Competition Commission of India seeks to widen scope of computing M&A deal value

The Competition Commission of India (CCI) has sought to widen the definition of deal value for big-ticket merger and acquisition (M&A) exercise to include "every valuable consideration, whether direct or indirect, immediate or deferred, cash or otherwise", according to its draft Combinations Regulations 2023.

Experts said such regulations, once finalised, will likely impact deals in sectors, including technology, infrastructure and healthcare, and lead to a surge in filings with the competition regulator.

The regulations propose to include in the deal value not only the shares or assets being acquired but also the consideration for contractual rights-such as non-competes, licensing of intellectual property rights and technology assistance-and inter-connected transactions, they said.

Through the amended competition law, the government this year introduced a deal value threshold of ₹2,000 crore, beyond which the parties involved in the mergers and amalgamations would be required to notify the fair trade regulator for clearance.

The draft regulations also said: "Any acquisition by one of the parties or its group entity in the enterprise being acquired or merged or amalgamated in the transaction, anytime during the period of two years before the relevant date, shall also be deemed to be an inter-connected transaction".

If the precise transaction value can't be determined with reasonable certainty or otherwise, the entity that is required to give notice to the regulator "may consider that the value of the transaction exceeds" the threshold amount, according to the regulations.


The draft regulations cover areas such as value of transaction and criteria for substantial business operations in India; form of notice for proposed combination; exercise of rights in case of open offer and acquisitions on stock exchanges; amount of fee and mode of payment; procedure for filing notice and scrutiny of notice; and procedure for modification to the proposed combination.

Bharat Budholia, partner, AZB & Partners, said: "The draft regulations also contemplate a two-year 'look-back' period, where acquisitions in the target by the acquirer or its group entities in the two years prior would be deemed to be interconnected to present transaction. Given this, there will be a definite uptick in number of merger filings to CCI".