when the parties had already furnished so under Form I, owing to the fact that the Commission requires such further information to form its prima facie opinion whether the combination is likely to cause or has caused appreciable adverse effect on competition within the relevant market, but the fee already paid alongwith Form I shall be reduced while filing notice in Form II. Further, pursuant to Section 6 (2A) no such combination regarding which notice has been furnished with the Commission will come into effect until expiry of two hundred and ten days from the day on which such notice has been given, or the Commission has passed orders under section 31, whichever is earlier. As per Section 6 (3), the notice will be dealt by the Commission in light of provisions contained in Sections 29, 30 and 31 which relates to ‘Procedure for investigation of combination’, ‘Procedure in case of notice under sub-section (2) of Section 6 ’, and ‘Orders of Commission in certain combinations’, respectively.
Vide Regulation, 2012,

“Where, in a series of steps or individual transactions that are related to each other, assets are being transferred to an enterprise for the purpose of such enterprise entering into an agreement relating to an acquisition or merger or amalgamation with another person or enterprise, for the purpose of section 5 of the Act, the value of assets and turnover of the enterprise whose assets are being transferred shall also be attributed to the value of assets and turnover of the enterprise to which the assets are being transferred.”

Further, the notice is to be duly signed by persons as specified under regulation 11 of the Competition Commission of India (General) Regulations, 2009 (“Regulation, 2009”).
Regulation, 2011 also includes provisions as to belated notice and failure to file notice.
Regulation, 2011 further provides that in case when the enterprise is acquired without the consent of the acquirer, such acquirer can also within fifteen days from filing of the notice; furnish the information available with him relating to such acquired enterprise in Form I or Form II. Otherwise, in a case where such acquirer is unable to furnish information in such Forms, the Commission may direct the enterprise being acquired to furnish such information. Further, time taken by the parties or the acquired enterprise, “in furnishing the required information including document(s) shall be excluded from the period provided in subsection (11) of section 31 of the Act and sub-regulation (1) of regulation 19 of these regulations.” Further, a single notice will suffice in case where “the ultimate intended effect of a business transaction is achieved by way of a series of steps or smaller individual transactions which are inter-connected or inter-dependent on each other, one or more of which may amount to a combination.”

A. Fee:
The notice under Form I or II, shall be accompanied by fee; applicable fee in case of notice in Form I is rupees ten lakhs; and in case of notice in Form II, applicable fee is rupees forty lakhs as per Regulation 11 of the Regulation, 2011 read with Regulation, 2012. The fee is payable by either tendering demand draft or pay order or banker’s cheque.

B. Procedure for Filing Notice:
Regulation 13 of 2011 Regulation lays down procedure for filling notice. Pursuant to Regulation, 2012, the notice should to be accompanied with a summary of the combination, excluding confidential information but including following information:

“[T]he products, services and business(es) of the parties to the combination; (b) the values of assets/turnover for the purpose of section 5 of the Act; (c) the respective markets in which the parties to the combination operate; (d) the details of agreement(s)/other documents and the board resolution(s) executed/passed in relation to the combination; (e) the nature and purpose of the combination; and (f) the likely impact of the combination on the state of the competition in the relevant market(s) in which the parties to the combination operate.”

C. Valid Notice
Acknowledgment of receipt of a notice shall be issued by the Secretary and parties shall be required to remove any defect or incompleteness within the time specified by the Commission time taken by the parties in removing such defects or furnishing the required information including document(s) shall be excluded from the period provided in Section 31(11) of the Act and Regulation 19 (1); and the notice would be rendered invalid, if the parties fail to remove such defects or to furnish “information including document(s), within the specified time.” Any change after sending notice is to be intimated to the Commission at the earliest during the continuation of the proceedings under the Act as per Regulation 16 (1) of 2011 Regulations. Section 31(11) provides that if ‘the Commission does not pass an order or direction, after expiry of two hundred and ten days from date of notice given to the Commission, the combination regarding which such notice was given will be deemed to have been approved.’

D. Failure to file Notice
Regulation, 2012 empowers Commission pursuant to Section 20 (1), to inquire owing to its own knowledge or information that “whether such a combination has caused or is likely to cause an appreciable adverse effect on competition within India”, and direct the parties to duly file notice in Form I or II, which is to be filed by parties within thirty days of receipt of such communication from Commission.

