CCI to get more powers to regulate M&As involving tech companies

The Competition Commission of India (CCI) will get more powers to supervise mergers and acquisitions (M&As) involving technology companies, which are currently out of its purview.

The regulator may also see changes in its structure and functioning to ensure fair practices when it comes to scrutinising business processes. For instance, Facebook’s $19 billion acquisition of Whatsapp in 2014 escaped CCI assessment.

The Ministry of Corporate Affairs sought feedback and public comments on the proposed Competition Amendment Bill, 2020, said that it intended to make substantive and procedural changes to the law. According to experts, the bill also seeks to streamline CCI’s administration, and give faster clearance to M&A deals and fill certain gaps in the statute.

As of now, the Centre has powers to only prescribe the asset size and revenue of companies which according to the Ministry were not adequate as new-age technology companies have huge valuations, but their assets and turnover in India keep them out of the purview of the competition law. After the proposed Bill takes shape, it will give the Centre option to prescribe new criteria for mergers.

According to the proposed bill, the fulfilment of the new criteria to be specified shall cause any acquisition of control, shares, voting rights or assets, merger or amalgamation to be deemed to be a combination under this section. Such deemed combinations have to seek CCI’s clearance.

According to experts, the amendment is a positive development.