India Inc has reason to cheer with the Ministry of Corporate Affairs making it mandatory for the competition regulator,the Competition Commission of India,to clear M&A (mergers and acquisitions) proposals in just 180 days compared with 210 days specified earlier. Finalising Sections 5 and 6 of the Competitions Act,2002,that deal with M&As,the Ministry of Corporate Affairs has also decided to fix the turnover and assets threshold of the target enterprise at Rs 750 crore and Rs 250 crore,respectively. The Act did not specify any such threshold values for the target enterprises originally. Such targets will ensure that only large M&As are placed before the CCI for approval and smaller ones do not add to the regulators workload. The amendments proposed by the Corporate Affairs Ministry have been circulated to other ministries including finance,commerce and industry and law,for comments. The Ministry hopes to place the amendments before the Cabinet soon and move an Ordinance later this month. Significantly,the Ministry of Corporate Affairs has yielded to the Reserve Bank of India,the regulator for banks,and agreed to exempt the banking sector from the purview of the Competition Act. Besides the banking and shipping sectors,the Ministry is open to exempt other sectors too,much against the wishes of the Competition Commission of India that has been advocating that it was best equipped to handle anti-trust issues. Most regulators including the telecom regulator,TRAI would not like a new regulator that is yet to gain the markets confidence,to decide on sectors that have strong and established regulatory oversight. Hectic lobbying by corporates and general elections had resulted in a considerable delay in the notification of sections 5 and 6 relating to M&As and combinations by over a year now even though other sections 3 and 4,pertaining to abuse of dominance and cartelisation were notified last May. Once all the sections are notified,it is expected that the CCI will finally start working. Big corporate houses,apprehending delays and bureaucratic hassles,had been exerting pressure on the government to reduce the time limit on the number of days required to clear M&A proposals. Also,certain sectors like banking and shipping had been asking for exemption from the ambit of the Act arguing that these sectors face extraordinary circumstances and would be at a disadvantage if they have to abide by the Act. The industry also wanted assurance that only those parties that are affected by a particular M&A should have a right to appeal before the competition watchdog so that there are no frivolous litigations against a merger. The sources said the government has agreed to the suggestion and has proposed that the right to appeal is restricted to only those who are parties to proceedings before the Commission so that frivolous appeals can be weeded out, the source said.
