Tt Flashcards
(103 cards)
1
Q
What is the main purpose of the Competition Act, 2002?
A
To promote and sustain market competition, protect consumers, and ensure the freedom of trade.
2
Q
Which body enforces the Competition Act, 2002?
A
The Competition Commission of India (CCI).
3
Q
What is the role of merger control in the context of the Competition Act?
A
To prevent monopolies and ensure businesses compete fairly.
4
Q
When did the sections dealing with mergers and combinations in the Competition Act come into effect?
A
Sections 5 and 6 were introduced in 2007 and started operating in 2011.
5
Q
What is the purpose of merger checks under the Competition Act?
A
To prevent companies from becoming too powerful, which could hurt consumers or slow down innovation.
6
Q
What are the two phases of the merger review process by the CCI?
A
Phase I and Phase II.
7
Q
How long does the CCI take to assess a deal in Phase I?
A
30 working days.
8
Q
What happens if the CCI finds concerns during Phase I?
A
The case moves to Phase II for a deeper examination over 150 calendar days.
9
Q
What percentage of mergers were approved without conditions during Phase I?
A
More than 90 percent.
10
Q
True or False: No merger has been completely blocked by the CCI to date.
A
True.
11
Q
What mechanism was introduced in 2019 to speed up approvals for mergers?
A
The Green Channel mechanism.
12
Q
What is the main concern regarding the quick reviews of mergers?
A
They might affect the depth of analysis.
13
Q
What type of remedies does the CCI use?
A
- Behavioral remedies
- Structural remedies
14
Q
What significant change was introduced in the 2023 amendments to the Competition Act?
A
The introduction of the Deal Value Threshold (DVT) for mergers valued above INR 2000 crore.
15
Q
What is the primary goal of the Deal Value Threshold (DVT)?
A
To capture digital mergers that may pose competition risks.
16
Q
How has the overall merger review timeline changed with the 2023 amendments?
A
Shortened from 210 to 150 days.
17
Q
What criteria determine if a transaction must be notified to the CCI?
A
If it crosses certain asset or turnover thresholds.
18
Q
What is the definition of control according to the Competition Act?
A
The ability to control the affairs or management of an enterprise, either alone or jointly.
19
Q
What are the jurisdictional thresholds for mandatory notification?
A
- Domestic assets over INR 20 billion
- Domestic turnover over INR 60 billion
- Worldwide assets or turnover crossing certain limits
20
Q
Fill in the blank: The CCI has never ______ a transaction.
A
blocked
21
Q
What does the CCI focus on when assessing a combination?
A
Whether it could cause an appreciable adverse effect on competition.
22
Q
What was removed to ease the information burden during the merger review process?
A
The requirement to justify non-compete clauses in the notification form.
23
Q
What does the ‘de minimis exemption’ refer to?
A
Exemption for small transactions that do not significantly impact competition.
24
Q
What analytical tools has the CCI started using to assess mergers?
A
- Herfindahl-Hirschman Index (HHI)
- Catchment area analysis
- Analysis of bidding data
25
What is a major concern regarding high-impact tech mergers in India?
Limited action by the CCI leading to fears of under-enforcement.
26
What did the CCI do to engage with stakeholders?
Encourages pre-filing consultations and publishes guidance notes and FAQs.
27
What is a significant milestone in the CCI's merger control journey?
Reviewing and approving more than 700 merger filings over a decade.
28
How does the CCI tailor its remedies?
To resolve competition concerns with the least restrictive solutions.
29
What does the concept of 'material influence' in control imply?
It broadens the scope of what constitutes control beyond decisive influence.
30
What is the main purpose of the Competition Commission of India (CCI) when assessing a combination?
To check if it could cause an appreciable adverse effect on competition.
31
List some factors that the CCI considers when analyzing a merger or acquisition.
* Level of competition through imports
* Barriers to entry
* Level of concentration in the market
* Bargaining power of buyers
* Likelihood of price or profit increases
* Availability of substitutes
* Market shares of the parties
* Removal of a strong competitor
32
True or False: The Competition Act applies only to specific industries in India.
False
33
What are some exemptions from mandatory notification under the Competition Act?
