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 power to investigate possible violations of antitrust legislation and issue orders
1
Paul Cook,”Competition and its Regulation: Key Issues”, accessed at
http://www.competitionregulation.org.uk/publications/working_papers/wp2.pdf
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
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
aforesaid 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

cause an 'appreciable adverse effect on competition' within the relevant market in India.
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

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
analysis between Competition Act and MRTP Act & the introduction to the merger control provisions in
the new Act.

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%20India.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

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
 interested 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 the CCI is to look at the effects of the

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.
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 Others 19,
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.
20
In Competition Commission of India v. Steel Authority of India Limited and Another , 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.
19
(2013) 7 Supreme Court Cases 160

20
(2010) 10 Supreme Court Cases 744,
 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,
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‖ 5 th 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‘.

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