The government aims to tighten M&A review rules under the proposed legislation, which could particularly affect tech companies that do a lot of business in India. The proposal, part of an overhaul of the country’s competition law, was tabled in parliament on Friday and could be passed as early as next week.

Under current law, the Competition Commission of India (CCI) reviews mergers and acquisitions that exceed asset or turnover thresholds.

However, many high-value deals between tech companies with substantial operations in the country have gone under scrutiny because the companies involved have very few assets there and low turnover.

For example, Facebook’s $19 billion (approximately Rs 1,509,000 crore) acquisition of in 2014 did not require a CCI license, even though WhatsApp counts India as a major market, lawyers said.

The draft law proposes all transactions worth more than Rs. If the company has substantial operations in the country, $20 billion should be subject to antitrust scrutiny.

Anisha Chand, a partner specializing in antitrust law at law firm Khaitan & Co., said: “The controversial deal value test is designed to attract scrutiny of deals where parties do not meet traditional asset and turnover thresholds, especially in technology.”

She added: “If passed in its current form, the upcoming amendments could lead to a surge in the number of transactions, especially in new-age markets, which would require prior approval.”

Koan Advisory, a public policy consultancy, said in a report on Friday that the deal value threshold under review was in line with German and Austrian antitrust regulations.

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CCI did not respond to a request for comment.

Under the Aug. 2 bill, the CCI’s new rules will set out a process for determining whether an entity has a “substantial business” in the country.

As part of revising competition laws, the government has also proposed reducing the time limit for approval of a merger from 210 days to 150 days.

Additionally, the bill says it plans to introduce a mechanism for entities seeking to settle with CCI.

© Thomson Reuters 2022



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