COMPARATIVE CORPORATE LAW

PROJECT
COMPETITION LAW IN REGULATING MERGERS AND
ACQUISITIONS COMPARATIVE STUDY OF INDIA, EU AND US.

SUBMITTED BY – SAHIL SHARMA

PRN - 193000464

LL.M. (2019-2020)

OF

SYMBIOSIS LAW SCHOOL, NOIDA

SYMBIOSIS INTERNATIONAL (DEEMED) UNIVERSITY, PUNE

ON

28th AUGUST 2019

UNDER THE GUIDANCE OF

DR. MOHIT SHARMA

(ASSOCIATE PROFESSOR)
 C E R T IF IC AT E

The Project entitle “Competition Law In Regulating Mergers And Acquisitions Comparative Study
Of India, Eu And Us.” submitted to the Symbiosis Law School, NOIDA for Comparative
Corporate Law as part of Internal assessment is based on my original work carried out under the
guidance of Dr. Mohit Sharma from July, 2019 to August, 2019. The research work has not been
submitted elsewhere for award of any degree. The material borrowed from other sources and
incorporated in the thesis has been duly acknowledged. I understand that I myself could be held
responsible and accountable for plagiarism, if any, detected later on.

Signature of the candidate

Date
 COMPETITION LAW IN REGULATING MERGERS AND
ACQUISITIONS COMPARATIVE STUDY OF INDIA, EU AND US.

CHAPTER: I

INTRODUCTION & RESEARCH METHODOLOGY

The word “Competition” is not defined in law but is commonly understood to mean the “process
of rivalry” to attract more consumers or for profit maximization. Competition law deals with
market fiascos on reason of restrictive commercial practices in the market. The fundamental creed
behind competition law & policy is that all enterprises (notwithstanding of profit or nonprofit) in
the markets need to adopt fair practices while doing business. A fair competition promotes
effectiveness, inspires innovation, enables better governance and ensures availability of goods at
an affordable price. Gradually, competition law came to be recognized as one of the key pillars of
a market economy. This recognition led to enactment of competition law in many countries,
including developing countries, and the number now stands at around 130+.

Every type of economy now has a well-established competition regime; it’s not a game for the rich
western world. Every economy whether developing or developed has a proper competition regime,
at the same time its extra- ordinary to see that in today’s time all most every country has similar
competition law regime regardless of their economies, there are certain things here or there but at
its core they almost have similar principles which are recognized globally.

The history of competition law is usually traced back to the enactment of Sherman Act in 1890 in
the US This act was directed against “the power and predations of the large trusts formed in the
wake of the Industrial Revolution where a small control group acquired and held the stock of
competitors, usually in asset, and controlled their business” 1. In 1914 Congress passed two more
legislative measures that provided support for the Sherman Act. One of these was the Clayton
Antitrust Act, which elaborated on the general provisions of the Sherman Act and specified many
illegal practices that either contributed to or resulted from monopolization. The other measure
created the Federal Trade Commission, providing the government with an agency that had the

1
Paul Cook,”Competition and its Regulation: Key Issues”, accessed at
http://www.competitionregulation.org.uk/publications/working_papers/wp2.pdf
power to investigate possible violations of antitrust legislation and issue orders forbidding unfair
competition practices. The American competition law is often compared with the European take
on competition law. The European competition law promotes the maintenance of competition
within the European Single Market by regulating anti-competitive conduct by companies to ensure
that they do not create cartels and monopolies that would damage the interests of society.
European competition law today derives mostly from articles 101 to 109 of the Treaty on the
Functioning of the European Union(TFEU), as well as a series of Regulations and Directives
directed by the European Commission.

India in last decade has adopted competition regime which is globally accepted. The Indian law is
more or less similar to the U.K law which understandable because both countries share the
common law legal system. Now if one analyzes the UK competition law of 1998 it is nothing but
basically reproduction of article 101 and 102 of the EU treaty. Section 6 of the United Kingdom
act specially provides that when the U.K commission applies the local competition law on its
subjects under its local jurisdiction it must do so consistently with the jurisprudence of EU
commission which is in Luxemburg. The net effect is this is that the U. K’s law is based on EU
law and Indian law is based on U.K law hence, by interpretation one can conclude that the Indian
law is based on EU law and in so far EU jurisprudence can be considered to resolve competition
law issue by the Competition Commission of India.

This research paper would be analyzing enforcement and regulation of Mergers & Accusations or
in other words merger control under competition law in three jurisdictions- India, EU and USA
giving a comparative breakdown of the antitrust law in these jurisdictions along with conclusive
suggestions.

RESEARCH METHODOLOGY

The present research paper will be a doctrinal study. The researcher will refer some case studies
to navigate the present situation of antitrust policies in India and foreign jurisdictions i.e. United
States of America & European Union. Researcher will also suggest certain recommendation based
on the research conclusion.

STATEMENT OF THE PROBLEM

Competition law is a very complex discipline of law where one can see amalgamation of law,
economics going hand in hand. The study is basically a trans-national in nature where the
researcher will be dealing with the enforcement of competition law in all three jurisdictions. The
word “Competition” is not defined in law but is commonly understood to mean the “process of
rivalry” to attract more consumers or for profit maximization. Competition law deals with market
fiascos on reason of restrictive commercial practices in the market. The fundamental creed behind
competition law & policy is that all enterprises (notwithstanding of profit or nonprofit) in the
markets need to adopt fair practices while doing business.

