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FICCI apprehensive over Competition Act, 2002
14
Feb '08
FICCI has expressed concern over the provisions regulating mergers and acquisitions in the new Competition Act, 2002, as there are fears that the proposed regulations would impose curbs and slow down combinations.

Consequently, FICCI apprehends that such provisions that would blunt the competitiveness of Indian industry, especially at a time when industry is in a slowdown phase with growth in December 2007 dipping to 7.6 per cent compared with 13.4 per cent in December 2006.

Feedback received by FICCI from chartered accountants, chief financial officers, corporate law experts shows that some of the inhibiting regulations relate to definition of combinations under Section 5 of the Act, under which the turnover thresholds are biased against Indian companies.

For instance, an Indian company with turnover of Rs. 3000 crore cannot acquire another Indian company without prior notification and approval of the Competition Commission.

On the other hand, a foreign company with turnover outside India of more than USD 1.5 billion (or in excess of Rs. 4500 crore) may acquire a company in India with sales just short of Rs. 1500 crore without any notification to (or approval of) the Competition Commission being required.

FICCI has pointed out that the definition of “combinations” is unnecessarily repetitive and gives rise to confusion. For example, Sections 5(b) and 5(c) are subsumed under Section 5(a)But, from a competition law perspective the only pertinent provision is Section 5(a), which regulates an acquisition of “control”.

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