This research paper explores the competition law aspects of combinations under the Competition Act, 2002, in India, focusing on how mergers, acquisitions, and amalgamations are regulated to ensure fair market competition. Combinations, defined under Section 5, include significant business deals that meet specific financial thresholds, such as acquisitions, mergers, or control over assets.

The paper categorizes combinations into horizontal, vertical, and conglomerate types, each posing unique challenges to competition, like potential monopolies or supply chain control. The legal framework, governed by Sections 5 and 6, mandates prior approval from the Competition Commission of India (CCI) for deals exceeding asset, turnover, or the new deal value threshold of ₹2,000 crore introduced by the Competition (Amendment) Act, 2023.

This amendment also streamlined the review process, reducing timelines to 150 days and codifying the Green Channel Route for low-risk deals. Exemptions, such as minority share acquisitions and intra-group transactions, reduce regulatory burdens for smaller deals. The CCI assesses combinations for Appreciable Adverse Effect on Competition (AAEC), balancing efficiency gains against risks like price hikes or reduced consumer choices, as seen in cases like Walmart-Flipkart (2018).

The paper also highlights recent amendments that enhance the CCI's ability to regulate tech-driven deals and exempt certain financial transactions, making India's framework more business-friendly yet vigilant. By analyzing thresholds, exemptions, and CCI processes, this paper underscores the Act's role in fostering competitive markets while addressing modern economic challenges. It concludes that ongoing refinements are essential to maintain fairness and adaptability in India's dynamic market landscape.

Introduction
When two companies join together or one buys another, it's called a combination. These deals can make businesses stronger, but they might also hurt competition in the market—like making prices higher or giving customers fewer choices. In India, the Competition Act, 2002, keeps an eye on these deals to make sure they don't mess up the market. This paper explains how India regulates combinations, what the CCI does, and some challenges we're seeing today.

Competition law refers to the set of rules and regulations that promote market competition by regulating anti-competitive conduct by businesses. Its primary aim is to ensure that markets remain open and fair, giving consumers more choices and better prices. In India, competition law is governed by the Competition Act, 2002, which replaced the earlier Monopolies and Restrictive Trade Practices Act (MRTP Act) to align with the changing dynamics of a liberalized economy.

The Competition Act prohibits practices that have an adverse effect on competition, regulates mergers and acquisitions (known as combinations), and seeks to protect the interests of consumers while ensuring freedom of trade. The Competition Commission of India (CCI) is the statutory body responsible for enforcing the Act.

Among the various areas regulated under this law, combinations such as mergers, acquisitions, and amalgamations are of particular interest. The regulation of combinations ensures that the consolidation of businesses does not lead to the creation of monopolies or cause an appreciable adverse effect on competition (AAEC).

The objective of this document is to explore the competition law aspects of combinations in India. It aims to provide a comprehensive understanding of how combinations are regulated, the procedure involved, and the role of the Competition Commission of India (CCI).

Combinations

The Competition Act, 2002, defines combinations in Section 5 as specific types of business deals that meet certain financial limits. These deals include:

• Acquisitions: When one company buys control of another, like purchasing shares, voting rights, or assets. For example, if a big retailer buys a smaller chain, that's an acquisition.
• Mergers or Amalgamations: When two companies combine to form a new entity or one absorbs the other. Think of two banks merging to create a bigger bank.
• Control over Assets or Operations: When a company gains significant control over another's assets or business, even without full ownership.

The key idea is that combinations are major deals that could change how a market works. The Act focuses on them because big deals might let companies dominate, which could hurt competitors or customers.

1. Types of Combinations

   Combinations come in three main types, each with different effects on competition:
   • Horizontal Combinations: These happen when competitors in the same industry merge or one buys the other. For instance, if two mobile phone brands merge, they might control more of the market, which could mean higher prices or fewer options for customers. These deals are closely watched because they reduce the number of rivals.
   • Vertical Combinations: These involve companies at different stages of a supply chain, like a shoe maker buying a leather supplier. This might let the company control raw materials, making it harder for other shoe makers to compete. Vertical deals can improve efficiency but might also block competitors from key resources.
   • Conglomerate Combinations: These occur between unrelated businesses, like a car company buying a food chain. They're less likely to harm competition directly but could raise concerns if the company gets too powerful across different markets.
   Each type poses unique challenges. Horizontal deals might create monopolies, vertical deals might control supply chains, and conglomerate deals might give one company too much influence. The CCI looks at these differences to decide if a deal is okay.
    

