Pending deal approvals: Industry participants flag lack of quorum at CCI
New Delhi, January 15, 2023
Various industry players have sought measures to address the current situation till a new chairperson is appointed
With various mergers and acquisitions awaiting CCI approval, industry participants have sought measures to address the issue of lack of quorum at the competition watchdog which does not have a chairperson for more than two months now.
Mergers and acquisitions beyond a certain threshold require the approval of Competition Commission of India (CCI) under the Competition Act, 2022. Section 5 and 6 of the Act relate to regulation of combinations in the country.
For approval of combinations, the regulator needs to have a quorum of three members. However, since the retirement of Chairperson Ashok Kumar Gupta on October 25, 2022, there are only two members, resulting in lack of quorum at CCI.
Against this backdrop, various industry players have sought measures to address the current situation till a new chairperson is appointed, saying the lack of quorum is causing delays in clearances for combinations that have been notified to the regulator.
The concerns have been flagged to the corporate affairs ministry, which is the administrative ministry for CCI.
Leading law firm Cyril Amarchand Mangaldas' Partner (Head - Competition Law) Avaantika Kakkar has written to the ministry regarding lack of quorum at CCI.
"As on date, a total of 15 combinations (transactions notified to the CCI) are pending CCI's review, including multiple global transactions and transactions under the ambit of the Insolvency and Bankruptcy Code, 2016.
"The lack of quorum at CCI and its consequent inability to pass any valid orders approving such notified combinations is affecting multiple stakeholders negatively, including acquirers, financial investors, creditors/ lenders, shareholders, employees of relevant parties etc," she said in a letter, dated January 11, to the ministry.
Section 31 of the Competition Act provides for orders of CCI on certain combinations, including on approving the combination wherein the regulator's opinion, the combination does not, or is not likely to have an appreciable adverse effect on competition.
Section 33 of the Act provides the regulator powers to issue interim orders in certain situations.
"... we humbly request the central government to consider passing an ordinance for an interim arrangement of 6 (six) months suspending the quorum requirement under Section 22(3) of the Act for the operation of CCI's functions only under Sections 31 and 33 of the Act.
"This is an imminent requirement considering that CCI is inquorate and the necessity for non-contentious and urgent issues (including notified combinations/merger matters) to be dealt with appropriately by CCI (often on an urgent basis)," the letter said. Section 22 relates to meetings of CCI.
According to an industry participant, who requested anonymity, the authorities can look at broadening the scope of transactions that would qualify for the green channel route for a short period of time as that could help in clearing more combinations till the time quorum is restored at the regulator.
Green channel mechanism allows for automatic approval of certain deals.
Temporary appointment of a member to ensure quorum till a new chairperson is appointed, as well as exempting certain classes of enterprises could be given exemption in the context of combination approvals, as per the industry participant.
[Press Trust of India]