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DATA BASED MERGERS AND ACQUISITION IN INDIA: FROM THE

LENS OF COMPETITION LAW

Submitted by:
Keshav Pandey (190401417049)

B.A.LLB(HONS.)
Batch 2019-2024

Under the supervision of:

Prof. Professor Harikrishnan
Seminar Paper 2: Competition Law SLAW 413

Alliance School of Law

Alliance University, Bangalore
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Schedule of Content

1. Introduction……………………………………………………………………………2

a. Background…………………………………………………………………....2

b. Literature Review……………………………………………………………..4

c. Statement of Problem…………………………………………………………7

d. Scope of Study………………………………………………………………..7

e. Objectives……………………………………………………………………..7

f. Research Question…………………………………………………………….8

g. Hypothesis……………………………………………………………………..8

h. Methodology…………………………………………………………………...8

i. Chapterization………………………………………………………………….8

2. Analysis of the Law under Competition Act 2002 and Merger Control Regulation 2011.9

3. Analysis of the Competition Commission of India (Combinations) Regulation, 2023….14

4. Comparative Analysis of Merger Control Regulation in several other

Jurisdictions…….18

5. Conclusion……………………………………………………………………...………..20
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1. Introduction
a. Background
The entirety of Global economy has seen a rapid transformation into the digitisation of the
economical process, owing to which countless business activities has become data-based and a
corollary to which is the fact that, data has become a quintessential asset for any company,
especially those which are primarily technology driven. In light of the aforementioned, the
consideration of the data pool available with a body corporate as an asset becomes relevant in
terms of various activities that a company can go through, ranging right from conducting day-to-
day business to high scaled implications deriving operations of amalgamations and mergers. This
paper specifically focusses on the implications of Mergers and Acquisitions in Indian Market of
`companies which are essentially and primarily data-driven.
The reasons for the subject matter consideration is that through the operations like Mergers and
Acquisitions, which primarily results in one entity taking control of several others or two
companies merging together to form one, an implication of which would be an increased market
share and access to greater market resources which are relevant considerations for the
determination of dominant position in a relevant market which is a precursor for assessment of
dominant position in the said relevant market as per the provisions of Section 19 (4) of the
Competition Act, 2002. The Competition Commission of India, has the authority to assess the
value of the Mergers or Acquisitions transaction to see if the same has an appreciable adverse
effect on the competition in India. The method thus used by the CCI, in the review and scrutiny
of assessment of Mergers and Acquisition in India, is based on the assets and turnover of the
merging entities or the entity being acquired, and the same is governed as per Section 5 of the
Competition Act, 2002. Apart from the Competition Act, 2002, the merger control regime is
also governed by the Competition Commission of India (Procedure in regard to the transaction of
business relating to combinations) Regulation, 2011.

The merger control provisions of the Competition Act, 2002 (‘Act’) were enforced on 1 June
2011. Since then, the Competition Commission of India has processed close to 990 merger
 P a g e | iii

notifications and developed a broadly consistent jurisprudence. CCI has not blocked any
transactions so far and found no competition concerns in most of the transactions notified to it1.

The Indian merger control regime is mandatory and suspensory. Notifiable transactions cannot
be consummated (entirely or in part) before CCI approval. Inter-connected transactions
(including internal reorganizations, in some cases) must remain in abeyance till the CCI approves
the transaction2. The threshold limit for notification to the CCI for any combination to initiate the
trigger event is as following:

The Government of India, further came up with a notification for the benefit of mergers and
acquisitions involving start-up companies working on the economies of scale until they meet a
breakeven point called the De minimis exemption, under which if the enterprise being acquired,
taken control of, merged or amalgamated has (i) assets less than INR 350 crore, or (ii) turnover
less than INR 1000 crore. This exemption is valid for a period of 5 years from the date of
publication of its notification in the official gazette. The de-minimis has been extended by
Central Government for a further 5 year period vide notification dated 16th March 20224.

