Indian Government Begins to Place Conditions on Merger Approval

The Competition Commission of India ("CCI") is the entity within the Indian government that evaluates merger activity in India to assess whether a proposed combination has an adverse effect on competition in the relevant markets.  If the CCI determines that a merger has an adverse effect on competition, it may prohibit the merger entirely or it may allow the merger subject to certain conditions or modifications.  These modifications are known as "merger remedies." 

Over the last several years, the CCI has unconditionally approved nearly 200 transactions.  During this time businesses were able to successfully combine without substantial interference from the Indian government.   However, in December 2014, the CCI conditionally approved the acquisition of Ranbaxy Laboratories by Sun Pharmaceuticals signaling a new phase of merger control by the Indian government.   In that case, the CCI required each of the combining entities to divest overlapping medicinal formulation products as a condition of combination to prevent unfair competition. 

As a result of this change in approach by the CCI, businesses in India must now be prepared for increasing involvement in combination transactions by the Indian government.   Businesses must assess their proposed combination transactions and prepare for potential modification of these transactions by the CCI in order to receive approval. 

 For guidance about merger remedies in India and the CCI's approach to combination transactions, please contact Mahesh Nayak at (248) 988-5868, mnayak@clarkhill.com, or another member of Clark Hill's India Practice Group.  Clark Hill's India Practice Group provides know-how, insight, and connectivity to its U.S. clients in furtherance of their legal and business interests in India, and to stay ahead of the changing legal landscape there.