More legally speaking Competition law is a law that promotes or seeks to maintain market
competition by regulating anti-competitive conduct by companies. Competition law is
implemented through public and private enforcement. Competition law is known as "antitrust law"
in the United States for historical reasons, and as "anti-monopoly law" in China and Russia.

The term 'control' in merger control does not have a singular definition under different laws. Given
the broad interpretation of 'control' and lack of formal guidance, one is frequently faced with
queries pertaining to what may constitute 'control' for a particular regulator. There are a number
of statutes which entail enquiry into the domain of 'control'1. However, the definition of 'control'
codified under different laws are very broad, and are either identical to or similar to the definition
of control as provided under the extant FDI Policy:

"Control shall include the right to appoint a majority of the directors or to control the management
or policy decisions including by virtue of their shareholding or management rights or shareholders
agreements or voting agreements."

The term 'control' is defined in explanation to Section 5 of the Competition Act, 2002
(Competition Act). The acquisition of control of an enterprise (which meets the thresholds of
turnover / asset size as prescribed in the Competition Act) is understood as a 'combination' for
purposes of the Competition Act. Such 'combinations' are regulated under the Competition Act
and are required to comply with certain tests such as the proposed combination will not adversely
affect combination in the relevant market in India.2 It is in this background that the aforesaid

2
If a proposed acquisition results into formation of a 'combination' under Section 5 of the Competition Act, the same
needs to be approved by the CCI as per Section 6 of the Act to determine whether or not such a 'combination' would
cause an 'appreciable adverse effect on competition' within the relevant market in India.
explanation defines 'control' as: "control includes controlling the affairs or management by one
or more enterprises, either jointly or singly, over another group or enterprise...."

Merger control provisions has always been an issue which has been dealt by jurisdiction in their
own manner. The major challenge for the researcher is to deal with the problem of enforcement
A bear reading of substantial law of all jurisdiction may seems similar but they are differently
enforced.

RESEARCH AREA

The research area for the purpose of this projected assignment will be Mergers Control under
Competition/ Anti- Trust Law.

RESEARCH ISSUE

The research issue for the purpose of this projected assignment are as follow:

1. Evolution of merger control provisions under competition law vis a vis USA, India & E.U
2. Comparive analysis of of Competition Law in India, EU & USA with reference to Merger
Control provisions under the Competition law.

RESEARCH QUESTION/S

The research questions for the purpose of this projected assignment are as follow:

 Whether the evolution of competition law India is different from that in the US or the
European Union?
 Whether the enforcement of Merger Control provisions under the competition law
different from that in the US or the European Union?
 What is the relevant legislation for merger control under competition law and who
enforces it?

HYPOTHESIS

The hypotheses for the purpose of this projected assignment are as follow:
  Yes, according to the researcher the evolution of competition law India is different from
that in the US or the European Union.
 Yes, according to the researcher the enforcement of Merger Control provisions
competition law different from that in the US or the European Union.

RESEARCH TOOLS

The Research tools for the purpose of this projected assignment are as follow:

i. Books
ii. Competition law journals
iii. Online databases
iv. Supreme court of India judgments
v. Supreme court of United States of America judgments
vi. Legislations
vii. Competition authorities’ rules and regulations

CHAPTER II

BRIEF REVIEW OF THE EXISTING LITERATURE

This literature review will discuss the competition law in global sense. The research review of
literature will also show various comparative studies done by various authorities in order to
compare Indian competition law with the world.

The research will begin with the discussion of competition law by tracing back its history. Singh (1971)
discussed the evolution of anti-trust law of the united states and compared it with the Indian law.3 Gautam
(2012)4 in a study discussed the need of the new competition law post New Economic Policy of 1991 and
How competition law regime is different from the old regime by conducting a comparative analysis between
Competition Act and MRTP Act & the introduction to the merger control provisions in the new Act.

3
Singh, S. N. “ANTI-TRUST LAWS OF THE UNITED STATES OF AMERICA.” Journal of the Indian Law
Institute, vol. 13, no. 4, 1971, pp. 581–594. JSTOR, www.jstor.org/stable/43950299.

4
Gautam, Shashank, The Competition Law of India (January 2, 2012). Available at
SSRN: https://ssrn.com/abstract=2234879 or http://dx.doi.org/10.2139/ssrn.2234879
After spreading light on the historical perspective, Nishith Desai Associates (2013)5 the analysis, the
enforcement by the competition commission of India in disposal of various Merger Control issues.

After anaylising the current position of our India enforcer of competition law, the researcher will conduct
a trans- nation study where the researcher will compare Indian competition regime with European
Competition law and American Antitrust regime. Pierce (2017)6 Professor Pierce is a well-known authority
on Anti-trust law. He in his paper compares the oldest system of competition law — the U.S. system —
with one of the youngest systems of competition law — the Indian system. Being the oldest system, the
American antitrust law is considered to be the bedrock for all laws in competition arena. The most well-
known and well drafted law on competition law is followed in European Union. Jain (2011)7 is a practicing
Advocate of the Supreme Court of India. In his paper he explains regulatory structure under EC competition
laws and compare it with India. He also explains how the competition law rules are of immense importance
for optimal functioning of the economic variables as they not only vouchsafe against the monopolistic and
exploitative tendencies of the bigger market players, they are also instrumental in providing the smaller and
newer entrants in the markets to work towards achieving self-sustaining levels. Patwari (2014)8 tried to
provide us a complete transnational study on competition law between E.U, India and United States of
America.

