As India accelerates its growth and remains a preferred destination for foreign investment, the need to provide an empowered and efficient ecosystem for businesses to survive and thrive has become pivotal. Various factors have propelled this growth—the demographic dividend, a burgeoning middle class and government initiatives to stimulate growth, such as infrastructure development and digitisation. However, this advancement in commerce and technology introduces challenges, including increased complexities in commercial relationships. This makes dispute resolution and competition enforcement essential to ensuring inclusive and sustainable growth.
Progress in ADR: Much achieved, yet some distance to cover
Arbitration has emerged as a leading Alternative Dispute Resolution (ADR) mechanism, following key amendments to the Arbitration and Conciliation Act, 1996, in 2015, 2019 and 2021. The proliferation of local arbitral institutions operating per international best practices, alongside continued reliance on global centres, has bolstered India’s arbitration landscape. The Mediation Act, 2023, further complements these developments by institutionalising mediation as a viable dispute resolution option. In June 2024, the government issued guidelines advocating mediation over arbitration for disputes exceeding INR10 crore to alleviate the burden on the judiciary and address arbitration challenges in governmental matters.
Despite the availability of various dispute resolution mechanisms, the intersection of multifaceted issues in modern disputes complicates the development of an effective resolution strategy. Businesses often face critical questions while consulting their legal advisors, such as: (i) Should we pursue legal action? (ii) Will this affect our existing relationships? (iii) Should we initiate negotiation or settlement discussions or opt for mediation/arbitration? (iv) Do we require specialised experts to assess the potential impact?
No universal solution exists for dispute resolution; strategies must be tailored to each case. Developing a practical approach requires a thorough analysis that includes legal and subject matter expertise and assesses the areas of dispute and the stakes involved. By performing a robust assessment, businesses can navigate the complexities of commercial disputes, ensuring that their interests are protected while fostering stronger relationships with collaborators and stakeholders. A successful dispute resolution strategy depends on the parties’ “intent” and “willingness” to seek common ground. Initiating discussions early in the dispute lifecycle enhances the likelihood of a favourable resolution.
Despite persistent challenges, India has made significant strides in the ADR ecosystem over the past decade. Questions remain about the efficacy of the arbitration regime concerning the time and costs involved and the ongoing difficulties in enforcing awards. To enhance the system, it is essential to strengthen the legal framework by establishing strict timelines, promoting institutional arbitration and recommending the selection of arbitrators based on their subject matter expertise, among other measures.
India’s evolving merger control regime
Over time, India's merger review policy has evolved to enhance the efficiency and effectiveness of antitrust scrutiny for notifiable transactions. Amendments to the Competition Act have driven this evolution, introducing procedural and structural changes. For instance, in March 2014, the Competition Commission of India (CCI) allowed informal and verbal discussions between parties and the CCI staff before filing a combination notice to increase clarity and transparency in the filing process. The CCI has also implemented remedies to foster competition by creating viable, independent competitors in relevant markets through divestitures, ensuring purchasers of divested assets have the necessary resources to compete effectively with the merged entity.
A significant milestone in this evolution is the amendment to the Act in 2024, which introduces the Deal Value Threshold (DVT) as an additional metric for screening transactions alongside the existing asset and turnover-based thresholds. This amendment mandates that transactions above INR2,000 crore (approximately US$245 million) with significant business operations in India must be notified to the CCI. It reflects the CCI's efforts to adapt its merger review process to the changing business environment and align with globally recognised standards.
The CCI recognised that the existing turnover and asset thresholds were insufficient to capture certain high-impact mergers in the digital sector, such as Facebook's US$19 billion acquisition of WhatsApp, despite its potential competitive implications. As antitrust authorities worldwide grapple with the influence of large digital platforms — entities that generate network efficiencies but may pose potential anticompetitive risks — the DVT amendment ensures that high-value deals, particularly in the tech sector, fall within the CCI's jurisdiction. This will allow for proper scrutiny of low-revenue but high-impact mergers.
CCI is taking the required actions to strengthen its merger policy. Building CCI’s capacity, particularly in digital markets, will bolster competition enforcement in India's rapidly evolving economy. Additionally, fostering transparent interactions between merging parties and the CCI can help identify the need for remedies early in the process, ensuring a smoother and more informed review.
As India continues its growth trajectory and global prominence, establishing a robust framework for dispute resolution and competition enforcement is crucial. While businesses and regulators are taking necessary steps in this direction by adapting to evolving market dynamics, a constant dialogue and continued collaboration between businesses and government stakeholders can ensure sustainable development, foster innovation and maintain a fair and competitive business environment in India.
Authored by: Amit Bansal, Partner, Deloitte India; Nandita Jain, Director, Deloitte India and Shruti Gupta, Director, Deloitte India
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