New Delhi, Dec 23 (UNI) Industry body Confederation of Indian Industry (CII) today said the mandatory pre-merger notification, which is required under the recently amended Competition Act, will adversely impact the industry and should be deffered.
''This entails a requirement of seeking prior approval from the Competition Commission, which may take up to 210 days to grant such approval,'' CII said.
The amendment has come as a surprise to the industry as the Act prior to the recent amendments had a voluntary notification regime.
''Any law that restricts the present status will result in loss of transactions, deny the opportunities for absorption of advanced technologies and impede growth,'' the industry body said.
According to CII, some of the provisions of the law in its present form need to be reconsidered.
''In the global M&A arena, there are multiple suitors for every worthwhile target, and target undertakings/companies will be extremely reluctant to wait for 210 days, a period exceptionally long by the international standards,'' CII said.
It said that the mandatory notification requirement is based on inappropriate'asset/turnover' criteria.
''The industry feels that size per se should not be regarded as the criterion for determination of dominance in the market.
Dominance is a state of 'fact' and not merely 'figures', and hence asset/turnover of an enterprise should not be regarded as the basis of determining their position in the market,'' CII said.
The relevant criteria should be asset/turnover threshold combined with dominance in the market, it added.
The asset/turnover criteria is coupled with concept of 'Group' covering within the ambit of regulation business conglomerates without having regard to commonality of product market being serviced by the members of such conglomerates.
Furthermore, the mandatory notification requirement extends even to cross-border combinations merely because they meet certain asset/turnover thresholds.
The merger control notification provision does not require any nexus between notification and potential harm to competition in India. ''There is a need for providing a more substantial 'local nexus' with India, which is linked to market share and actual dominance of the combining firms in India,'' CII said.
''Over-regulation and procedural hurdles such as pre-notification of all mergers could prove to be counter-productive and thwart India's economic growth. Regulating combinations may be justifiable in a matured economy; however, in a developing economy like ours, where we have a long way to go to achieve scale of economies to compete effectively in a global market, regulation of 'size' per se may not be an economically sound proposition,'' it added.