In the proposed legislation, the Centre is planning to overhaul the country's competition law. Under current law, the Competition Commission of India (CCI) reviews mergers and acquisitions that surpass thresholds for assets or turnover.
But many high-value deals between technology firms that have a big presence in India have escaped scrutiny because the companies involved have had few assets and low turnover there.
In fact, the 2014 acquisition of Facebook with WhatsApp required no CCI clearance even as WhatsApp admitted India as its biggest market.
In the draft bill, the Centre has proposed that all deals worth over ₹20 billion ($250 million) should be subject to antitrust scrutiny if the companies have substantial business operations in India.
Anisha Chand, a partner specializing in antitrust law at Indian law firm Khaitan & Co told Reuters, "The hotly debated deal value test seeks to attract the scrutiny of transactions where parties do not meet the conventional asset and turnover thresholds, particularly in the tech space. If passed in the present form, the incoming amendment may likely result in a jump in (the) number of transactions, particularly in new age markets to require prior clearance".
New regulations from the CCI will lay out the process to determine whether an entity has "substantial business operations" in India, according to the bill, which is dated August 2.
As part of the revamp of competition law, the government also proposes reducing the time limit for approving mergers to 150 days from 210 days.
In addition, it plans to introduce a mechanism for entities seeking to reach a settlement with the CCI, the bill says.
Separately, Competition (Amendment) Bill, 2022 has also proposed provisions for having 'value of transaction' as a criteria for notifying combinations to the Competition Commission of India (CCI).
Other amendments suggested include a limitation period of three years for filing information on anti-competitive agreements and abuse of dominant position before the CCI, changes in certain definitions like 'enterprise', 'relevant product market', 'group' and 'control' to provide clarity.
The government is also looking to broaden the scope of anti-competitive agreements and the inclusion of a party facilitating an anti-competitive horizontal agreement under such pacts as well as substitute the provision pertaining to penalty.
The provision providing for a penalty up to ₹1 crore or imprisonment up to three years or both in case of contravention of any order of the National Company Law Appellate Tribunal would be replaced with the provision for contempt, as per the bill.