2. Legal Framework Governing Combinations

   In India, the Competition Act, 2002, is the main law for combinations. It says any big deal meeting certain money limits must get CCI approval. Section 5 explains what counts as a combination, and Section 6 says you have to tell the CCI about it before the deal happens. Some small deals, like buying a tiny share of a company, might not need approval.
    

3. Section 5: Financial Thresholds for Combinations

   Not every business deal counts as a combination under the Competition Act. The Act sets financial thresholds based on the companies' assets (what they own) or turnover (their sales). If a deal crosses these limits, it's a combination and must be reported to the Competition Commission of India (CCI). The thresholds depend on whether the companies operate only in India or globally.

Here's a simple breakdown of the threshold limits in the Competition Act over the past year:

Level	Location	Value of Assets			Value of Turnover
		Original	2016	2024	Original	2016	2024
Enterprise	India	>Inr 20 Billion	>Inr 20 Billion	>Inr 25 Billion	>Inr 30 Billion	>Inr 60 Billion	>Inr 75 Billion
	In India or Outside India Aggregate	>Usd 0.5 Billion With Atleast Inr 5 Billion in India	>Usd 1 Billion With Atleast Inr 10 Billion in India	>Usd 1.25 Billion With Atleast Inr 12.5 Billion in India	>Usd 1.5 Billion With Atleast Inr 15 Billion in India	>Usd 3 Billion With Atleast Inr 30 Billion in India	>Usd 3.75 Billion With Atleast Inr 37.5 Billion in India
Group	India	>Inr 40 Billion	>Inr 80 Billion	>Inr 100 Billion	>Inr 120 Billion	>Inr 240 Billion	>Inr 300 Billion
	In India or Outside India Aggregate	>Usd 2 Billion With Atleast Inr 5 Billion in India	>Usd 4 Billion With Atleast Inr 10 Billion in India	>Usd 5 Billion With Atleast Inr 12.5 Billion in India	>Usd 6 Billion With Atleast Inr 15 Billion in India	>Usd 12 Billion With Atleast Inr 30 Billion in India	>Usd 15 Billion With Atleast Inr 37.5 Billion in India

The Competition (Amendment) Act, 2023, added a new rule to Section 5 to make sure the CCI catches more deals that could affect competition, especially in tech and digital markets. Here's what changed:
New Deal Value Threshold
Before 2023, Section 5 only looked at a company's assets (like buildings or cash) or turnover (sales) to decide if a deal was a combination. But some deals, especially in tech, involve small companies with low assets but huge potential—like a startup with a popular app. The 2023 amendment added a deal value threshold to catch these:

• Rule: If a deal's value is more than ₹2,000 crore (about $240 million) and the company being bought or merged has substantial business operations in India, it's a combination and needs CCI approval.
• Example: If a global tech giant buys an Indian app for ₹3,000 crore, even if the app has few assets, the deal needs a CCI check because of its high value and big user base in India.
• The deal value includes all payments—cash, shares, or future promises (like extra money if the app grows).
   

Substantial Business Operations In India

For the deal value threshold to apply, the target company (the one being bought or merged) must have substantial business operations in India. The CCI will set exact rules for this later, but it likely means things like:

• A big user base (e.g., millions of Indian users for an app).
• Significant sales or revenue from India.
• Data operations, like storing or processing Indian customers' data.
• For instance, if a foreign company buys an Indian startup with a small office but a huge number of Indian users, that counts as substantial operations, and the CCI will review the deal.
   

How Does Amended Section 5 Work

Section 5 sets the bar for which deals the CCI needs to review. Here's how it works now:

• Check the Deal's Size: Companies look at their combined assets or turnover. If they cross the limits (e.g., ₹2,500 crore in assets in India), it's a combination.
• Check the Deal's Value: Even if assets or turnover are low, a deal over ₹2,000 crore with substantial Indian operations counts as a combination.
• Notify the CCI: If the deal meets any threshold, the companies must tell the CCI within 30 days of signing the agreement or deciding to merge, explaining the deal's details.
• CCI Review: The CCI checks if the deal might harm competition (e.g., raise prices or limit choices). This can take up to 150 days, but harmless deals might use the Green Channel for instant approval.
• Example: If a US company buys an Indian e-commerce startup for ₹2,500 crore, and the startup has millions of Indian users, it's a combination because of the deal value and operations in India. The CCI reviews it to ensure it won't hurt other online stores or customers.
   

