Tuesday, July 15, 2008
Posted by D. Daniel Sokol
Manish Agarwal (University of South Australia) and Aditya Bhattacharjea University of Delhi - Delhi School of Economics ask Are Merger Regulations Diluting Parliamentary Intent? in the Indian context.
ABSTRACT: India's Competition Act (2002) was amended in 2007, modifying inter alia the Act's thresholds for merger review, and requiring mandatory rather than voluntary notification of mergers above the revised thresholds. This created considerable opposition in international business and legal circles. Draft merger regulations proposed by the Competition Commission of India (CCI) in early 2008 have responded by categorizing mergers which do not fulfill a two-firm local nexus requirement as those unlikely to cause an appreciable adverse effect on competition in India. We critically evaluate this claim and argue on the basis of international and Indian experience that the regulations will result in the CCI turning a blind eye to cross-border mergers designed to pre-empt potential competition or competition from small "maverick" firms. The regulations dilute parliamentary intent in requiring mandatory notification.