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De Minimis Thresholds under Competition Law
In 2017, the Ministry of Corporate Affairs issued a notice under the Competition Act, 2002 that dealt with the significant changes in the area of merger and acquisitions. There was a change made that affected the merger control regime in India and has a lasting effect on the same. There was an introduction of an amendment in the existing exemptions that was meant to target enterprises going through certain combinations.
Under the Competition Act of 2002, mergers, acquisitions and amalgamations above a certain limit of transactions were required to be notified to the Competition Commission of India. In 2011, the Ministry brought forth a limited de minimis exception from this requirement. De minimis is a term used to signify something trivial to even merit any consideration in law. The acquisition of a target enterprise, the assets of which were Rs. 2.5 billion or less than that, or turnover of Rs. 7.5 billion or less , in India were exempted from notifying the CCI for a period of 5 years. Later in 2016, the Ministry released a notification through which it increased these thresholds to asset value being Rs. 3.5 billion or less and turnover of Rs. 10 billion or less, in India.
However, the CCI interpreted that these Target Interpretation only apply to the acquisitions and not the mergers or amalgamations. The CCI did not consider these thresholds when the portion of assets or division of an enterprise was being acquired even through the ‘Target Exemptions’ were breached. Subsequently, acquisitions of the relatively smaller divisions or businesses belonging to a large enterprise was required to be notified even though the size of the assets was less than what was mandated by the Target Exemption thresholds.
Furthermore, in 2017, Revised Target Exemptions were released by the Ministry of Corporate Affairs. Though the Target Exemption thresholds in terms of financial targets remained the same, the Revised Target Exemptions extended to Mergers and Acquisitions as well.
