WHEN M&A MEETS COMPETITION LAW: LESSONS FOR INDIAN CORPORATES

In India’s rapidly changing business ecosystem, mergers and acquisitions (M&A) have become essential for companies seeking growth, diversification, and competitiveness. However, as firms expand through consolidation, competition law serves as the crucial checkpoint to ensure that ambition doesn’t evolve into dominance or unfair market control.

The relationship between M&A and competition law has become particularly significant after the Competition (Amendment) Act, 2023, which has expanded the powers and reach of the Competition Commission of India (CCI). For Indian corporates, understanding how these two fields interact is now indispensable for both legal compliance and strategic decision-making.

THE ROLE OF COMPETITION LAW IN M&A

When two or more companies merge or one acquires another, the resulting combination often alters the market structure. Such deals can eliminate key competitors, reduce consumer choice, or lead to price manipulation if unchecked. That is precisely where the Competition Commission of India (CCI) plays a vital role.Under Sections 5 and 6 of the Competition Act, 2002, mergers or acquisitions that cross certain financial thresholds must be notified to the CCI for approval. The CCI’s objective is to prevent combinations that may cause an “Appreciable Adverse Effect on Competition (AAEC)” in India.

The CCI primarily assesses:

• The market share and dominance of the merged entity.

• The likelihood of higher prices or reduced consumer choice.

• Whether the merger creates entry barriers for new competitors.

• The potential impact on innovation, supply chains, and market access.

In essence, while M&A transactions aim for efficiency and synergy, competition law ensures these benefits do not come at the cost of market fairness.

THE 2023 AMENDMENT: A STRICTER AND SMARTER REGIME

The Competition (Amendment) Act, 2023 marks a paradigm shift in India’s competition regime. It modernizes regulatory tools and aligns them with global standards, especially for digital and cross-border transactions.

1. Introduction of Deal-Value Threshold : Earlier, combinations were evaluated based only on assets or turnover. The amendment now empowers the CCI to scrutinize any transaction valued above ₹2,000 crore, provided the target entity has significant business operations in India. This change prevents big tech or digital mergers from escaping oversight merely because the target company’s turnover is small.
2. Reduced Review Period : The CCI must now issue its initial opinion within 30 calendar days, significantly speeding up the approval process. This reform supports a faster business environment without compromising regulatory checks.
3. Expansion of Liability (Hub-and-Spoke Cartels) : The amendment now holds not only direct participants but also facilitators and intermediaries liable for cartel-like arrangements, closing important loopholes in the law.
4. Settlement and Commitment Mechanisms : Companies under investigation can now offer commitments or settlements, saving time and resources while maintaining accountability. This reflects a more collaborative, business-friendly regulatory approach.

CASE STUDIES: LEARNING FROM EXPERIENCE

The practical application of competition law in M&A can be best understood through recent decisions of the CCI.

•PVR–INOX Merger (2022):This merger between two of India’s largest multiplex chains raised concerns over market dominance. The CCI closely analysed regional competition, pricing, and consumer impact before granting approval. The key takeaway — sector-specific market analysis is crucial in large consolidations.

•Holcim–Lafarge Merger (2015):The global cement merger was approved only after the parties agreed to divest certain assets to maintain healthy market competition. This case highlighted that structural remedies can be vital for regulatory approval.

•Amazon–Future Group Dispute (2021):Although more of a contractual matter, this case underscored the growing intersection of competition law, corporate control, and digital commerce, showing how complex modern transactions can become.

COMMON MISTAKES IN M&A COMPLIANCE

Many corporates falter during the M&A process due to simple but costly oversights. Common compliance pitfalls include ignoring CCI thresholds and proceeding without mandatory pre-merger notification, engaging in “gun-jumping” by implementing parts of a merger before obtaining CCI approval, assuming that foreign-to-foreign mergers with only a minor Indian presence do not require clearance, and neglecting non-price factors such as innovation, data control, and technological influence, which are increasingly important in today’s digital economy. Avoiding these mistakes requires careful planning, proactive risk assessment, and early consultation with legal and regulatory experts.

BEST PRACTICES FOR CORPORATE COMPLIANCES

Successful M&A transactions in today’s regulatory climate demand proactive compliance. Companies can safeguard deals and reputation by following these practices:

• Early Competition Impact Assessment: Evaluate the merger’s potential effect on market structure before signing agreements.
• Engage Legal and Economic Experts: Their analysis helps in preparing robust filings and addressing CCI concerns effectively.
• Transparency with Regulators: Clear, accurate disclosures strengthen credibility and reduce investigation risks.
• Plan Structural or Behavioural Remedies: Be ready to divest assets or make commitments if the merger raises competition concerns.
• Board Awareness and Accountability: Corporate governance should integrate competition law considerations into strategic planning.THE DIGITAL DIMENSION:The 2023 reforms also recognize the growing complexity of digital markets. Traditional tests based on turnover or assets often fail to capture the competitive value of tech startups. Many digital acquisitions aim to acquire data dominance rather than tangible assets, which can reshape entire markets.With the introduction of the deal-value threshold, even smaller but data-rich companies now fall under CCI scrutiny. This ensures that “killer acquisitions”, where tech giants acquire innovative start-ups to eliminate future competition, do not go unchecked.

CONCLUSION: GROWTH WITH RESPONSIBILITY

As India positions itself as a global hub for business and investment, companies must strike a delicate balance between expansion and ethical competition. The intersection of M&A and competition law represents this balance — where growth meets accountability.For modern corporates, compliance should no longer be viewed as a burden but as a strategic advantage. Transparent and fair business practices not only ensure regulatory approval but also enhance credibility, attract investors, and strengthen long-term sustainability.In the era of fast-paced consolidation and digital disruption, the message from India’s competition regime is clear:grow ambitiously, but play fair.