Livemint, January 16, 2023
Transactions worth more than ₹10,000 crore are hanging fire as India’s competition authority lacks enough members to make decisions on them, prompting many businesses to approach the government for an early resolution.
Although the law allows Competition Commission of India (CCI) 210 days to clear a transaction starting from the date on which parties to the deal approach the regulator, approvals are usually granted much faster. The regulator takes 17-18 business days on an average to give merger approvals, said a person informed about the development. But that has changed since former chairman Ashok Kumar Gupta left after completing his four-year term on 25 October. CCI is now one short of the three members needed to meet the quorum.
“With the lack of quorum, at present, there are around 10 deals pending for around 100 days. Some of these are big-ticket transactions involving investments from private equity and venture capital funds,” said a second person, who also spoke on condition of anonymity, estimating the total deal value of these transactions at around ₹10,000 crore.
Industry representatives have reached out to the government for a solution as delays in merger approvals could come in the way of foreign investment flows. The industry is batting for an ordinance to temporarily suspend the quorum requirement for urgent matters—M&A clearance and grant of interim relief on certain matters—which will enable the regulator to function till the time the government processes the appointment of new CCI members or chair, said the second person. According to the proposal, this would solve the immediate concern around economic activity and investment flows.
Experts said an ordinance may not be the best solution for this issue. “Fast-tracking the process of appointing the new chair is the best solution. The government is looking for the new chairperson and sooner it fructifies, the better. The government could also broaden the eligibility criteria so that the search is not remain limited to civil servants and also enables competition law practitioners to join CCI,” said Amol Kulkarni, Director-Research at CUTS International, a non-governmental organization working on public interest issues.
As per the Competition Act, CCI shall consist of a chairperson and not less than two other members. Without quorum, CCI’s functioning comes to a standstill and only routine work, which does not involve the rights of parties, can take place, Mint reported on 2 November.
India received foreign direct investments worth $27 billion in the first half of FY23, but only those deals that meet certain criteria of assets and turnover of the target business—in India and abroad—need CCI nod.
In addition to streamlining competition in the market including by way of regulating transactions which can have an adverse impact on market dynamics, CCI has also been given the mandate of adjudicating on goods and services tax (GST)-related anti-profiteering matters after the National Anti-profiteering Authority’s (NAA) term expired last year. In an interview on 2 January, parliamentary standing panel on finance chairperson Jayant Sinha said CCI’s staffing needs to be significantly expanded.
Emails sent to the ministry of corporate affairs and to CCI on Friday seeking comments remained unanswered.
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