AUTOMATIC COMPETITION COMMISSION OF INDIA (CCI) NOD FOR M&AS OF SICK COS

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THE Competition Commission of India (CCI), which will soon start scrutinising and clearing big corporate M&As, will give automatic approval to such deals if one of the parties involved is in financial distress, the regulator said.

CCI, which has already opened its doors to complaints of anti-competitive practices such as cartelisation and predatory pricing, is now finalising the merger regulations. Once these are notified, it will be mandatory for all big corporate deals to get CCI's endorsement that they will not adversely affect competition in the market. The regulator can also direct the parties to exclude certain businesses from the purview of the deal to protect healthy competition in the market. The regulator will give automatic clearance to all big deals that are in the interest of the economy, CCI chairman Dhanendra Kumar said. "We don't want to be a roadblock. We want to be a facilitator for businesses, or indeed an accelerator," said Mr Kumar. This, despite the fact that CCI is empowered under the competition law to take up to 210 days to clear a transaction. The regulator is keen to reduce the time taken as regulatory delays can mar corporate transactions. Mr Kumar said in the case of an M&A deal where the target company is sick or is facing bankruptcy, it is in the interest of the economy and stakeholders, including clients and employees of the company, that it be given a quick clearance. "Besides, ensuring that a company is alive is important for sustaining competition in the market," said Mr Kumar. The final merger code will identify all such cases where automatic clearance should be given. In some other cases, the regulator may clear the deal in about a month. CCI is now fine-tuning the merger regulations prepared earlier, which said the regulator would clear most of the deals in 90 days. The commission feels it should take the maximum 210 days allowed by law only in exceptional cases that require a thorough investigation.

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