Introduction

Merger and Acquisitions (M&A) have become a central force and strategy for economic growth and development in India, as according to PwC’s “Deals at a Glance 2023”, India recorded huge M&A activity. Still, deal count and value have declined (the number of M&A deals in India fell 10 % to 793 in 2023, with disclosed deal value dropping 38 %). As Indian companies grow and integrate with global firms for better economic and company performance, competition oversight becomes even more critical than ever. 

The Competition Commission of India (CCI) has reviewed over 1000 mergers, acquisitions, and amalgamation filings (legally referred to as “combinations” under Section 5 of the Competition Act, 2002) between 2011 and 2023, and most of these were cleared in Phase I of the review process (i.e. without a detailed inquiry). For example, we can analyse the high-profile case of the Sony and Zee merger (2021–2024) in which transaction faced the extended regulatory scrutiny as CCI initially flagged concerns over it and issues about the merged entity’s dominance as it was noted that it would command “around 92 channels in India,” and it required further inquiry hence the merger eventually received conditional approval in 2022 but it was later called off in January 2024 by citing unmet conditions.

This demonstrates how competition law, especially strictness and scrutiny by the CCI, can directly affect major corporate deals’ timelines, feasibility, and outcomes. This blog will therefore discuss and examine how CCIs’ approach towards mergers and acquisitions, particularly gun-jumping and the Green Channel mechanism, has evolved, and how this impacts corporate transactions in India.

Overview of India’s Merger Control Regime

Under the Competition Act, 2002 a “combination” refers to mergers, acquisitions, or amalgamations that cross the financial thresholds given in section 5 of the act and a combination must be notified to the CCI if the combined assets of the parties in India exceed INR 2,000 crore, or the combined turnover exceeds INR 6,000 crore. 

Moreover, Section 6(2) of the Act mandates that the CCI approve such combinations before they are executed by ensuring that no transaction harms market competition and contravention of this “standstill obligation” invites penalties under Section 43A.

Indian merger control system operates on an ex-ante approval model which means every transaction must be filed before it is consummated. The procedure for notification, scrutiny, and approval is governed by the Competition Commission of India (Procedure in regard to the transaction of business relating to combinations) Regulations, 2011, commonly called the Combination Regulations. This regulation also outlines the forms and deadlines for the Phase I and Phase II review process. Specifically Form I is for simple cases and Form II is for complicated cases and the process for revisions or remedies to address possible competition concerns are all outlined in these regulations.

Since enforcement of merger control provisions began in 2011 the CCI has reviewed a large number of combinations and over 95% have been cleared in Phase I, showing both efficiency and predictability in the review process. A landmark case illustrating CCI’s assertive approach is the Sun Pharma–Ranbaxy merger (2014), where the CCI imposed structural remedies, including divestiture (i.e., selling off or giving up certain business units/products to another company) of seven overlapping products, to prevent a reduction in competition in the pharmaceutical market. This framework ensures that market fairness is maintained while M&A activity in India grows, and large transactions are closely monitored for potential anti-competitive effects.

The Gun-Jumping Provisions: Strictness vs Practicality

One of the crucial pillars of India’s merger control regime is the essential requirement that parties do not implement any part of a transaction before securing approval from the CCI. This precautions against any premature execution which is commonly known as “gun-jumping” which ensures that market structures are not altered before regulatory scrutiny. Furthermore, CCI can impose penalties for "gun-jumping" as under Section 43A of the Competition Act, 2002 which is about the premature implementation of a merger or acquisition before receiving CCI approval and for which penalties can go  upto 1% of the total turnover or asset value of the parties involved. 

In the case of Hindustan Colas Pvt. Ltd. (2015), the Competition Commission of India fined the company for making a partial payment to Shell India Markets Pvt. Ltd. before obtaining approval, and deemed  it as a premature consummation of the deal. Similarly in another case of UltraTech and Jaiprakash Associates (2016) the Competition Commission of India closely inspected  the extension of a corporate guarantee before approval by considering it a potential violation of the standstill obligation. As of 2022 , the CCI had imposed over ₹80 crore in penalties for gun-jumping violations. Internationally, the European Commission has also enforced strict gun-jumping regulations for example in 2018 Altice was fined €124.5 million for implementing its acquisition of PT Portugal before receiving approval. In another case in 2019, Canon faced a €28 million fine for partially implementing its acquisition of Toshiba Medical Systems Corporation prior to clearance. Penalties may be aimed for maintaining market competition but they have raised concerns about the practical challenges for businesses as stricter interpretations may create uncertainty and delay in transactions and affect business strategies. Therefore, a balanced approach is essential to ensure both regulatory compliance and business efficiency.