Exemptions From Combination Regulation

Not all deals that meet the financial thresholds need CCI's approval. The Act and CCI regulations list certain exemptions to avoid overburdening businesses with small or harmless deals. Some key exemptions include:

• Minority Share Acquisitions: Buying less than 25% of a company's shares for investment purposes (not to control the company) doesn't count as a combination.
• Intra-Group Transactions: Deals within the same corporate group, like a parent company merging two subsidiaries, are often exempt if they don't change market competition.
• Small Target Exemption: If the target company (the one being bought/acquired) has assets less than ₹350 crore or turnover less than ₹1,000 crore in India, the deal is exempt. This helps small startups avoid heavy regulation.
• Failing Firm Defense: If a company is going bankrupt and merging is the only way to save it, the CCI might allow the deal without strict scrutiny.
• These exemptions make the process practical, letting the CCI focus on deals that really matter. For example, if a big company buys a tiny startup with ₹200 crore in assets, it might not need to notify the CCI.
   

Regulatory Implications Of Combinations

Combinations are regulated because they can change how markets work. Section 6 of the Act says any combination that meets the thresholds must be reported to the CCI before the deal starts. The CCI checks if the deal causes an Appreciable Adverse Effect on Competition (AAEC)—basically, does it hurt the market by reducing choices, raising prices, or blocking new competitors?

• Example: If two big grocery chains merge (a horizontal combination), they might control most stores in a city, letting them charge higher prices. The CCI might approve the deal but ask them to sell some stores to keep competition alive.
• In a vertical deal, like a phone maker buying a chip supplier, the CCI checks if other phone makers can still get chips easily.
• Conglomerate deals are trickier—if a huge company buys businesses in unrelated fields, it might use its power to influence markets indirectly.
• The CCI's job is to balance the good and bad. Combinations can bring benefits, like better products or lower costs, but they can also harm consumers if they create monopolies. The law ensures the CCI looks at both sides before deciding.
• Case Example: In the Walmart-Flipkart acquisition (2018), Walmart bought 77% of Flipkart. The CCI reviewed and approved it, finding the market remained competitive.
• Hypothetical: If Airtel and Vodafone tried to merge, the CCI would worry about fewer choices. They might ask the companies to sell some network towers or limit their market share.
   

Why Combination Matters

Combinations are a big deal because they shape markets. A well-regulated combination can help companies grow, create jobs, or bring new products—like a tech merger leading to better apps. But without oversight, combinations can hurt consumers by creating monopolies or controlling supplies. The Competition Act's rules on combinations ensure the CCI can step in early, before a deal causes problems. By setting clear thresholds and exemptions, the law focuses on deals that matter while letting smaller ones go through easily.

• The system isn't perfect. Some worry the thresholds are too high, missing smaller deals that still affect competition, especially in tech.
• Others say exemptions like the small target rule let big companies buy startups without scrutiny.
• Still, the Act gives the CCI a strong framework to keep markets fair.
   

Assessment Of Combinations

The CCI's assessment of combinations involves a structured process to determine their potential impact on competition. Parties to a combination must notify the CCI using Form I (simplified) or Form II (detailed), depending on the transaction's complexity. The CCI reviews the notification within 30 working days, extendable to 150 days for detailed investigations, to assess AAEC.

Key factors in the assessment include the combined market share of the parties, the likelihood of price increases, and the impact on competitors and consumers. The CCI may approve the combination unconditionally, approve it with modifications (e.g., divestitures), or prohibit it if AAEC is unavoidable. For instance, in the Agro Tech Foods Limited combination, the CCI approved the transaction after ensuring no significant market distortion. This process ensures transparency and aligns with international best practices.

The CCI examines whether a combination causes an Appreciable Adverse Effect on Competition (AAEC) in India.

Factors Considered:

• Market share of the parties
• Level of concentration in the market
• Barriers to entry
• Availability of substitutes
• Countervailing buyer power
   

Case Study

The Walmart-Flipkart combination (2018) is a landmark case, where the CCI approved Walmart's acquisition of a 77% stake in Flipkart for USD 16 billion. The CCI assessed the e-commerce market, concluding that the combination would not cause AAEC due to the presence of competitors like Amazon and low barriers to entry.