V. Conclusion
The importance of notice of any combination is of great importance under the present competition law regime because it helps to bring transparency and accuracy and to promote healthy competition among the players in a relevant market and also acts as a check on any practice prevalent in the market which might have an adverse effect. Intimation to the Commission of any combination, be it acquisition or merger or amalgamation or acquiring control, is being elaborately dealt through provisions of the Act added by the regulations under the Regulation, 2009; Regulation, 2011; and Regulation, 2012. Any combination whose notice is so received by the Commission is thereupon inquired in light of Sections 29, 30 and 31. Further, the whole exercise of issuing notice and approval to such combination is time framed, which enhances the efficacy of the system itself. Further, if the Commission is unable to duly act upon and reply to a notice so received the combination would be deemed to have been approved.
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# Text available at: http://www.cci.gov.in/images/media/notifications/SO479(E),480(E),481(E),482(E)240611.pdf (As visited on 22.3.2012).
# Regulation, 2011 provides “The reference to the ‘other document’ in clause (b) of sub-section (2) of section 6 of the Act shall mean any binding document, by whatever name called, conveying an agreement or decision to acquire control, shares, voting rights or assets:
Provided that if the acquisition is without the consent of the enterprise being acquired, any document executed by the acquiring enterprise, by whatever name called, conveying a decision to acquire control, shares or voting rights shall be the ‘other document’:
Provided further that where such a document has not been executed but the intention to acquire is communicated to the Central Government or State Government or a Statutory Authority, the date of such communication shall be deemed to be the date of execution of the other document for acquisition.” Text available at: http://www.cci.gov.in/images/media/Regulations/CombinationRegulation110511.pdf (As visited on 22.3.2012).
# Text available at: http://www.cci.gov.in/images/media/Regulations/CombinationAmendmentRegulation23Feb2012.pdf (As visited on 22.3.2012).
# Text available at: http://www.cci.gov.in/images/media/Regulations/CombinationRegulation110511.pdf (As visited on 22.3.2012).
# The specific instances are: “(a) the parties to the combination are engaged in production, supply, distribution, storage, sale or trade of similar or identical or substitutable goods or provision of similar or identical or substitutable services and the combined market share of the parties to the combination after such combination is more than fifteen percent (15%) in the relevant market ; (b) the parties to the combination are engaged at different stages or levels of the production chain in different markets, in respect of production, supply, distribution, storage, sale or trade in goods or provision of services, and their individual or combined market share is more than twenty five percent (25%) in the relevant market.” Available at: http://www.cci.gov.in/images/media/Regulations/CombinationAmendmentRegulation23Feb2012.pdf (As visited on 22.3.2012).
# Text available at: http://www.cci.gov.in/images/media/Regulations/CCI_Combination_Regulations_as_amended_upto_23_02_2012.pdf (As visited on 22.3.2012).
# Regulation 11 of the Regulations, 2009 states “Signing of information or reference. –(1) An information or a reference or a reply to a notice or direction issued by the Commission shall be signed by –
(a) the individual himself or herself, including a sole proprietor of a proprietorship firm;
(b) the Karta in the case of a Hindu Undivided Family (HUF);
(c) the Managing Director and in his or her absence, any Director, duly authorized by the board of directors in the case of a company,
(d) the President or the Secretary in the case of an association or society or similar body or the person so authorized by the legal instrument that created the association or the society or the body;
(e) a partner in the case of a partnership firm;
(f) the chief executive officer in the case of a co-operative society or local authority;
(g) in the case of any other person, by that person or by some person duly authorized to act on his behalf.
(2) A reference shall be signed and authenticated by an officer not below the rank of a Joint Secretary to the Government of India or equivalent in the State Government or the Chief Executive Officer of the Statutory Authority if the same has been received from the Central Government or State Government or Statutory Authority.
(3) Without prejudice to the provisions of this regulation, the counsel may also append his or her signature to the information or reference as the case may be. ” Available at: http://www.cci.gov.in/images/generalregulation.pdf (As visited on 22.3.2012).

# Regulation, 2012 provides that “Provided that in case of a company, apart from the persons specified under clause (c) of sub-regulation (1) of regulation 11 of the Competition Commission of India (General) # Regulations, 2009, Form I or Form II may also be signed by the Company Secretary of the company, duly authorised by the board of directors of the company.”; Available at: http://www.cci.gov.in/images/media/Regulations/CCI_Combination_Regulations_as_amended_upto_23_02_2012.pdf (As visited on 22.3.2012).
# Regulation, 2011. Text available at: http://www.cci.gov.in/images/media/Regulations/CombinationRegulation110511.pdf (As visited on 22.3.2012).
# Ibid.
# Regulation 2 (4) under Regulation, 2012; Text available at: http://www.cci.gov.in/images/media/Regulations/CCI_Combination_Regulations_as_amended_upto_23_02_2012.pdf (As visited on 22.3.2012).
# Regulation 2 (5) under Regulations, 2012; Text available at: http://www.cci.gov.in/images/media/Regulations/CCI_Combination_Regulations_as_amended_upto_23_02_2012.pdf (As visited on 22.3.2012).
# The Commission shall form its prima facie opinion under sub-section (1) of section 29 of the Act, on the notice filed in Form I or Form II, as the case may be, as to whether the combination is likely to cause or has caused an appreciable adverse effect on competition within the relevant market in India, within thirty days of receipt of the said notice. Available at: # http://www.cci.gov.in/images/media/Regulations/CCI_Combination_Regulations_as_amended_upto_23_02_2012.pdf (As visited on 22.3.2012).
# Explanation to Section 31 (11) of the Competition Act : “For the purposes of determining the period of [two hundred and ten] days specified in this subsection, the period of thirty working days specified in # sub-section (6) and a further period of thirty working days specified in subsection (8) shall be excluded.” Available at:  http://www.cci.gov.in/images/media/competition_act/act2002.pdf?phpMyAdmin=QuqXb-8V2yTtoq617iR6-k2VA8d (As visited on 22.3.2012).
# Regulation 2 (8) under Regulation, 2012; Text available at: http://www.cci.gov.in/images/media/Regulations/CCI_Combination_Regulations_as_amended_upto_23_02_2012.pdf (As visited on 22.3.2012).

The  author can be reached at: SharmaSaumya@legalserviceindia.com

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