13 March 2024
Central Government revises minimum thresholds for exemption from combination regulations
 
The Ministry of Corporate Affairs (MCA) w.e.f. 7 March 2024 has notified revised thresholds to claim exemption from combination regulations under the Competition Act, 2002 (the Act).

The comparative table summarizing earlier and amended thresholds is as follows:

 
Earlier thresholds Amended thresholds
A transaction is exempt from the Notification requirement under the Act if the target (i.e., acquiree or transferor company) has:
  • assets in India of not more than INR 3.5 billion;
    or
  • turnover in India is not more than INR 10 billion.
 A transaction is exempt from the Notification requirement under the Act if the target (i.e., acquiree or transferor company) has:
  • assets in India of not more than INR 4.5 billion;
    or
  • turnover in India is not more than INR 12.5 billion.
Our Comments
The Act requires prior Notification and approval of the Competition Commission of India if a combination between enterprises is likely to cause appreciable adverse effects on competition in India. The Central Government (i.e., MCA) is empowered to grant exemptions to certain transactions. Accordingly, MCA initially granted an exemption to a transaction where assets or turnover do not exceed the prescribed threshold. The said thresholds were increased from time to time. On the basis of the wholesale price index and exchange rate of the rupee, the said thresholds have now been increased to the present level. The Notification takes effect from 7 March 2024 and grants exemption for a period of two years from the date thereof.

This is a welcome step offering ease of doing transactions up to the revised threshold as it does not require prior Notification/Approval from the Competition Commission of India. However, it would have been better if the exemption period was kept on the higher side. The earlier Notification provided the period as "ten years," valid till 28 March 2027, whereas the present Notification shall be valid for "two years" until 6 March 2026. However, MCA usually extends this period from time to time.
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