By Abir Roy
The Competition Act, 2002 (“Act
”) read with the attendant Combination Regulations provide for a mandatory notification of the transaction to the Competition Commission of India (“CCI
”) provided that threshold limits provided under the Act are met (“combination
”). The Act provides for a suspensory regime i.e. the parties cannot consummate a combination (for which CCI approval is required) without obtaining the approval of CCI. Further, a strict time frame is also given (30 days from the trigger date) for notification, failing which penalties can be levied under Section 43 A of the Act. The penalty exposure for non notification of a combination or consummation of the combination without obtaining the approval of the CCI is huge and exposes the parties to a penalty which may be upto 1% of the assets and turnover of the combination. As such, the CCI has used this power increasingly to levy fines under Section 43 A of the Act.
In a recent case, the CCI had received a merger notification from Zuari Fertilisers and Chemicals Limited (“ZFCL”) and Zuari Agro Chemicals Limited (“ZACL”) (collectively referred to as the Acquirers) pertaining to a shareholders agreement dated 12th May 2014 , entered into between the Acquirers, and the UB group comprising United Breweries (Holdings) Limited, Kingfisher Finvest India Limited and McDowell Holdings Limited for an acquisition of upto 3,08,13,939 equity shares of Mangalore Chemicals and Fertilizers Limited (MCFL) (representing additional 26 per cent stake in MCFL), as per the relevant provisions of SEBI Takeover regulation. CCI held that during the continuation of the tranche agreements, transactions approx. 16.43% in the equity share capital of MCFL was consummated prior to giving notice under sub-section (2) of Section 6 of the Act.
[Abir Roy, The Indian antitrust regulator fines parties for gun jumping (Zuari Fertilisers and Chemicals and Zuari Agro Chemicals), 10 February 2015, e-Competitions Bulletin February 2015, Art. N° 72173]
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