New Delhi: To ensure stricter compliance with competition norms, the government has amended procedural rules related to combinations between enterprises that would require approval of fair trade regulator CCI.
The Competition Commission of India (CCI) has the mandate to keep a tab on unfair trade practices in the market place. With new amendments, the focus would be on substance of proposed combinations rather than their structure when it comes to seeking approval from the fair trade watchdog. In a move that would help the regulator have a better understanding about the business activities of entities seeking approval, parties to combination are now required to provide their audited annual accounts of (immediate) preceding two financial years.
Also, the fee for filing forms by enterprises have been increased. The Corporate Affairs Ministry has notified CCI (Procedure in regard to the transaction of business relating to combinations) Amendment Regulations, 2014. The same was notified on March 28. One of the changes is that the requirement of filing notice, with respect to combinations, would be "determined with respect to the substance of the transaction and any structure of the transaction(s), comprising a combination, that has the effect of avoiding notice in respect of the whole or a part of the combination shall be disregarded". Most of the combinations, involving Indian companies or having presence in India, have to get CCI nod. "By this notification, a GAAR (General Anti Avoidance Rules) like provision has been inserted.
In structuring of a transaction in a particular manner, the notice to the regulator... cannot be avoided if otherwise the transaction was subject to approval of CCI," consultancy KPMG in India's co-head Tax Hiten Kotak said. Among other changes, the fee for filing Form I has been hiked to Rs 15 lakh from Rs 10 lakh. The fee for submitting Form II has also been increased to Rs 50 lakh from Rs 40 lakh. Generally Form I has limited information while Form II is more elaborate. Moreover, enterprises entering into combination would now have to furnish details related to whether the proposed transaction is subject to filing requirements in other jurisdictions.
