Indian MCA Raises Thresholds for Merger Regulation

Indian MCA Raises Thresholds for Merger Regulation
Photo: Times of India 12.03.2024 446

This regulatory shift is expected to significantly benefit startups and smaller enterprises. 

The government has hiked the threshold for mergers and acquisition that do not need the Competition Commission of India’s approval.

In the new regime, companies are not required to notify the regulator if the acquired entity has assets (including subsidiaries) of less than Rs 450 crore (about $54 million) and a turnover below Rs 1,250 crore (about $150 million). Previously, the thresholds were Rs 350 crore for assets and Rs 1,000 crore for turnover.

New rules are also expected to reduce the regulatory burden on the Competition Commission of India (CCI).

Section 5 of the Competition Act states that the acquisition of one or more enterprises or the merger or amalgamation of enterprises, surpassing the specified threshold, qualifies as a ‘Combination’ under the Act and requires nod from the antitrust regulator.

The move is expected to ease startups M&As, as many early stage startups have assets and turnover below the threshold limits.

It is pertinent to mention here that the number of M&As in the Indian startup ecosystem almost halved to 123 in 2023 from 240 deals in 2022. 

The latest development also comes at a time when the Centre has been working to revamp the competition laws in the country, especially with an eye on reining in Big Techs amid increasing digitalisiation. As part of these efforts, the CCI has also formed a new panel to suggest laws for the digital economy.

Source:  Inc42

India 

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