The recent amendment of Competition Act making it mandatory for all enterprises to notify before a merger or acquisition, has been criticised by Confederation of Indian Industry (CII) as a move that would impede economic growth.
“This amendment entails a requirement of seeking prior approval from the Competition Commission of India, which may take up to 210 days, and is not only ill-timed, but also contradicts recommendations of the expert committee,” said the trade body.
Expressing surprise over the amendment, it said the Competitions Act prior to the recent amendments had a voluntary notification regime, and the same was changed, rather surreptitiously, to introduce a mandatory notification regime.
“This legislative move is not only ill-timed at the present stage of Indian economy, but also contradicts recommendations of the expert committee (S.V.S. Raghavan Committee), which formed the very basis of the competition law in India,” CII said.
It said the legislative attempt to regulate combinations is reminiscent of the repealed provisions of the MRTP Act, which had put several restrictions on the expansion and consolidation in Indian corporate sector.
“It will be ironical that provisions, which were consciously scrapped in 1991, are being brought back to the statute books. Mergers and acquisitions activity in today’s context is an engine for economic growth. Any law that restricts the present status will result in loss of transactions, deny the opportunities for absorption of advanced technologies and impede growth,” CII said.
It felt that given the current stage of Indian economy, the enforcement of provisions regulating combinations in the market should be deferred. The Competition Act can be enforced in phases, starting with regulation of ‘anti-competitive agreements’ and ‘abuse of dominant position’, and in the third stage, regulation of ‘combinations’.