Companies with a turnover of more than Rs1,500 crore will require to seek the approval of the Competition Commission before merging with another firm; rules come into effect on 1st June
New Delhi: The Competition Commission today notified regulations requiring corporates to seek its approval before going in for high-value mergers and acquisitions.
According to the notification, the CCI will take a view on the proposed merger deals within 180 days of the filing of the notice by the companies.
The regulation, titled “Competition Commission of India (procedure in regard to the transaction of business relating to combinations) Regulations, 2011,” will come into force from 1 June 2011, the competition watchdog said. The parties would have to submit a fee of up to Rs1 lakh along with the application seeking the CCI’s approval, reports PTI.
“The CCI Act empowers the Commission to regulate combinations which have caused, or are likely to cause appreciable adverse effect on competition,” the Commission stated. Under the regulations, the Commission can approve the merger proposal, reject it, or modify it.
The regulations follow the notification in March of Section 5 and 6 of the Competition Commission Act, 2002, which deals with mergers and acquisitions (M&As).
According to the provisions in the Act, companies with a turnover of over Rs1,500 crore will have to approach the CCI for approval before merging with another firm. Only those proposals would need the CCI's nod where the companies have combined assets of Rs1,000 crore or more, or a combined turnover of Rs3,000 crore or more, as per the Act. Also, the target company’s net assets have to be a minimum of Rs200 crore or it should have a turnover of Rs600 crore for intervention by the CCI.
The CCI held wide consultations with industry bodies and law experts to work out the regulations.
The Commission was fully functional in 2009, with the appointment of a chairman and six members. Under the current process, it is empowered to check anti-competitive agreements and abuse of dominant position, drawn from Sections 3 and 4 of the Competition Act, 2002.
It is unlikely that the group of ministers will meet and resolve the matter before the current deadline of 20th May
New Delhi: Edinburgh-based Cairn Energy Plc may have to again extend the deadline to conclude the sale of 40% stake in its Indian unit to Vedanta Resources, as a ministerial panel vetting the deal is unlikely to meet before next week.
Cairn Energy Plc chief executive Bill Gammell today met oil minister S Jaipal Reddy to put forward the urgency for a decision before the 20th May deadline which his company and Vedanta have set to conclude the $9.6 billion deal.
Mr Gammell, who could not get an audience with the minister yesterday, expressed deep concern on the likelihood of missing the deadline, an official who is privy to the deliberations said, reports PTI.
Mr Reddy, on his part, expressed helplessness, as it is finance minister Pranab Mukherjee who has to convene the meeting of the group of ministers (GoM) on the matter. He also said that the deadline was an internal understanding between Cairn and Vedanta and had nothing to do with the government.
Cairn Energy spokesperson David Nisbet could not be reached for comments immediately.
“There is no indication of the GoM meeting being held this week. The finance minister’s office has inquired about the availability between May 17 and 19 and it is very unlikely that the meeting will take place before that,” the source said.
It is also unclear whether the GoM will require more than one meeting to vet the proposal, after which it will have to go back to the Cabinet Committee on Economic Affairs (CCEA), which is the final authority in this case.
Cairn, which had previously set 15th April as the deadline to conclude the sale, had raised a hue and cry over the sanctity of the deadline, saying this could not be extended. But a day after the CCEA referred the deal to the GoM on 6th April, the deadline was put off to 20th May.
The source said that Mr Gammell, who also met law minister M Veerapa Moily, again underlined the issue of the 20th May deadline.
The GoM consists of Mr Mukherjee, Mr Reddy, Mr Moily as well as Planning Commission deputy chairman Montek Singh Ahluwalia and telecom minister Kapil Sibal, and it is split down the middle over the approval for the deal.
The law ministry and the Planning Commission have backed Mr Reddy’s option to give clearance to Vedanta only if it agrees to ONGC being allowed to recover the Rs18,000 crore that the state-owned explorer is liable to receive in royalty from Cairn India in the all-important Rajasthan oilfields. However, the finance ministry is in favour of Mr Reddy’s second option of granting consent without any pre-condition and taking appropriate decisions to protect ONGC’s interests.
Bilateral business between Singapore and India expanded to 30 billion Singapore dollars last year
Singapore aims to woo medium and small-size Indian companies seeking to expand into Asia-Pacific markets to set up shop in the city state as a regional base of operations, senior minister of state for trade and industry, S Iswaran, said today.
“We already have large companies from India coming to Singapore and using the island state for regional business. The next step really is how this can cascade down to the larger pool of mid-size companies,” he told PTI.
Having met domestic demand, the mid-size Indian companies were looking beyond their borders, especially for opportunities in the Asia-Pacific, he said after launching Tata Communications’ international headquarters in Singapore.
“Singapore can be a good springboard for these mid-size companies into the region as the city state has Free Trade Agreements with regional markets,” said Mr Iswaran. Singapore companies also have traditional links with regional businesses.
“As such, the mid-size Indian companies can partner Singapore companies or just use the links to other countries,” he said. Mr Iswaran also underlined the synergy between technology-savvy Indian companies in the pharmaceuticals and IT space and Singapore’s emphasis on attracting knowledge-based companies.
“Singapore’s emphasis is on knowledge-based activity and the kind of resources we are committing toward such sectors are opportunities for the Indian mid-size companies to come here and collaborate with our research institutes in the universities,” he said.
Bilateral business between Singapore and India expanded to 30 billion Singapore dollars last year, especially following the easing of taxes under the Comprehensive Economic Cooperation Agreement.
Indian commerce and trade observers see the number of Indian companies increasing to 6,000 over the next two to three years.