Section 5 of the Competition Act, 2002 defines combination as the acquisition of one or more enterprises by one or more persons or merger or amalgamation of enterprises, if the value of assets or turnover of the combining entities exceeds certain thresholds prescribed under the Act. The combination must be notified to the CCI for scrutiny and approval. A combination includes:

1. Mergers or Amalgamations of enterprises
2. Acquisitions of control, shares, voting rights, or assets

Regulation of Combinations

Section 6(4) of the Competition Act (as amended up to date) provides if a combination fulfils such criteria as may be prescribed and is not otherwise exempted under the Act from the requirement to give notice to the Commission under sub-section (2), then notice for such combination may be given to the Commission in such form and on payment of such fee as may be specified by regulations, disclosing the details of the proposed combination and thereupon a separate notice under sub-section (2) shall not be required to be given for such combination.

Section 63(1) states that the Central Government may, by notification, make rules to carry out the provisions of the Act and sub-section (2) thereof mentions that in particular, and without prejudice to the generality of the foregoing power, such rules may provide for all or any of the following matters, inter alia, the criteria of combinations under Section 6(4) of the Act. The Central Government vide G.S.R. 548(E) dated 09.09.2024 in exercise of the powers conferred by clause (ac) of Section 63(2) notified the Competition (Criteria of Combination) Rules, 2024 (hereinafter ‘COC Rules’) with effect from 10.09.2024. COC Rules provide that the parties to a combination, their respective group entities and their affiliates that fulfil the following criteria, may give notice for such combination under that sub-section, namely: 

1. they do not produce or provide similar or identical or substitutable product or service; 

2. they are not engaged in any activity relating to production, supply, distribution, storage, sale and service or trade in product or provision of service, which are at different stage or level of production; or which are complementary to each other.

COC rules clarify that:

1. the parties to the combination and their respective group entities means- 

1. the ultimate controlling person of the acquirer and other entities forming part of the same group; 

2. the enterprise being acquired and its downstream entities forming part of its group; 

3. enterprises being merged or amalgamated, their controlling persons, and entities forming part of their group. 

2. an enterprise is considered to be an affiliate of another enterprise if that another  enterprise has-

1. 10% or more of the shareholding or voting rights of the enterprise; or

2. right or ability to have a representation on the board of directors of the enterprise either as a director or as an observer; or  

3. right or ability to access commercially sensitive information of the enterprise.

Sub-sections (5) to (8) of Section 6 stipulate the mechanism to deal with the notice under sub- Section 4(4). These provisions have been substituted/added by the Competition (Amendment) Act, 2023. 

Evaluation of Combinations

Section 5 of the Competition Act (as amended up to date) lays down the following thresholds for evaluation of combinations:

1. Assets and Turnover In India: The combined assets of the parties shall be more than Rs. 2,000 crore, or the combined turnover of the parties shall be more than Rs. 6,000 crore. 

2. Assets and Turnover Globally (with a significant presence in India): The combined global assets of the parties shall be more than USD 1 billion, including at least Rs. 1,000 crore in India, or the combined global turnover of the parties shall be more than USD 3 billion, including at least Rs. 3,000 crore in India.

The CCI evaluates combinations based on a range of factors such as market concentration; entry barriers; consumer benefits, etc. The evaluation process focuses on identifying such combinations which do not have or are not likely to have an appreciable adverse effect on competition (AAEC) in the relevant market in India. Parties meeting the thresholds must notify the CCI before consummating the transaction. They cannot complete the transaction until a statutory waiting period of 150 days has passed or the CCI has passed orders under Section 31, whichever is earlier. 

Failure to notify a combination can result in a penalty which may extend to 1% of the total turnover or assets or the value of transaction referred to in clause (d) of section 5, whichever is higher, of such a combination. As per regulation 11 of the CCI (Combination) Regulations 2024, the amount of fee payable along with the notice in Form I is INR 30 lakh and for Form II INR 90 lakh. Regulation 10 of the Combination Regulations prescribes that:

1. The person filing notice under Regulation 5 or Regulation 8 of these regulations shall pay the fee as specified under regulation 11 of these regulations.

2. Where the notice is filed jointly, the fee shall be payable jointly or severally.