Examining the Efficacy of Mandatory Merger Notification in India

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Mergers and acquisitions are strategic decisions taken for maximisation of a company's growth by enhancing its production and marketing operations.

They are being used in different industries viz.

information technology, telecommunications, and business process outsourcing apart from traditional businesses in order to gain strength, expand the customer base, cut competition or enter into a new market or product segment.

Regulations for Mergers and Acquisitions
Mergers and acquisitions are regulated under various laws in India.

The objective of the laws is to make these deals transparent and protect the interest of all shareholders.

Firstly they are regulated through the provisions of the Companies Act, 1956.

The Act lays down the legal procedures for mergers or acquisitions.

The other Act which regulates mergers and acquisitions include The Competition Act, 2002, as amended by The Competition (Amendment) Act, 2007.

The Act regulates the various forms of business combinations through the Competition Commission of India (CCI).

Under the Act, no person or enterprise shall enter into a combination, in the form of an acquisition, merger or amalgamation, which causes or is likely to cause an appreciable adverse effect on competition in the relevant market and such a combination shall be void.

Enterprises intending to enter into a combination may give notice to the Commission, but this notification is voluntary.

However, all combinations do not call for scrutiny unless the resulting combination exceeds the threshold limits in terms of assets or turnover as specified by the Competition Commission of India.

The Commission while regulating a 'combination' shall consider the following factors:-

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