SUMMARY
All transactions exceeding INR 20 Bn involving parties having “substantial business operations in India” would have to seek the approval of the CCI: Report
The Bill could be presented in the Parliament as soon as August 5
According to the draft, the definition of the value of transaction will include “every valuable consideration, whether direct or indirect, or deferred for any acquisition, merger or amalgamation”
In what appears to be a bid to reign in big tech players, the government is reportedly planning to make it mandatory for companies to seek antitrust approval for overseas mergers and acquisitions.
According to a draft bill seen by Bloomberg, all transactions exceeding INR 20 Bn ($252 Mn) involving parties having “substantial business operations in India” would have to seek the permission of the Competition Commission of India (CCI).
The Centre is mulling changes to the country’s competition law to enforce these changes. The Bill could be presented in the Parliament as soon as Friday (August 5), the report said, quoting sources.
Rules defining “substantial business operations” would be brought in by the government once the amendments are approved, it added.
If the amendments go through, it will empower the CCI to scrutinise transactions based on the value as against asset size and turnover of the companies currently. According to the report, the definition of the value of a transaction will include “every valuable consideration, whether direct or indirect, or deferred for any acquisition, merger or amalgamation”.
Additionally, the draft also envisages slashing the time limit for approval of mergers to 150 days from the existing 210 days to expedite the approval process.
Bringing Big Tech Down A Peg
The move is likely part of the government’s bid to regulate powerful tech majors. The ambitious plan is likely modelled after similar measures enforced by other major economies such as Europe and China on US-based tech giants.
The move would leverage India’s standing in the burgeoning number of online users. The country was home to 846 Mn internet users at the end of 2021 and headlined all major tech platforms from Facebook to Meta and from Google to Twitter. This number is expected to grow to 1.3 Bn by 2030, with smartphone penetration rising to 87% of the population by 2030.
The move would recognise the government’s intention to have a say in deals such as Meta’s (then Facebook) 2014 acquisition of WhatsApp. Indians form the biggest chunk of social media users online on platforms such as Facebook, Instagram, Snapchat, among others.
Countries such as China, Germany and Austria also hold much sway over the mergers of foreign companies. While Germany currently has a deal value threshold of $407 Mn for merger, Austria has set a value of $204 Mn for such transactions.
The move comes amidst a renewed standoff between the government and social media companies. On August 4, Minister for Information Technology Ashwini Vaishnaw said that the government is finalising a new data protection bill that would ensure accountability of social media platforms.
Last month, microblogging site Twitter India moved the Karnataka High Court against some of the takedown orders issued by the Centre. Quick on the heels of that, it was reported that the government was also looking to question social media platforms – Twitter and Meta’s Facebook – over low rates of compliance to legal notices.
The two sides are also at loggerheads over the latest amendments to the Information Technology (IT) Rules, 2021. Critics have also panned the new norms that mandate social media platforms to ‘find the first originator of a text’ and to set up an ‘Oversight Committee’ to ensure adherence to the Ethics Code, among other issues.
