CCI to meet industry bodies before finalising M&A rules

Wednesday, 30 March 2011, 19:22 Hrs
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New Delhi: Competition watchdog CCI will meet industry chambers before finalising rules to implement provisions of the competition law concerning mergers and acquisitions.

The provisions, Sections 5 and 6 of the Competition Act, will require large companies to seek the Competition Commission of India's (CCI's) approval before going ahead with high-voltage takeovers.

Sources said the meeting, which is likely to be held early next month, is important, as industry still seems to have issues like the fees to be paid by companies for notification and concerns over the possibility of red tapism for approving mergers, besides demanding exemption of sectors from the CCI's ambit.

"If the issues are really serious, we will definitely take note of it before finalising the rules. We are open to suggestions," said a senior CCI official.

Among other things, some sections of industry have proposed that the fee to be paid should be 1 per cent of the total deal size. Industry also seems to be jittery about whether the CCI will be able to pass approvals without taking much time.

Once the provisions come into effect, companies pursuing mergers or acquisitions worth more than a threshold limit of Rs 1,500 crore will need to approach the CCI for approval. Only proposals concerning companies that have combined assets of Rs 1,000 crore or more, or a combined turnover of Rs 3,000 crore or more, will need the CCI's approval.

Furthermore, the target company's net assets have to be a minimum of Rs 200 crore or a turnover of Rs 600 crore for CCI intervention.

The CCI will take a prima facie view on proposals within a month of filing by companies, addressing a major concern of the industry. The maximum time that the CCI will take to vet mergers has been reduced to 180 days, from the earlier 210 days, after facing opposition from industry.

The commission became fully functional in 2009, with the appointment of a chairman and six members. It has the power to check anti-competitive agreements and the abuse of dominant position.

"In this year, the guidelines for some other IT products will be announced. After laptops, guidelines for printers, then desktop will be announced. Gradually we will cover entire range of IT products but it will happen in a phased manner," said Ajay Mathur, director general, BEE.

Unlike BEE star labels which indicate the efficiency of products like refrigerator, air-conditioner and others, these guidelines do not specify the levels of energy saving that a product will deliver to consumer.

"It will only indicate either product is energy efficient or it is not. The energy efficiency of the product will be computed on annual basis based on a formula that had been mentioned in the guideline," Mathur said.

On energy efficiency difference between a non-certified and certified product, Aggarwal explained that during research it was found that non-certified products will consume at least 40 per cent more energy that the certified one.

However, Aggarwal added that most of the laptops available in India qualify the guidelines announced by BEE.

"It was only 3 out of 20 laptops that failed to qualify," said Aggarwal.

The move to come up with energy efficiency labels was proposed by India Chapter of Climate Savers Computing Initiative in July 2009. MAIT was one of the proposer of this programme.
Source: PTI
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