Govt exploring legal options on pending CCI approval of 16 mergers

Seeks solutions within statutory framework of Competition Act to speed up approvals

The government is exploring legal options to break the logjam created by the absence of all three members at the quorum of the Competition Commission of India (CCI). This has delayed approvals of 16 merger deals, according to government sources. 

The Centre is seeking solutions within the statutory framework of the Competition Act to speed up the approvals without full strength of the quorum.

Various industry bodies had flagged the issue to the government as it had kept the future of thousands of crores worth of deals hanging. 

Section 22 of the Competition Act mentions, “...All questions which come up before any meeting of the commission shall be decided by a majority of the members presiding and voting… provided that the quorum for such a meeting shall be three members.” 

The deals have been pending approval since September 2022, a month before the former chairperson of CCI Ashok Gupta retired. This has left one position vacant in the CCI’s quorum. 

The government is yet to appoint the chairperson of CCI.

According to sources, the process of selection has been completed but final approval is pending before the appointments committee of the Cabinet. 

While there is no provision under the Competition Act, the government could consider invoking the “doctrine of necessity” cited by some courts. This could help clear the combination deals without the three-member quorum. 

The doctrine of necessity enables the legal authorities to take certain actions that must be taken at a particular moment.

This would not otherwise be regarded within the scope of the law in a general legal situation.

However, legal experts are concerned that such a move may lead to more uncertainty as other parties could challenge it in the courts. 

Of the 16 mega deals that have been pending since September 2022, one is a major global deal, which has received approvals in 11 jurisdictions. It is only awaiting CCI’s clearance. “The closing date of that transaction is close to expiring,” an industry source said. 

Former chairperson of CCI Vinod Dhall stressed on the need to fill the quorum.

He said, “Some transactions may fall through if the CCI approval does not come in time. There has been a lot of delay in filling the chairperson’s post, which is causing these issues.”

Some of the combination deals that are pending CCI approval include Ardor Holding Pte and Hero Future Global Energies deal; AGI Greenpack and Hindustan National Glass; Megha Engineering & Infrastructure and Lanco Anpara Power; Cummins Inc and Meritor Inc; and Dalmia Cement and certain businesses of Jaiprakash Associates, among others.

IN THE PIPELINE

• Various industry bodies have flagged the issue to the government
• Deals have been pending approval since September 2022, a month before the former chairperson of CCI Ashok Gupta retired
• The government could consider invoking the ‘doctrine of necessity’ which could help clear the combination deals without the three-member quorum
• Of the 16 mega deals that have been pending since September 2022, one is a major global one

Combination deals pending CCI approval

• Ardor Holding Pte and Hero Future Global Energies deal
• AGI Greenpack and Hindustan National Glass
• Megha Engineering & Infrastructure and Lanco Anpara Power
• Cummins Inc and Meritor Inc
• Dalmia Cement and certain businesses of Jaiprakash Associates