A Shift in Policy

While the CCI’s strict stand on gun-jumping ensures procedural discipline and the need for quicker approval of non-problematic deals led to the Green Channel Route. The Green Channel Route was introduced on August 13, 2019 which offers an automatic approval mechanism for certain mergers and acquisitions under the Competition Act, 2002 and this route is available when the parties involved in it have no horizontal overlaps vertical relationships, or complementary products in India and if these conditions are met then the transactions are deemed approved upon filing and eliminating the need for the standard of 30-day review period. By the end of the financial year 2022–23, approximately 25% of all notified combinations were filed under the Green Channel by indicating a significant uptake of this expedited process and this shift reduced the average merger review time in India from 25–30 working days to under 17 days by streamlining the approval process for non-controversial transactions. 

A good example of this is the Airtel and Telenor merger, which happened in 2018, and it would have qualified for the Green Channel route because there were no competitive overlaps between the two companies, which shows the practical use of the Green Channel in giving swift approvals for simple cases and making the process smoother. But still, the Green Channel route also has some problems and difficulties, as it asks companies to check if their deal qualifies. If they give wrong information or hide facts, they can get penalties, and CCI has fined parties in such cases. There is also a debate on whether deals in the digital and technology sector that can affect competition indirectly should be allowed under this faster route. Thus Green Channel mechanism reflects a balanced evolution in India’s merger control by combining regulatory caution with procedural efficiency creating contrast to the stricter enforcement seen in gun-jumping cases.

Evolving Trends in CCI's Approach to M&A

In recent years, the Competition Commission of India (CCI) has become very active and strict in following up on mergers and acquisitions, specifically in major cases. Amazon-Future Retail Dispute serves as a recent, crystal-clear example where the CCI had to revoke the approval from Amazon after discovering that the company had not disclosed full and correct information. Our Supreme Court also upheld the decision, showcasing the importance of full disclosure and honesty as follows in Mergers and Acquisitions filings. The CCI's requirement that international firms provide accurate and comprehensive disclosures in merger filings was strengthened by this case, which also established a solid precedent for transparency. It made clear that any deception or concealment, even by major international actors, could result in sanctions and the loss of approval. Also, in another case of the Sony-Zee Merger of 2021-24, the CCI had to intervene and probe due to the combined company of 92 channels, which could risk the market competition. 

In 2022-23, the CCI had over 80 merger filings, out of which 5 of them were forwarded to Phase II for further review, showing a paradigm shift towards stronger and stricter reviews. Not being limited to India, around the world, taking part in big deals by the regulators. Like the European Commission, which was fined 110 million Pounds in 2017 for providing wrong information after it bought WhatsApp in 2014. The same happened with the Microsoft Activision Blizzard merger, which got multiple responses and was primarily blocked, but was later cleared with the agreement to the terms and conditions. This reflected the complexities of global mergers and acquisitions cases. As per OECD’s 2023 report, over  60% of worldwide merger scrutiny is linked to digital markets, indicating that the growth focus on the technical sector in  India is also in line with global practices. 

Impact on Corporate Transactions

M&A Strategies have been constantly influenced by the changing regulatory landscape in India. Now the companies are incorporating the “CCI Approval conditions Precedent” clauses in transaction documents to overcome the risk associated with the gun jumping penalties. This approach provides security of compliance by reducing the issues of post-deal complications and the process has been streamlined for transactions with low to no competitive overlap with the introduction of the Green Channel approval route. About 25% of deals that were notified were filed under this specified route, which resulted in reduced uncertainty in deal and legal costs. High-stakes cases like the Sony-Zee Merger, which went on for 2 years of review, displayed the potential delays in complicated transactions. Also, these delayed timelines could lead to an impact on valuation and sentiment of the shareholders, focusing on the need for strategic planning in structuring the deal. As per the Deloitte survey, which revealed 70% Indian corporates now include competition compliance in their M&A due diligence processes, which reflected a raised awareness for regulatory considerations and evolving governance practices. India can observe future trends in the technology sector, as regulatory scrutiny deepens, due to the comparatively high number of US firms allocating an estimated 30 to 50 million dollars annually related to antitrust deal litigation, as mentioned by the American Bar Association in 2022. 

Conclusion and Way Forward

Our country’s merger control system has entered a new era where it shows both toughness and flexibility. On the one hand, the CCI enforces strict rules, such as penalties for gun jumping, and on the other hand, it helped to introduce tools like the Green Channel route to speed up easy cases. But new gaps need to be filled as the market gap changes. One of the most significant issues lies with the current threshold for looking for mergers based on the asset and turnover. This indicates that many “killer acquisitions” in the startup space are escaping the reviews, as these companies often hold low assets but radiate high market influence. 

Then lies the other challenge in the digital economy, where digital mergers flag unique concerns like data control and effect on the network, unlike in traditional sectors. In this area, India can learn from global practices like the EU’s Digital Markets Act. Ultimately, the lengthy Phase II investigations often heighten business uncertainty, underscoring the need for more transparency and time-bound procedures. And suppose India manages to focus on these reforms. In that case, it can result in a better merger control regime that will keep the markets fair and extend support to innovations to attract global investments.

About the Authors

4th year B.B.A LL.B students at Indian Institute of Management, Rohtak