* Acquisitions by public financial institutions
* Foreign institutional investors
* Banks or venture capital funds under a loan or investment agreement
* Regional rural banks (until August 2022)
* Mergers involving nationalized banks (until August 2027)
34
When must parties file details of their acquisition with the CCI?
Within seven days of the acquisition.
35
What is the initial time frame for the CCI to give a preliminary opinion in Phase I?
30 working days from the date of notification.
36
Fill in the blank: The CCI must issue a decision within ______ working days in Phase II after public comments are received.
45
37
What happens if the CCI finds no concerns during Phase I?
The transaction is approved.
38
What is the purpose of the Green Channel introduced by the CCI?
For automatic approval of transactions with no overlaps between the parties' activities.
39
Who is responsible for filing a notification in the case of mergers or amalgamations?
All merging parties jointly.
40
What are the filing fees for Form I and Form II?
* Form I: INR 1.5 million (approximately USD 21,000)
* Form II: INR 5 million (approximately USD 70,000)
41
What must parties publish after the CCI issues a show cause notice in Phase II?
Information about the transaction in newspapers and on their websites.
42
What is 'gun-jumping' in the context of merger control?
Implementing a transaction before notifying the CCI.
43
What is the penalty for failing to notify a transaction to the CCI?
Up to 1% of turnover/assets.
44
What is the definition of 'control' under the Competition Act, 2002?
The ability to significantly influence or direct the affairs of a company.
45
What is the new Deal Value Threshold introduced by the 2023 Amendment?
Transactions exceeding INR 20 billion with substantial operations in India must be notified.
46
What is the maximum review period set for the CCI under current law?
210 calendar days.
47
What does the CCI assess to determine whether a combination causes an Adverse Effect on Competition (AAEC)?
* Level of competition from imports
* Barriers to entry
* Market concentration
* Likelihood of higher prices or profit margins
* Availability of substitutes
* Market share of the parties
* Risk of eliminating effective competitors
48
What must parties do during the review process if the CCI issues a Request for Information (RFI)?
Respond to the RFI, pausing the review timeline.
49
True or False: The CCI can rely on market definitions from other antitrust authorities.
True
50
What is the role of the Ministry of Corporate Affairs (MCA) in merger control?
Issuing notifications on merger control matters.
51
What is the purpose of the pre-filing consultations (PFC) with the CCI?
To clarify issues regarding notification requirements, disclosures, or exemptions.
52
What factors does the CCI consider when defining the relevant geographic market?
* Trade barriers
* Local specifications and procurement policies
* Distribution facilities
* Transport costs
* Consumer preferences
* Need for secure supplies or after-sales services
* Nature of goods and services
* Switching costs for supply or demand in different areas
## Footnote
The CCI analyzes both demand-side and supply-side factors in the market definition process.
53
True or False: The CCI is bound by the market definitions of other antitrust authorities.
False
## Footnote
The CCI may rely on decisions of other authorities like the EC and DoJ, but these decisions are not binding.
54
What are unilateral effects in the context of merger assessments by the CCI?
Unilateral effects occur when merging parties are engaged in the same business with high combined market shares, typically more than 40%.
## Footnote
The CCI evaluates barriers to entry, consumer bargaining power, and competitive constraints from competitors.
55
What remedy did the CCI impose in the PVR Cinemas/DT case?
Structural remedies involving the divestiture of specific target assets
## Footnote
This was due to risks associated with high market concentration and inadequate competitive constraints.
56
What are coordinated effects and how has the CCI addressed them?
Coordinated effects have not been specifically assessed, but the CCI looks at unilateral effects of common ownership, especially in private equity cases.
## Footnote
The CCI has required changes in control-conferring rights to mitigate risks from common ownership.
57
Fill in the blank: The CCI evaluates vertical integration by assessing _______.
[input and customer foreclosure]
## Footnote
The assessment includes risks of bundling products and elimination of potential competition.
58
What must economic efficiencies arising from a combination demonstrate?
They must be demonstrable and arise from the combination.
## Footnote
The CCI rejected claims of efficiency gains in the Holcim/Lafarge case due to lack of quantification and verifiability.
59
What provisions allow the CCI to consult with sector-specific regulators?
The Competition Act allows for consultation during merger control reviews.
## Footnote
This was exemplified in the CCI's consultation regarding the Billdesk/PayU transaction.