CHAPTER III

HISTORICAL PROSPECTIVE AND EVOLUTION OF COMPETITION LAW

A. HISTORY AND EVOLUTION OF COMPETITION LAW IN UNITED STATES OF

AMERICA

5
Nishith Desai Associates “Competition Law in India-A Report on Jurisprudential Trends and Way Forward” (April,
2013). Available at
http://www.nishithdesai.com/fileadmin/user_upload/pdfs/Research%20Papers/Competition%20Law%20in%20Ind
ia.pdf

6
Pierce, Richard J., Comparing the Competition Law Regimes of the United States and India (2017). GWU Law
School Public Law Research Paper No. 2017-27; GWU Legal Studies Research Paper No. 2017-27. Available at
SSRN: https://ssrn.com/abstract=2951944

7
Jain, Tarun, Regulatory Structure under EC Competition Laws: Lessons for India (December 1, 2011).
Manupatra Competition Law Reports, Vols. 2(3), pp. B289-B297, 2011. Available at
SSRN: https://ssrn.com/abstract=1260148

8
Patwari, Sumita, Competition Law - A Trans-National Perspective (January 18, 2014). Available at
SSRN: https://ssrn.com/abstract=2381195 or http://dx.doi.org/10.2139/ssrn.2381195
 "If we will not endure a king as a political power, we should not endure a king over the
production, transportation, and sale of any of the necessaries of life."
- SENATOR JOHN SHERMAN
-
As mentioned above, the history of competition law is usually traced back to the enactment
of Sherman Act (1890) and the Clayton Act (1914) both are legislated in the United States9.
These acts were directed against the power and predations of the large trusts formed in the
wake of the Industrial Revolution where a small control group acquired and held the stock
of competitors, usually in asset, and controlled their business.
United States antitrust law is the body of laws that prohibits anti-competitive behavior
(monopoly) and unfair business practices. Antitrust laws are intended to encourage
competition in the marketplace.

Section 7 of the Clayton Act, enacted in 1914 and amended in 1950, is the principal US
antitrust statute governing mergers and acquisitions. Section 7 prohibits acquisitions of
assets or stock where ‘the effect of such acquisition may be substantially to lessen
competition, or to tend to create a monopoly’. Transactions may also be challenged under
section 1 or 2 of the Sherman Act as unreasonable restraints of trade or as attempts at
monopolisation. The Federal Trade Commission (the FTC) also has the authority under
section 5 of the FTC Act to challenge a transaction as an ‘unfair method of competition’.
The Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the HSR Act) was enacted to
give the federal agencies responsible for reviewing the antitrust implications of mergers
and acquisitions - the Federal Trade Commission and the Antitrust Division of the
Department of Justice (collectively, ‘the antitrust agencies’ or ‘the agencies’) - the
opportunity to review the antitrust issues presented by certain acquisitions of assets, non-
corporate interests or voting securities before those acquisitions are completed. Pursuant
to congressional authorisation, the FTC, with the agreement of the Antitrust Division, has
promulgated detailed and complex rules (the Rules) governing pre-merger notification
under the HSR Act. Both the HSR Act and the Rules were amended significantly in

9
www.ftc.gov.us
 February 2001, and the Rules again underwent significant revision in 2005 and 2011. The
antitrust agencies also have jurisdiction to investigate and challenge transactions under the
US antitrust laws noted above, whether or not they have been notified under the HSR Act
and whether or not they have been consummated.
The Antitrust Division has exclusive federal responsibility for enforcing the Sherman Act;
the FTC is an independent administrative agency and has exclusive responsibility for
enforcing the FTC Act and joint authority (with the Antitrust Division) over enforcement
of the Clayton Act. Although both agencies have jurisdiction to enforce the antitrust laws,
any given merger or acquisition will be examined by only one of the two bodies. Which
agency will concern itself with any particular transaction is decided by informal
discussions between the two agencies and can often be predicted (but not with certainty)
on the basis of the agency’s relative familiarity with the industry or companies involved.
Mergers and acquisitions can, under some circumstances, also be challenged by private
parties and by state attorneys general. The risk of a challenge by private parties has been
reduced somewhat by court decisions requiring that such challengers demonstrate a threat
that the private party challenger will be injured by the anticompetitive aspects of the
transaction (rather than, for example, by the new firm’s enhanced effectiveness as a
competitor). In situations where a private party has standing to challenge a transaction, that
party can seek the same remedies (including divestiture) that are available to the
government, although a private party may be subject to certain equitable defences (such as
laches and ‘unclean hands’), which might protect a consummated transaction from attack.

