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Combination & Regulation of Combinations (Under The Competition Act, 2002)

What is a Combination?

A combination refers to a merger, acquisition, or amalgamation between companies where one company gains control over another. The Competition Act, 2002 regulates such combinations to prevent monopolies and anti-competitive practices.

Types of Combinations:

  1. Mergers – Two or more companies combine to form a single entity.
  2. Acquisitions – One company acquires shares, voting rights, or control over another.
  3. Amalgamations – Two or more companies merge to form a new company.

Example of a Combination:

  • A large telecom company acquiring a smaller competitor to expand market share.

Regulation of Combinations

To prevent monopolistic control, the Competition Act, 2002 requires that certain combinations be reviewed and approved by the Competition Commission of India (CCI).

1. Thresholds for Regulation (Section 5)

A combination must notify the CCI for approval if it meets the following financial criteria:

  • Combined assets exceed ₹1,000 crores (~USD 130 million), or
  • Combined turnover exceeds ₹3,000 crores (~USD 390 million).

2. Notification Requirement

  • Companies planning a combination must notify the CCI before implementing the deal.
  • The CCI has 30 working days to review and approve/reject the combination.
  • If required, a detailed investigation may be conducted.

3. Green Channel Approval

  • Some combinations are approved automatically if they do not raise competition concerns.
  • If CCI does not object within 30 days, the combination is considered approved.

4. Penalties for Non-Compliance

If companies fail to notify CCI or proceed without approval, penalties include:

  • Fines up to 1% of the total turnover or assets of the involved companies.
  • The transaction can be declared void by CCI.
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