The Indian economy thrives on competition. But when big companies merge or acquire others, competition can get affected. To prevent monopolies and protect market balance, the Competition Act, 2002 regulates these transactions. These mergers and acquisitions are legally called combinations under the Competition Act.
What Are Combinations?
In simple terms, combinations refer to mergers, acquisitions, or amalgamations that meet certain financial thresholds. These deals often involve large companies. The Competition Commission of India (CCI) reviews such transactions to check if they could harm competition in the market. Not all combinations are anti-competitive, but some may create dominant players and restrict consumer choice.
Legal Framework and Key Sections
Section 5 of the Competition Act, 2002 defines combinations. It lists the thresholds based on assets and turnover, both in India and globally. If a proposed merger or acquisition crosses these thresholds, it must be notified to the CCI.
Section 6 prohibits combinations that cause or are likely to cause an appreciable adverse effect on competition (AAEC) in India. The law requires companies to notify CCI before executing such deals.
Types of Combinations Covered
The Act recognises three broad types:
- Acquisition – One company buying shares, voting rights, or assets of another.
- Merger – Two or more companies coming together to form one.
- Amalgamation – A blend of existing companies forming a new entity.
These combinations become notifiable when the size of assets or turnover goes beyond the set limits.
Thresholds for Notification
As of recent updates, the following thresholds apply:
- Combined Indian assets exceeding ₹2,000 crore or turnover over ₹6,000 crore.
- Combined global assets exceeding $1 billion, with Indian assets of at least ₹1,000 crore.
- These thresholds are subject to review and change, so parties must check the latest figures before filing.
Process of Notification and CCI Review
When a combination meets the threshold, the parties must file Form I or Form II with CCI. The Commission examines whether the deal could reduce competition. It evaluates market share, entry barriers, buyer power, and impact on consumers. If the combination is safe, CCI approves it. If not, it can suggest modifications or even block the deal.
Landmark Cases Involving Combinations
In Sun Pharma–Ranbaxy merger, the CCI imposed conditions to avoid excessive market dominance. In PVR–DT Cinemas merger, CCI allowed the deal but required divestment in certain cities. These cases show how CCI balances business efficiency with market fairness.
Exemptions and De Minimis Rule
Certain smaller transactions, even if they involve large companies, may not need CCI approval. Under the de minimis exemption, acquisitions where the target company has assets below ₹350 crore or turnover below ₹1,000 crore are exempt. Also, intra-group restructurings or acquisitions done in the ordinary course of business may qualify for exemption.
Conclusion: Balancing Growth with Fair Competition
Combinations under the Competition Act help India manage the fine line between business expansion and fair markets. By reviewing mergers and acquisitions, the CCI protects consumer interests and market health. For law students, business professionals, and aspiring regulators, understanding this process is key to navigating corporate and competition law effectively.