B. HISTORY AND EVOLUTION OF COMPETITION LAW IN INDIA

Post Indian Independence in 1947, for the “better part of half a century thereafter, adopted
and followed laws comprising what are known as Command-and-Control laws, rules,
regulations and executive orders”.10 The competition law of India, namely, the
Monopolies and Restrictive Trade Practices Act, 1969 (hereinafter referred as ‘MRTP

10
Arun Kumar Singh and Anil Kumar, Genesis of Competition Law in India. Also available at:-
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2552486
 Act’) was one such. 11 It was in 1991 that widespread economic reforms were undertaken
and consequently the march from Command-and-Control economy to an economy based
more on free market principles commenced its stride.12 As is true of many countries,
economic liberalization has taken root in India and the need for an effective competition
regime has also been recognized and then Competition Act, 2002 came into existence.13
Primarily Competition Law for India was triggered by Articles 38 14 and 3915 of the
Constitution of India. These Articles are a part of the Directive Principles of State Policy.
Articles 38 and 39 of the Constitution of India mandate, inter alia, that the State shall strive
to promote the welfare of the people by securing and protecting as effectively, as it may, a
social order in which justice social, economic and political shall inform all the institutions
of the national life, and the State shall, in particular, direct its policy towards securing.16

In October 1999, the Government of India appointed a High-Level Committee on

Competition Policy and Competition Law to advise a modern competition law for the
country in line with international developments and to suggest a legislative framework,
which may entail a new law or appropriate amendments to the MRTP Act. The Committee
presented its Competition Policy report to the Government in May 2000. The draft
competition law was drafted and presented to the Government in November 2000. After
some refinements, following extensive consultations and discussions with all interested

11
Leela kumar, MRTP Commission and Competition Commission of India, Also available at:-
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2429261
12
Ibid
13
Sethi, Rajat, and Simran Dhir. “Anti-Competitive Agreements Under the Competition Act, 2002.” National Law
School of India Review, vol. 24, no. 2, 2013, pp. 32–49. JSTOR, www.jstor.org/stable/44283760.

14
Article 38 of the Indian Constitution-State to secure a social order for the promotion of welfare of the people
available at : http://lawmin.nic.in/olwing/coi/coi-english/coi-4March2016.pdf
15
Article 39 of the Indian Constitution- Certain principles of policy to be followed by the State available at :
http://lawmin.nic.in/olwing/coi/coi-english/coi-4March2016.pdf
16
Why India adopted a new competition law also available at: - http://www.cuts-international.org/pdf/wiancl.pdf
 parties, the Parliament passed in December 2002 the new law, namely, the Competition
Act, 200217.
Competition Act, 2002 is a completely new take on the antitrust law. Some of the anti-
competition practices like cartels, predatory pricing, bid rigging etc. we’re not specifically
mentioned in the MRTP Act but the MRTP Commission, over the years, had attempted to
fit such offences under one or more of its sections by way of interpretation of the language
but the Competition Act, 2002 successfully deliver a well-structured framework where all
anti-competition practices are well enshrined in section 3, section 4, section 5 & section 6
of the Act. 18
Most nations in the world have enacted competition/anti-trust laws to protect their free-
market economies. The objective of competition law is provide limit to the role of market
power that might result from substantial monopolisation of a particular industry. At the
first instance it may seem that being big or in a dominant position is bad, the Competition
Act is very clear on this aspect, being big is not bad the problem arises when an enterprise
( in case of abuse of dominance) or a cartel (in case of an Anti-competitive agreement)
start abusing its position in order to again more market power and stat creating barrier for
entering for others. , This is per se is one of the change in the outlook of the Competition
Commission of India from that of the erstwhile Monopolies and Restrictive Trade Practice
Commission. However, because of the control exerted by a dominant undertaking over
price and other economic elements there are economic productivity losses to society and
product value and diversity may also be affected. Thus, there is a need of an effective Anti-
trust policy to protect markets from monopolisation and other Anti- competitive practices.
Apart from Abuse of Dominance and Anti- Competitive agreements a good. competition
law regime must have operative merger control provisions to ensure that any transaction
does not lead to formation of a dominant undertaking. The erstwhile regime did not have
merger control provisions, which was one of the major downsides. The present outlook of

Vijay Kumar Singh, ―Competition Law & Policy in India: The Journey in a Decade‖, accessed at
17

www.nujslawreview.org
18
Bhattacharjea, Aditya. “Amending India's Competition Act.” Economic and Political Weekly, vol. 41, no. 41, 2006,
pp. 4314–4317. JSTOR, www.jstor.org/stable/4418800.
the CCI is to look at the effects of the enterprises to see whether the behaviour of enterprises
cause any anti-competitive effect on the markets in India.
Competition law in India is governed by the Competition Act 2002 (the Competition Act)
and regulations and guidance notes issued thereunder. Sections 5 and 6 of the Competition
Act require the mandatory pre-notification of all acquisitions, mergers and amalgamations
that cross specified asset or turnover thresholds (collectively described as ‘combinations’)
to the Competition Commission of India (CCI), which is the enforcement agency.

