Govt doubles M&A threshold for CCI approval

In yet another step aimed at promoting ease of doing business in the country, the central government has decided to enhance the limit above which parties of a corporate merger has to seek prior approval of the anti-trust regulator Competition Commission of India by 100 per cent.

The decision has been taken in consultation with the CCI, on the basis of the wholesale price index, the value of assets and the value of turnover and the relaxation would be applicable from the date of publication of the notification in the official gazette, an official release stated.

Only those mergers where the combined assets in India is worth over Rs2,000 crore or total Indian turnover is more than Rs6,000 crore would require prior approval from the CCI, reports said.

Mergers where the target company has less than Rs350 crore worth of assets or up to Rs1,000-crore turnover would not require prior approval from the competition panel, it said.

The recent measures announced by the ministry are likely to benefit startups the most as the deal valuations in this category are not very high.

The new threshold limits are related to the financials of the target enterprise and not to the value of assets being transferred and will be effective for five years till March 2021.

CCI had, in 2011, come out with small target exemption with regard to combinations for five years. Previously, the limit was up to Rs250 crore for assets and turnover of less than Rs750 crore.

The government is also reported to have extended the exemption for enterprises with respect to group holdings for another five years till March 2021. This would be applicable in case the voting right of the group is less than 50 per cent in another enterprise.