60
What is the CCI's approach to joint venture transactions?
The CCI considers overlaps between the transferred product and the market presence of the joint venture parents.
## Footnote
This was observed in the GSK/Pfizer case.
61
How many combinations has the CCI reviewed since its inception?
Over 900 combinations
## Footnote
The CCI covers various sectors including financial markets, pharmaceuticals, healthcare, retail, and digital markets.
62
What is the 'inter-connection rule' in the context of CCI notifications?
A single notification form must be filed for interconnected transactions that achieve a common ultimate effect.
## Footnote
No step of an interconnected transaction can be consummated without CCI approval.
63
What happens if the CCI believes a proposed combination will likely cause an AAEC?
The CCI may propose modifications to eliminate adverse effects.
## Footnote
This was the case in the Holcim/Lafarge case.
64
What is the penalty range for gun-jumping violations by parties?
INR 500,000 to INR 10 million
## Footnote
An example includes Bharti Airtel receiving a penalty of INR 10 million.
65
What significant changes were introduced by the 2023 Amendment to the Competition Act?
* Introduction of deal value thresholds for transactions over INR 20 billion
* Shortened review timeline from 210 days to 150 days
* Increased penalties for false statements from INR 10 million to INR 50 million
## Footnote
The amendment aims to enhance the CCI's oversight on larger transactions and streamline the review process.
66
True or False: The CCI has prohibited any transactions since its inception.
False
## Footnote
While the CCI has not prohibited transactions, it has directed modifications in several cases.
67
What does the CCI require from parties during the Phase II review?
Parties must publicly publish details of the combination and invite comments.
## Footnote
This allows affected third parties to file written representations regarding the combination.
68
What penalty did Amazon face for failing to disclose inter-connected transactions?
A crore penalty
## Footnote
The fine was imposed due to Amazon's failure to notify details about its agreement with Future Retail Limited (FRL).
69
What is the Green Channel route in the context of CCI?
A self-assessment mechanism for merger notifications
## Footnote
It allows parties to assess the effects of the combination on the Indian market.
70
What does CCI emphasize when filing combination notices?
Full, fair, and accurate disclosures of interconnected transactions
## Footnote
This includes information about acquisitions by subsidiaries.
71
What is the Narrowest Relevant Market (NRM)?
The preferred delineation for assessing competitive effects of a combination
## Footnote
CCI aims to classify products and services within narrow and broad relevant markets.
72
How long does Phase I of the CCI inquiry typically take?
4-8 weeks
## Footnote
Serious competition concerns may lead to a Phase II inquiry.
73
What types of remedies can CCI impose to preserve competition?
Structural and behavioral remedies
## Footnote
Structural remedies may include divestitures, while behavioral remedies may involve access to infrastructure.
74
What was the Delhi High Court's ruling regarding the CCI's application of natural justice?
CCI did not provide a fair hearing before disqualifying Eaton
## Footnote
The court emphasized compliance with procedural fairness.
75
What significant change occurred with the Competition (Amendment) Act of 2007?
Repeal of Section 37 of the Competition Act
## Footnote
This affected how combination notices are handled.
76
What behavioral remedies were imposed on Schneider Electric in its merger with L&T?
White labelling of products, sharing of management personnel, and investment in R&D
## Footnote
These remedies aimed to address competitive concerns in the low voltage switchgear market.
77
What does the CCI's approach to remedy design reflect?
A trend of negotiating remedies with merging parties
## Footnote
This contrasts with international practices where remedies are often imposed unilaterally.
78
What percentage of approved cases required remedies or modifications during the Phase I or Phase II stages?
Only 23 cases
## Footnote
This includes divestments, behavioral commitments, or a combination of both.
79
What is the CCI's stance on minority acquisitions?
Expansive interpretation of control definitions
## Footnote
This has led to uncertainty for financial and institutional investors.
80
What is the purpose of the Green Channel introduced by the CCI?
To provide a fast-track approval process for merger notifications
## Footnote
It applies when there are no vertical, horizontal, or complementary linkages.
81
What is a key concern regarding common ownership through minority investments?
Potential for lessening competition
## Footnote
CCI scrutinizes cases where investors have stakes in competing companies.
82
What is the average approval time under the Green Channel?