Any person aggrieved by an order of the CCI approving or prohibiting a transaction may
appeal to the National Company Law Appellate Tribunal (NCLAT) within 60 days.
Appeals previously lay before the COMPAT, which has been dissolved as of 26 May 2017.
Orders of the COMPAT and NCLAT can be further appealed to the Supreme Court of
India.
Section 5 of the Competition Act covers three broad categories of combinations:
 First, the acquisition by one or more persons of control, shares, voting rights or
assets of one or more enterprises, where the parties, or the group to which the target
will belong post-acquisition, meet specified assets or turnover thresholds (see
below). Acquisitions not involving a change of control are also caught in this
category.
 Second, the acquisition by a person of control over an enterprise where the person
acquiring control already has direct or indirect control over another enterprise
engaged in the production, distribution or trading of similar or identical or
substitutable goods, or in the provision of a similar or identical or substitutable
service, where the parties, or the group to which the target will belong post-
acquisition, meet specified assets or turnover thresholds (see below).
 Third, mergers or amalgamations, where the enterprise remaining, or enterprise
created, or the group to which the enterprise will belong after the merger or
amalgamation, meets specified assets or turnover thresholds.
In order to prevent the merger control regime from becoming unduly onerous, the CCI
introduced, in Schedule I of the CCI (Procedure in Regard to the Transaction of Business
Relating to Combinations) Regulations 2011 (the Regulations), categories of transactions
that are ‘ordinarily’ not likely to cause an appreciable adverse effect on competition
(AAEC) in the relevant market in India and, therefore, are not ‘normally’ required to be
notified to the CCI. These transactions are:
Direct or indirect acquisitions of shares or voting rights entitling the acquirer to hold less
than 25 per cent of the shares or voting rights of a target company (including through a
shareholders’ agreement or articles of association), solely for investment purposes or in the
ordinary course of business, provided that this does not lead to the acquisition of control.
The acquisition of less than 10 per cent of total shares or voting rights will be treated solely
as an investment if:
 The acquirer is able to exercise only the rights of ordinary shareholders exercisable
to the extent of their respective shareholding;
 The acquirer does not have, or have a right to have, or intend to have a seat on the
board of the target enterprise; and
 The acquirer does not intend to participate in the management or affairs of the target
enterprise;
 An acquisition of additional shares or voting rights of an enterprise by the acquirer
or its group, where the acquirer or its group, prior to the acquisition, already holds
25 per cent or more shares or voting rights of the enterprise, but does not hold 50
per cent or more of the shares or voting rights of the enterprise, either prior to or
after such acquisition. This exemption is not available if the acquisition results in
the acquisition of sole or joint control of such enterprise by the acquirer or the
group;
 Acquisition of shares or voting rights where the acquirer already holds 50 per cent
or more of the shares or voting rights in the target enterprise, except in the cases
where the transaction results in a transfer from joint control to sole control;
 Acquisition of assets not directly related to the business of the acquirer or made
solely as an investment or in the ordinary course of business, not leading to control
of the target enterprise, except where the assets represent substantial business
operations of the target enterprise in a particular location or for a particular product
or service, irrespective of whether such assets are organised as a separate legal
entity or not;
  An acquisition of shares or voting rights or assets by one person or enterprise of
another person or enterprise within the same group, except in cases where the
acquired enterprise is jointly controlled by enterprises that are not part of the same
group; and
 A merger or amalgamation of two enterprises where one of the enterprises has more
than 50 per cent shares or voting rights of the other enterprise, or a merger or
amalgamation of enterprises in which more than 50 per cent shares or voting rights
in each of such enterprises are held by enterprises within the same group. This
exemption is not available if the transaction results in transfer from joint control to
sole control;
 Acquisitions of stock-in-trade, raw materials, stores and spares, trade receivables
and other similar current assets in the ordinary course of business
 Acquisition of shares or voting rights pursuant to a buyback or a bonus issue or a
stock split or consolidation of face value of shares or subscription to rights issue,
not leading to an acquisition of control. Note, care will need to be taken in case of
an acquisition of control through a renunciation of rights;
 Amended or renewed tender offer where a notice has been filed by the party making
such an offer;
 Acquisition of shares, control, voting rights or assets by a purchaser approved by
the CCI (for instance, in case of a divestiture); and
 Acquisition of shares or voting rights by a person acting as a securities underwriter
or a registered stock broker on behalf of its clients, in the ordinary course of its
business and in the process of underwriting or stockbroking.

C. HISTORY AND EVOLUTION OF COMPETITION LAW IN EUROPEAN UNION

One of the paramount aims of the founding fathers of the European Community - statesmen
around Jean Monnet and Robert Schuman - was the establishment of a Single Market. To
achieve this, a compatible, transparent and fairly standardised regulatory framework for
Competition Law had to be created. The constitutive legislative act was Council Regulation
17/62.
The Commission still retained an important role in the enforcement mechanism, as the co-
ordinating force in the newly created European Competition Network (ECN). This Network,
made up of the national bodies plus the Commission, manages the flow of information
between NCAs and maintains the coherence and integrity of the system. At the time,
Competition Commissioner Mario Monti hailed this regulation as one that will
'revolutionise' the enforcement of Arts 101 & 102. Since May 2004, all NCAs and national
courts are empowered to fully apply the Competition provisions of the EC Treaty. In its
2005 report, the OECD lauded the modernisation effort as promising, and noted that
decentralisation helps to redirect resources so the DG Competition can concentrate on
complex, Community-wide investigations. Yet most recent developments shed doubt on
the efficacy of the new arrangements. For instance, on 20 December 2006, the Commission
publicly backed down from 'unbundling' French and German energy giants, facing tough
opposition from Member State governments. Another legal battle is currently ongoing over
the merger, where the Commission has been trying to enforce the free movement of capital,
while Spain firmly protects its perceived national interests. It remains to be seen whether
NCAs will be willing to challenge their own national 'champion companies' under EC
Competition Law, or whether patriotic feelings prevail.
The fundamental objective of EU competition rules is to prevent distortion of competition.
This is not, however, an end in itself. It is rather a condition for achieving a free and
dynamic internal market and is one of several instruments promoting general economic
welfare. Since the Lisbon Treaty came into force, this objective has no longer been set out
expressly in Article 3 TFEU but subsumed into the term ‘internal market’ under Protocol
No 27. This is not expected to have any practical implications, as no changes have been
made to the competition rules themselves. The conditions for the application of these rules
and their legal effects have become so entrenched in the Commission’s administrative
practice over many years, and in the case law of the European courts, that they may be
regarded as fixed.
Regulation (EC) 139/2004 on the control of concentrations between undertakings (Merger
Regulation) provides the regulatory framework for the assessment of mergers, acquisitions
and certain joint ventures (collectively concentrations) that meet prescribed turnover
thresholds and therefore have an "EU dimension". The European Commission
(Commission) has exclusive jurisdiction within the European Economic Area (EEA) to
review concentrations with an EU dimension.
The Merger Regulation applies to any "concentration" that has an EU dimension. A
"concentration" is defined as a lasting change in the control of an undertaking. "Control"
is defined as the ability to exercise decisive influence over an undertaking. A change of
control, and so a concentration, can arise in the following situations:
 The merger of two or more previously independent undertakings (or parts of them).
 The acquisition by one or more undertakings, directly or indirectly, of the whole or
parts of another undertaking.
 The creation of a full-function joint venture
 There are no specific shareholding or other quantitative thresholds to measure
whether a change of control has occurred.
 Acquisitions of both sole and joint control, as well as changes from sole control to
joint control (and vice versa), can constitute a concentration.

