CCI not a 'stumbling block' in M&A deals: Ashok Chawla

Jan 17 2013, 13:49 IST
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CCI president, Ashok Chawla. (Reuters) CCI president, Ashok Chawla. (Reuters)
SummaryThere is an informal consultations process for entities involved in M&A transactions.

Fair trade watchdog CCI has said that the companies can seek its informal guidance on mergers and acquisitions being planned by them to ensure a speedy approval and it is never a "stumbling block" for such deals.

All major merger and acquisition (M&A) deals involving Indian companies, except a few exemptions, require approval from the Competition Commission of India (CCI), which is mandated to ensure healthy competition in the market.

In an interview here, CCI Chairman Ashok Chawla said companies do need an approval from CCI to close their M&A deals, but the Commission has never been a stumbling block for such transactions.

"In this context, I would very categorically say that the Commission is not a stumbling block or perceived as one," Chawla said.

To fast-track the approval process, Chawla said, the companies can even seek informal guidance on their M&A deals.

There is an informal consultations process for entities involved in M&A transactions, he said, while adding that such guidance should not be construed as a formal view of CCI.

"We do not give out a kind of advanced ruling," he said.

"Many law firms, companies which are pursuing M&A proposals come and talk to our officers before they do their filings actually. Our officers interact with them on our perception on what is required," the CCI chief said.

The issues, Chawla said, very often relate to whether a filing is required or not or whether the kind of structure they have in mind of the deal would necessitate an approval under the Competition Act or not.

CCI suggests changes to the deal terms it feels could be anti-competitive in nature. Besides, it can send back an application if the deal does not conform to competition norms.

In some instances, CCI has asked entities to provide more clarifications after going through their applications seeking approval for M&A deals.

"The whole idea is that an initial proposal, or the one based on modifications, is cleared fast if it is not causing any adverse effect. We realise that time is the essence for M&As," Chawla said.

CCI is believed to have recently sought certain changes in a proposed deal involving acquisition of a majority stake in United Spirits Ltd by global liquor giant Diageo for about Rs 11,500 crore.

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