Section-6

Section 6 is all about keeping an eye on combinations—big mergers, acquisitions, or amalgamations that could affect competition in India. It says:

• No harmful deals: Companies can't go through with a combination that causes an Appreciable Adverse Effect on Competition (AAEC)—like creating a monopoly or hiking prices.
• Notify the CCI: Anyone planning a combination (as defined in Section 5) must inform the CCI within a set time, sharing details about the deal.
• Wait for approval: The deal can't start until the CCI approves it or a specific period passes without a decision.

Think of the CCI as a referee. If two major phone companies want to merge, they have to tell the CCI first. The CCI checks if the merger will make phones pricier or limit choices. If it's bad for competition, the CCI can block it or ask for changes, like selling some stores.
 

Key Amendments to Section 6 (2023)

The Competition (Amendment) Act, 2023, made Section 6 sharper and faster to handle today's markets, especially tech deals. Here are the big changes:

Shorter Review Timeline

• Before 2023, the CCI had up to 210 days to review a combination after getting the notice.
• The 2023 amendment cut this to 150 days.
• The CCI must form a prima facie opinion within 15 days (down from 30 days) to decide if the deal raises concerns.
• If there's a concern, the CCI issues a notice, and the full review wraps up within 150 days total.

Example: If a clothing brand buys a software firm, the CCI can approve it quickly if it's harmless, saving months of delay.
 

Green Channel Route Codified

• The Green Channel Route, introduced in 2019, allows automatic approval of non-overlapping deals.
• The 2023 amendment added this to the Act as Section 6(4).
• Companies must declare no horizontal, vertical, or complementary overlaps for automatic approval.

Example: If a car company buys a food chain, there's no market overlap. They file a Green Channel notice, and the CCI green-lights it in days.
 

Exemptions to Certain Transactions

The 2023 amendment added Section 6(9), exempting specific financial transactions from combination rules, such as:

• Share subscriptions or acquisitions by Public Financial Institutions, Foreign Portfolio Investors, Banks, or Category I Alternative Investment Funds, if done under a loan or investment agreement.

These deals don't need CCI approval, as they're unlikely to affect competition. Example: If a bank buys shares in a company as part of a loan deal, it skips the CCI process, saving time.

Open Offer Exemptions

New Section 6A exempts open offers and stock exchange acquisitions from "standstill" rules if:

• A notice is filed with the CCI.
• The acquirer doesn't exercise voting rights or control until CCI approval.

Example: If a company makes a public offer to buy shares on the stock market, it can proceed after notifying the CCI, as long as it doesn't control the target company yet.

KEY CHANGES TO SECTION-6

Aspect	Pre-2023	Post-2023
Review Timeline	Up to 210 days; prima facie opinion in 30 days	Up to 150 days; prima facie opinion in 15 days
Green Channel	In regulations (2019)	Codified in Section 6(4)
Financial Exemptions	Limited exemptions	Section 6(9) exempts banks, FPIs, etc.
Open Offer/Stock Exchange	Standstill rules applied	Section 6A allows with notice, no control

How the Amended Section-6 Works:

The process for combinations under Section 6 is now faster and more flexible. Here's how it goes:

• File a Notice: Companies must notify the CCI within 30 days of signing a merger agreement, board approval, or other trigger events (like executing an acquisition deal).
• Green Channel Option: If there's no competitive overlap, they file a Green Channel notice for instant approval.
• CCI Review:
  • Within 15 days, the CCI decides if the deal looks risky (prima facie opinion).
  • If no issues, it's approved quickly.
  • If concerns arise, the CCI investigates, wrapping up within 150 days.
• Outcome: The CCI can approve the deal, ask for changes (like selling parts of the business), or block it if it causes AAEC.
• Exemptions: Financial deals (Section 6(9)) or open offers (Section 6A) skip some steps, as explained above.

For example, if two small tech firms merge with no market overlap, they might use the Green Channel for a quick okay. But if two big retailers merge, the CCI takes a closer look to ensure prices won't skyrocket.
  The amended Section 6 makes India's competition law more business-friendly while protecting markets:

• Faster Approvals: Cutting the review time to 150 days helps companies close deals quicker, like a startup merging with a bigger firm to launch new products.
• Tech Focus: The Green Channel and exemptions suit tech deals, where overlaps are rare but innovation is key. For example, a global app buying an Indian data firm might breeze through.
• Ease for Investors: Banks and financial institutions can invest without CCI hurdles, boosting funding for businesses.
• Market Protection: The CCI still catches risky deals, ensuring consumers don't face higher prices or fewer choices.