Sole control is typically acquired where an undertaking acquires a majority of the voting
rights of another undertaking, which gives the acquiring undertaking the power to exercise
decisive influence over the target undertaking. An acquisition of less than a 100% stake
(and, in exceptional cases, even a minority stake) could give rise to sole control if it results
in the acquiring undertaking being solely able to determine the key strategic business
decisions of the target over the potential objections of the other shareholders. This depends
on the rights conferred by the shareholding compared to the rights enjoyed by the other
minority shareholders.
Where two or more undertakings can each exercise decisive influence over another
undertaking, they will be deemed to have joint control of that undertaking. This would be
the case, for example, where two or more shareholders are each able to block actions
determining the key strategic business decisions of an undertaking (for example, its
business plan, operating budget and appointment of its senior management). This can be
contrasted with veto rights normally accorded to minority shareholders to protect their
financial interests (for example, over changes to the corporate statute, major investments
or liquidation), which are usually not sufficient to confer joint control. The most common
 example of joint control is a 50-50 joint venture; however, joint control can arise under any
shareholding structure. In theory, even a shareholder with a small stake could have joint
control if its consent is required to take key business decisions.
Whether a transaction constitutes an acquisition of sole control, of joint control or of no
control must be determined on a case-by-case basis with regards to the contractual and non-
contractual rights of the acquiring shareholder.
Concentrations which meet either of the two turnover thresholds set out below have an EU
dimension and must be notified to the Commission, unless they satisfy the two-thirds
exception. These thresholds are solely turnover based. The nationalities of the parties,
whether or not they have assets within the EU, and whether or not the transaction is likely
to have any impact on competition in the EEA, are irrelevant to the question of whether or
not a notification must be made.
The main threshold is met when both the:
 Combined aggregate worldwide turnover of all the undertakings concerned exceeds
EUR5 billion.
 Aggregate EU wide turnover of each of at least two of the undertakings concerned
exceeds EUR250 million.
The alternative threshold is met if:
 The combined aggregate worldwide turnover of all the undertakings concerned
exceeds EUR2.5 billion.
 In each of at least three member states, the combined aggregate turnover of all the
undertakings concerned exceeds EUR100 million.
 In each of at least the three member states included for the purpose of the above
criterion, the aggregate turnover of each of at least two of the undertakings
concerned exceeds EUR25 million.
 The aggregate EU wide turnover of at least two of the undertakings concerned
exceeds EUR100 million.

CHAPTER IV

ENFORCEMENT OF COMPETITION LAW IN EC, USA AND COMPARISON WITH INDIA

A. COMPARISON OF ENFORCEMENT MECHANISM OF EC AND INDIA:

India in last decade has adopted competition regime which is globally accepted. The Indian law is
more or less similar to the U.K law which understandable because both countries share the common
law legal system. Now if one analyzes the UK competition law of 1998 it is nothing but basically
reproduction of article 101 and 102 of the EU treaty. Section 6 of the United Kingdom act specially
provides that when the U.K commission apply the local competition law on its subjects under its
local jurisdiction it must do so consistently with the jurisprudence of EU commission which is in
Luxemburg. The net effect is this is that the U. K’s law is based on EU law and Indian law is based
on U.K law hence, by interpretation one can conclude that the Indian law is based on EU law and
in so far EU jurisprudence can be considered to resolve competition law issue by the Competition
Commission of India.
It is true that the Competition Act of India is based on EC law and U.K law to a very large extent
but there are certain differences which are there between the enforcement mechanism of EC and
India. Following are few of them:

1. Regulation1/2003 of EC provides for Article 9 whereby if the undertakings concerned offer

commitments to meet the concerns expressed to them by the Commission in its preliminary
assessment, the Commission may by decision make those commitments binding on the
undertakings. Such an exercise amounts to saving of time of the commission. However,
the Competition Act 2002 does not provide for any such mechanism.