22 days
## Footnote
This contributes to the ease of doing business in India.
83
What is the highest penalty imposed by CCI on Amazon?
INR 200 crores
## Footnote
This was for failing to notify details of its acquisition of a 49% stake in Future Coupons.
84
What trend has CCI shown regarding structural and behavioral remedies?
A willingness to use both types of remedies
## Footnote
Initially, CCI preferred structural remedies but has recognized the effectiveness of behavioral remedies.
85
What did CCI examine in the Bayer/Monsanto merger?
Potential harm to innovation
## Footnote
CCI focused on how Bayer's innovation activities would affect competition with Monsanto.
86
What is the relationship between portfolio effects and merger assessments?
CCI considers how combined portfolios may impact competition
## Footnote
This includes examining bundling effects in mergers.
87
What is a notable feature of the CCI's merger control process?
Timeliness and efficiency in approving mergers
## Footnote
The Green Channel is an example of this efficiency.
88
What penalty did Amazon face for making false statements in the Future Coupons case?
INR 2 crores (approximately USD 0.3 million)
## Footnote
This penalty was for knowingly making false statements and omitting crucial information.
89
What has CCI increasingly prioritized in merger filings?
Complete and accurate information
## Footnote
CCI has penalized companies for failing to disclose material facts or providing incorrect information.
90
What is the maximum penalty for failing to disclose material facts in merger filings?
INR 2 crores
## Footnote
This is often greater than penalties for failing to notify a transaction.
91
What are interim covenants that CCI enforces?
Standstill obligations and clean team mechanisms
## Footnote
These prevent partial implementation of a transaction before regulatory approval.
92
What does CCI focus on to prevent gun-jumping?
Ensuring no material influence or control over target company before approval
## Footnote
Typical safe harbors may not mitigate risks of gun-jumping.
93
What broader impacts is CCI starting to consider beyond the consumer welfare standard?
Socio-economic impacts, such as labor market consequences
## Footnote
This is particularly relevant in deals involving data aggregation or large tech companies.
94
What did CCI order in the Bayer/Monsanto merger?
Free access to its digital farming platform for seven years
## Footnote
This was to grant access to agro-climatic data as a public good for India.
95
What is a 'killer acquisition'?
An acquisition where large companies acquire nascent competitors to stifle competition
## Footnote
These often fall outside CCI’s jurisdiction due to the small target exemption.
96
What is the proposed deal value threshold for merger filings in the Competition (Amendment) Bill, 2022?
INR 2,000 crores (around USD 244 million)
## Footnote
This applies where the target has substantial business operations in India.
97
What does the proposed amendment to the Companies Act aim to do?
Simplify and streamline the merger process for Indian companies
## Footnote
This includes expanding the scope of fast-track mergers.
98
What types of mergers are currently eligible for the fast-track merger process under Section 233?
* Mergers between two or more small companies
* Mergers between a holding company and its wholly-owned subsidiary
* Mergers between two or more start-up companies
* Mergers involving one or more start-up companies with a small company
## Footnote
These provisions facilitate a more streamlined approach for smaller companies.
99
What new provisions does the proposed amendment introduce for fast-track mergers?
* Mergers between unlisted companies (excluding Section 8 companies)
* Mergers between a holding company and its unlisted subsidiaries
* Mergers between two subsidiaries of the same holding company
* Mergers of foreign transferor companies with their wholly-owned Indian subsidiaries
## Footnote
These changes aim to simplify the merger process.
100
What is the deadline for stakeholders to submit feedback on the proposed amendments?
May 5, 2025
## Footnote
The Ministry of Corporate Affairs has invited comments from industry bodies, legal professionals, and corporate entities.
101
How might the proposed amendments impact unlisted companies?
Provide a faster and more efficient route to merger approval
## Footnote
This is particularly beneficial for unlisted companies and their subsidiaries.
102
What is the significance of including foreign transferor companies in Rule 25?
Simplifies the process for cross-border mergers and acquisitions
## Footnote
This makes it easier for multinational corporations to streamline operations in India.
103
What is the overarching goal of the MCA's proposed amendments to the Companies Act?
Create a more efficient and business-friendly regulatory environment
## Footnote
This aims to enhance the ease of doing business in India.
