Deal Value Threshold Now Effective: Major Changes To India's M&A Regime

Krishnendra Joshi Sep 10, 2024

This new regulatory threshold mandates that any transaction with a deal consideration exceeding INR 2,000 Crore-and involving target entities with substantial business operations—will require clearance from Competition Commission of India (CCI).

India Inc. is set for a significant shake up as the much anticipated Deal Value Threshold (DVT) comes into effect from September 10,2024. This new regulatory threshold mandates that any transaction with a deal consideration exceeding INR 2,000 Crore-and involving target entities with substantial business operations—will require clearance from Competition Commission of India (CCI).

Reportability status Of new deals should be re-examined

Highlighting the significance of the development, Anisha Chand, Partner, Khaitan & Co pointed towards increased scope for scrutiny on large transactions.

“The deal value threshold is now live. All deals with a deal consideration of over INR 2000 crore and where the target entity has substantial business operations in India will need to evaluate the reportability of their transaction to the Competition Commission of India. The existing de minimis (asset and turnover thresholds) and deal value threshold (DVT) are mutually exclusive. Expect a number of transactions that were benefiting from de minimis exemption to require a prior clearance from the CCI now if they meet the DVT criteria. Deals that are yet to be signed or will be signed on or after 10 September must re-examine their reportability status to the CCI,” she said.

Change good for structuring deals amid increase in CCI approvals

The CCI is expected to release its amended Combination Regulations shortly and these will provide clarity as to what constitutes substantial business operations in India. “This new threshold is likely to increase the number of transactions requiring CCI approval. The MCA has also brought into force the amendment allowing acquirers to make on-market purchases and seek a post-facto approval from the CCI. This change should be helpful in better structuring of on-market deals,” said Anshuman Sakle, Partner, Khaitan & Co.

“Depending on the increase in the number of filings received by it, the CCI may also need to enhance the capacity at its merger control division. Until now, the regulator has had a fantastic track record of providing timely approvals for transactions”, he added.

These amendments mark a notable change in India's merger control regime. Only time will tell how it changes and impacts the M&A strategy in the long run.

Krishnendra Joshi

BW Reporters Krishnendra has 6 years of experience in Content and Copywriting. He realised the value of persuasive writing while working with LawSikho. Writing a few marketing emails taught him that right wordings create the right impact. Reading The Boron Letters by advertising legend Gary Halbert inspired him to keep learning about the craft of writing. He does not restrict himself to legal content writing alone. He has written content for clients in the SaaS Industry and Personal development Industry. He believes in writing for multi niches to enhance his creativity and train his writing muscle.