2. Article 14 of the Regulation provides that the Commission should before taking any
decision should consult Advisory Committee on Restrictive Practices and Dominant
Position. The Committee consist of members who are competent in competition matters.
However, there is no such provision for consultation in the Competition
Act but Section 17 of the Act provides that the Commission can appoint experts and
professionals for the proper functioning of the commission.

3. Further Article 20 and 21 of the Regulation provides the Commission with the power to
inspect the undertakings and the associations of the undertakings and for this purpose the
officer so authorized can enter the premises of the undertaking, examine the books and
other related records, seal the business premises etc. Further the Commission can also
inspect any other place apart from undertaking premises like homes of directors, managers
and other member staff of the undertakings. But in Competition Act no such provision for
 inspection is provided. The Commission can only order the Director General to investigate
and Director General while make investigation has power similar to Commission provided
under Section 36(2).

4. Apart from the imposition of penalty under Article 23, 1/2003 Regulation of EC also talks
of concept of periodic penalty which provides for compelling the undertaking to abide by
the decision given by the commission under Article 7, 8, 9, 17, 18(3), 20(4) but no such
compelling mechanism is provided under the Indian Competition Act.

Hence above were some of the major differences between the enforcement mechanisms of EC and
India.

B. COMPARISON OF ENFORCEMENT MECHANISM OF USA AND INDIA:

Coming on to the comparison of enforcement mechanism of United States of America all that
jurisprudence of United states which is based on the Sherman act and federal trade commission act.
But the problem with the enforcement of competition law in the United states that one doesn’t see
a continuous flow of decisions that get published and because they don’t publish the decisions one
doesn’t witness the appeals to the American courts because as a general rule what happens in
United states are consent degrees and a settlement agreements between the parties. Similarly, in
case of merger control there is no decisions hence you don’t get the final judgement all we know it
that merger is clear, so the general public doesn’t witness the reasons and circumstances as to why
a merger was cleared. Whereas under the EU law and Indian law where the system provides for a
higher degree of transparency. As opposed to the Indian framework comprising single legislation
and single agency, the US enforcement framework comprises multiple agencies and legislation. In
the US, two federal agencies bear the major responsibility of enforcing, the Antitrust Division of
the US Department of Justice and the Federal Trade Commission. The former is part of the
executive branch of the government and the latter is an independent administrative agency, similar
to the CCI. The Sherman Act is the oldest federal antitrust statute, enacted in 1890 and deals
primarily with anti-competitive agreements and monopoly exercised by firms. The Clayton Act,
1914 deals with specific business practices including mergers, price discrimination and tying,
exclusive supply etc. The DoJ and FTC independently enforce the Sherman Act and the Clayton
Act. However, if the violation entails criminal prosecution, then the DoJ has the exclusive authority
to prosecute.
 The basic elements of the Indian competition law regime are better than their U.S. counterparts in
several important ways. First, unlike the FTC and DOJ, the CCI has the power to issue substantive
rules to implement the CA. Second, unlike the U.S., India has avoided the risk that private parties
will create bad legal precedents by litigating cases before courts of general jurisdiction whose
judges lack the expertise required to consider critically the often-implausible theories the private
parties urge the courts to adopt. India has accomplished that both by conferring exclusive
jurisdiction on institutions with appropriate expertise and by declining to allow private parties to
initiate competition law proceedings. Third, the Indian Competition Commission has the power to
determine its own rules of procedure. Used wisely, that power allows the Commission to adopt
procedures that are adequate to the task but do not produce the interminable delays that plague the
decision-making processes of the FTC and U.S. courts.
The Indian Supreme Court has issued two opinions that establish basic ground rules applicable to
the Competition Commission. In Rangi International Ltd. v. Nova Scotia Bank and Others19, the
Court held that the Commission must state reasons to support its actions. That requirement is
critical to the success of any agency-administered legal regime. Courts, the Prime Minister,
Parliament, and the public must have a means of understanding why the Commission acted as it
did in each case.
In Competition Commission of India v. Steel Authority of India Limited and Another 20, the Court
held that all proceedings before the Commission must be completed “most expeditiously” and in a
period of time even shorter than the demanding decisional deadlines stated in the applicable statute.
The Commission may find this mandate difficult, or impossible, to implement, and the Supreme
Court may experience great difficulty enforcing the mandate.

CHAPER: VI

CONCLUDING REMARKS

Competition Law is a complex piece of legislation which is an amalgamation of the law, economics and
administrative action intended to favour competition in the economy. Since competition is seen as critical
to economic development, competition law seeks to protect this competitiveness in the economy. The
underlying theory behind competition law is the positive effect of competition in an economy's market,

19
(2013) 7 Supreme Court Cases 160

20
(2010) 10 Supreme Court Cases 744,
acting as a safeguard against misuse of economic power. The link between competition law and economic
development emphasized over and over again seems rather undeniable and the need for competition law
seems like the order of the day. The operation of competition law by prevention of anti-competitive
agreements, prohibiting abuse of dominant position by firms and regulation of combinations which might
adversely affect competition in the economy, thus seems crucial for India. It is therefore keeping that in
mind that the Indian Parliament enacted the Competition Act, 2002. The preamble and the statement of
objects and reasons of the Act, also evidence that the broad economic development objectives were a
consideration to adopting the Act.

