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ABA Spring 2009 Meeting- Section of International Law

ABA Spring 2009 Meeting- Section of International Law. Panel on Antitrust in the East Presentation on Indian Competition Act—Combinations Vinod Dhall, DHALL LAW CHAMBERS, India In co-operation with LINKLATERS LLP. Status of enforcement. Act introduced- Jan 2003

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ABA Spring 2009 Meeting- Section of International Law

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  1. ABA Spring 2009 Meeting-Section of International Law Panel on Antitrust in the East Presentation on Indian Competition Act—Combinations Vinod Dhall, DHALL LAW CHAMBERS, India In co-operation with LINKLATERS LLP ABA Int Law Spring 2009

  2. Status of enforcement • Act introduced- Jan 2003 • Commission established- Oct 2003 • Constitutional challenges ended- Jan 2005 • Amendments to Act- Sept 2007 • Full Commission appointed- Mar 2009 • Commission planning early enforcement- to commence draft Regs approval, staffing,etc • Enforcement likely to begin in 3m(?);in stages(?) • No case law yet ABA Int Law Spring 2009

  3. What is a “combination” ? A merger or amalgamation, or acquisition Only if above given thresholds applied to: Size of parties to transaction– by assets / turnover Local nexus Size of transaction (in draft Regulations) ABA Int Law Spring 2009

  4. Thresholds ABA Int Law Spring 2009

  5. Timelines: filing and initial review Mandatoryfiling-within 30 days of relevant trigger event: If Merger or amalgamation: Last Board approval is trigger event; parties file jointly If Acquisition: Document conveying bona fide intention to acquire is trigger event; acquirer files NB. Overview here includes parameters of draft Regulations “Form 1” filing T=Trigger event T+30 (max) Prepare filing N+60 N=Notification N+30 “Form 2” filing • Filing form: Form 1 ( standard) or Form 2 (short); determines initial review period • Filing fee: INR 4 million (USD 80,000) • Maximum review period: N+210 days; on its own motion inquiry possible until 1 year after closing • Fast track process introduced: CCI must establish prima facie within 30/60 days: • No action (deemed clearance), or • Serve “show cause” notice requesting parties explanation why no (in-depth) review ABA Int Law Spring 2009

  6. In-depth review: Overview After parties’ reply to “show cause” In-depth review may be initiated DG’s report may be obtained If CCI of opinion that combination will have AAEC Parties directed to publish details of combination (prior to this, review has been confidential) CCI may invite affected persons to file objections CCI can ask for additional information from parties Initial review In-depth review N+210 (max) N=Notification • Decision: After consideration (RoR), CCI may • prohibit combination • approve combination • approve subject to modifications • Modification should eliminate AAEC • Acceptance of modification (remedies) proposed by CCI: • Parties can accept remedies or propose amendments • If CCI does not accept amendments, parties given further time to accept modification • If parties fail to accept, combination deemed to have AAEC • Independent trustee may be appointed to monitor implementation of remedies ABA Int Law Spring 2009

  7. De minimis provisions Regulations (draft) effectively exempt from notification • Acquisition of shares or voting rights • Below 15%, provided not leading to control • Where acquirer already has over 50%, or within same group, • From underwriting, sub-division, bonus or rights issue (but not renunciation) • Amended or renewed tender offer, where notice already filed • Acquisition through gift, intestate / testamentary succession, etc • Acquisition of asset (unless it is a complete business operation) solely as investment, or in ordinary course of business, not leading to control • Others ABA Int Law Spring 2009

  8. Commission’s powers • Summon witnesses / documents • Record evidence on oath • Punish for: • failure to comply with any order • failure to notify combination • furnishing false / incomplete information • destruction of evidence ABA Int Law Spring 2009

  9. Observations • Broadly similar to EU law, with some differences • To avoid in-depth review, prudent to front load review • Ensure complete information in filing, to avail 30/ 60 day deadline • Invest time to be well prepared-before filing • Sanctions not insignificant • Some unresolved issues, despite draft Regs ABA Int Law Spring 2009

  10. Vinod Dhall, Dhall Law Chambers, Dewan Manohar House, B-88, Sector 51, Noida, U.P., India-201301 Phone:+91-120-4547551, Fax:+91-120-4547550 vinod.dhall@dhall-lawchambers.com, dhall.vinod1@gmail.com ABA Int Law Spring 2009

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