However, challenges remain. Companies must carefully check for overlaps to use the Green Channel, and the shorter timeline puts pressure on the CCI to review complex deals fast.
 

Example:

A global software company wanting to buy an Indian analytics startup in 2025. The deal meets Section 5's thresholds (e.g., deal value over ₹2,000 crore). Here's how Section 6 applies:

• They check for overlaps. The software company makes apps, and the startup analyzes data—no horizontal, vertical, or complementary links.
• They file a Green Channel notice under Section 6(4). The CCI reviews it in days and approves it, letting the deal start immediately.
• If there was an overlap (say, both made similar apps), they'd file a regular notice. The CCI would check within 15 days, and if concerns arise, review it fully within 150 days, possibly asking them to sell some app divisions.

This shows how the amended Section 6 speeds up safe deals while keeping risky ones in check.
 

Section-20

Section 20 of the Competition Act, 2002, empowers the Competition Commission of India (CCI) to investigate combinations (mergers, acquisitions, or amalgamations) to ensure they don't harm competition in India. Let's break it down in simple terms:

• Inquiry Power: The CCI can start an investigation on its own (suo moto) or if someone, like a competitor or consumer, complains about a combination. It can also act if the Central or State Government refers a case, saying a deal might hurt the market.
   
• Time Limit: The CCI can only investigate deals within one year of when they take effect (e.g., when the merger is finalized). This ensures investigations happen quickly, so businesses aren't left uncertain for too long.
   
• Focus of Inquiry: The CCI checks if the combination causes an Appreciable Adverse Effect on Competition (AAEC). This means looking at whether the deal creates a monopoly, raises prices, limits choices, or blocks new companies from entering the market.
   
• Factors Considered: Section 20(4) lists what the CCI looks at, like the combined market share of the companies, how easy it is for new competitors to join the market, whether customers have other options (substitutes), and if the deal gives the company too much control (like over supplies or prices). For example, if two big telecom companies merge, the CCI checks if phone users will face higher bills or fewer providers.
   
• Outcome: If the CCI finds the deal harmful, it can block it, ask for changes (like selling parts of the business), or impose penalties. For instance, in a case where a merger might control too many stores in a city, the CCI might require some stores to be sold to keep competition alive.

This section is crucial because it gives the CCI teeth to act proactively or reactively, ensuring combinations don't hurt consumers or small businesses. It balances the need for companies to grow with the need to keep markets fair and open.

Conclusion
The regulation of combinations under the Competition Act, 2002, as amended in 2023, reflects India's commitment to fostering competitive markets while allowing businesses to grow through mergers and acquisitions. Sections 5 and 6, bolstered by the investigative powers under Section 20, provide a robust framework to scrutinize deals that could harm competition, particularly in dynamic sectors like technology.

The CCI's ability to assess AAEC, enforce timely reviews, and offer exemptions for low-risk transactions ensures a balance between regulatory oversight and economic efficiency. Landmark cases like Walmart-Flipkart demonstrate the CCI's practical approach, approving deals that maintain market competition while imposing conditions when needed.

However, challenges remain, such as fine-tuning thresholds to capture emerging market dynamics and ensuring the CCI's resources match its growing responsibilities. Continued legislative updates and global alignment will be key to maintaining a fair, competitive, and innovative market environment in India.

End Notes:

1. Competition Act, 2002, No. 12 of 2003 (India).
2. Competition (Amendment) Act, 2023, No. 9 of 2023, Gazette of India, dated 11-04-2023.
3. Notification No. S.O. 1047(E), Ministry of Corporate Affairs, dated 08-03-2024 (India).
4. Competition Commission of India (Combinations) Regulations, 2024, notified on 09-09-2024.
5. T. Ramappa, Competition Law in India: Policy, Issues, and Developments (3rd ed. 2014).
6. Vinod Dhall, Competition Law Today: Concepts, Issues, and the Law in Practice (2nd ed. 2019).
7. Abir Roy, Competition Law in India (2nd ed. 2016).
8. Nishith Desai Associates, The Competition (Amendment) Act, 2023 (2023). URL: www.nishithdesai.com
9. PRS Legislative Research, The Competition (Amendment) Bill, 2022 (2022). URL: www.prsindia.org
10. Taxmann, Competition (Amendment) Act 2023: Definition, Amendments, Highlights (2024). URL: www.taxmann.com