Mergers and acquisitions are essential part of today’s corporate world and arguably belong among the
most complex business transactions. As such they are potentially problematic, and therefore interesting,
in several legal areas. As the management or majority shareholder seeks to proceed with such transaction,
there are two groups of subjects, whose interests might be jeopardized by it. The first one are
stakeholders, especially minority shareholders, creditors, and employees. The second one is the market
itself.

U.S. merger law has, not surprisingly given its 122 year history, changed dramatically both procedurally
and substantively. In recent years, economic learning has advanced while U.S. antitrust policy has become
more focused on consumer welfare and efficiencies as goals. The understanding of what signals likely
competitive harm has evolved, and as a result cases that the government litigated all the way to the
Supreme Court forty years ago would go unchallenged today.

India, in its nascent stage of merger review and enforcement, must of course develop its own merger
enforcement processes, priorities, and goals specific to its growing economy in an increasingly borderless
commercial world. It certainly can and perhaps should be informed by the development of merger policy
in the United States and other "mature" competition jurisdictions, both for replication where appropriate
and for mistake avoidance. With its long history, U.S. merger law provides plenty of fodder for both.

After anaylising the research questions the researcher to the following conclusion:

i. To the answer to the second question is positive because the Indian competition law is just a decade
old. It is natural that the Indian law is far nascent than the fully developed laws in USA and EU.

ii. To the answer of the third question is also positive as there is a lot of difference in enforcement of
merger control provisions of competition law in India and USA & EU because it is the matter of
 the enforcement agency to decide the procedure of enforcement, even if the law is almost same still
the mode of enforcement are different.

BIBLIOGRAPHY

BOOKS

1. SM Dugar, ―GUIDE TO COMPETITION LAW‖ 5th Edn 2010, Vol 1, Lexis Nexis
Butterwoths Wadhwa Nagpur;

2. Richard Wish, ―COMPETITION LAW‖,8 Edn, Oxford University Press;

3. Ramappa T., Competition Law in India, (Oxford India Paperbacks, New Delhi, 2009)

4. Douglas F. Broder, A guide to US Antitrust Law, 2005, Sweet & Maxwell Ltd.

5. Singh, Rahul,‗The Teeter-Totter of Regulation and Competition: Balancing the Indian

6. Competition Commission with the Sectoral Regulators‘.

ARTICLES

1. Singh, S. N. “ANTI-TRUST LAWS OF THE UNITED STATES OF AMERICA.” Journal of the

Indian Law Institute, vol. 13, no. 4, 1971, pp. 581–594. JSTOR,
www.jstor.org/stable/43950299.

2. Danov, Mihail. “EU COMPETITION LAW ENFORCEMENT: IS BRUSSELS I SUITED TO

DEALING WITH ALL THE CHALLENGES?” The International and Comparative Law
Quarterly, vol. 61, no. 1, 2012, pp. 27–54., www.jstor.org/stable/41350135.

3. Van Cleynenbreugel, Pieter. “EU Competition Law.” East African Community Law:
Institutional, Substantive and Comparative EU Aspects, edited by Emmanuel Ugirashebuja et
al., Brill, LEIDEN; BOSTON, 2017, pp. 454–466. JSTOR,
www.jstor.org/stable/10.1163/j.ctt1w76vj2.32.

4. Van Cleynenbreugel, Pieter. “EU Competition Law.” East African Community Law:
Institutional, Substantive and Comparative EU Aspects, edited by Emmanuel Ugirashebuja et
al., Brill, LEIDEN; BOSTON, 2017, pp. 454–466. JSTOR,
www.jstor.org/stable/10.1163/j.ctt1w76vj2.32.
5. Pierce, Richard J. “COMPARING THE COMPETITION LAW REGIMES OF THE UNITED
STATES AND INDIA.” National Law School of India Review, vol. 29, no. 1, 2017, pp. 48–
69. JSTOR, www.jstor.org/stable/26459200.

6. Bhattacharjea, Aditya. “India's Competition Policy: An Assessment.” Economic and Political

Weekly, vol. 38, no. 34, 2003, pp. 3561–3574. JSTOR, www.jstor.org/stable/4413938.

7. Sethi, Rajat, and Simran Dhir. “Anti-Competitive Agreements Under the Competition Act,
2002.” National Law School of India Review, vol. 24, no. 2, 2013, pp. 32–49. JSTOR,
www.jstor.org/stable/44283760.

8. Bhattacharjea, Aditya. “Amending India's Competition Act.” Economic and Political Weekly,
vol. 41, no. 41, 2006, pp. 4314–4317. JSTOR, www.jstor.org/stable/4418800.

9. Chauhan, B.S. “INDIAN COMPETITION LAW: GLOBAL CONTEXT.” Journal of the Indian
Law Institute, vol. 54, no. 3, 2012, pp. 315–323. JSTOR, www.jstor.org/stable/44782475.

10. Fidler, David P. “Competition Law and International Relations.” The International and
Comparative Law Quarterly, vol. 41, no. 3, 1992, pp. 563–589. JSTOR,
www.jstor.org/stable/760547.

11. Maher, Imelda. “Re-Imagining the Story of European Competition Law.” Oxford Journal of
Legal Studies, vol. 20, no. 1, 2000, pp. 155–166. JSTOR, www.jstor.org/stable/20468311.

12. Maher, Imelda. “Competition Law in the International Domain: Networks as a New Form of
Governance.” Journal of Law and Society, vol. 29, no. 1, 2002, pp. 111–136. JSTOR,
www.jstor.org/stable/4489083.