Therefore, we see that the merger control regulations are based on the asset and turnover value of
the companies involved in such transaction which at times may not consider the value of data
available with the company given the definition of assets provided under the Competition Act
1
Kakkar A, Chauhan VP, “Evolving Character of the Indian Merger Control Regime”, (2003) Volume 3
Competition Commission of India Journal on Competition Law and Policy
2
Cyril Amarchand and Mangaldas, “Merger Regulation in India: Cheat Sheet”, https://www.cyrilshroff.com/wp-
content/uploads/2020/09/Merger-Regulation-in-India-Cheat-Sheet.pdf
3
Filing of Combination Notices, https://www.cci.gov.in/combination/combination/filing-of-combination-notice/
introduction
4
Ibid.
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under Section 5. Other jurisdictions, across the world, follows the method of deal value threshold
which is also sought to be introduced in India through the Competition Commission of India
(Combinations) Regulation, 2023, which introduces a dual criteria for combinations to require
prior approval by the Competition Commission of India (CCI). This involves both the value of
the transaction exceeding INR 2,000 crores and the acquired enterprise having 'substantial
business operations in India5.

Thus, The aim of the paper will be look at the current Merger Control Regulations and analyse
its efficiency and compatibility in a rampantly increasing digitized world. The paper will attempt
to identify gaps in the law with accounts of its ramifications on data based mergers and
Acquisition in India. Further, with comparative analysis from the US and EU, the paper will also
attempt to provide way to fill those gaps and address the issues related to data-based mergers in
digital market.

b. Literature Review

Kakkar A, Chauhan VP, “Evolving Character of the Indian Merger Control Regime”, (2003)
Volume 3 Competition Commission of India Journal on Competition Law and Policy

The article titled "Evolving Character of the Indian Merger Control Regime" by Kakkar A and
Chauhan VP, published in the Competition Commission of India Journal on Competition Law
and Policy in 2003, explores the development and evolution of merger control regulations in
India. This literature review examines scholarly perspectives on Kakkar and Chauhan's analysis,
focusing on key themes such as the legislative framework, enforcement practices, and
implications for competition policy in India. Kakkar and Chauhan's article provides a
comprehensive overview of the legislative framework governing merger control in India. They
trace the evolution of merger regulations from the absence of specific provisions to the
enactment of the Competition Act, 2002, which introduced comprehensive provisions for
regulating mergers and acquisitions. Scholars have praised the authors' analysis of the legal
framework, including the criteria for assessing the competitive effects of mergers, the
notification and review process, and the role of the Competition Commission of India (CCI) in
enforcing merger control regulations. Moreover, Kakkar and Chauhan's examination of the
5
Khaitan and Co., “Indian Competition Authority Publishes the Draft Merger Regulations with Guidance on Deal
Value Threshold”, (2023) https://www.khaitanco.com/thought-leaderships/Indian-Competition-Authority-Publishes-
the-Draft-Merger-Regulations-with-Guidance-on-Deal-Value-Threshold
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legislative history and policy objectives underlying the Competition Act sheds light on the
broader context of competition policy in India. They highlight the dual objectives of promoting
competition and protecting consumer welfare through the regulation of mergers and acquisitions.
Scholars have engaged with their analysis to assess the effectiveness and efficiency of the Indian
merger control regime in achieving these objectives while balancing the interests of market
participants and society at large.

Cyril Amarchand and Mangaldas, “Merger Regulation in India: Cheat Sheet”,

https://www.cyrilshroff.com/wp-content/uploads/2020/09/Merger-Regulation-in-India-Cheat-
Sheet.pdf

Cyril Amarchand and Mangaldas' cheat sheet provides an overview of the legal and regulatory
framework governing mergers and acquisitions in India. It outlines the primary legislation,
including the Companies Act, 2013, the Competition Act, 2002, and relevant regulations issued
by the Securities and Exchange Board of India (SEBI) and the Reserve Bank of India (RBI).
Scholars have praised the cheat sheet for its clarity and accessibility, making complex legal
requirements understandable for practitioners, businesses, and other stakeholders involved in
M&A transactions. Moreover, the cheat sheet highlights the role of regulatory authorities such as
the Competition Commission of India (CCI) and the National Company Law Tribunal (NCLT)
in overseeing M&A transactions and ensuring compliance with applicable laws and regulations.
Scholars have engaged with the cheat sheet to assess the effectiveness and efficiency of these
regulatory bodies in promoting competition, protecting shareholder interests, and facilitating the
orderly conduct of M&A transactions in India's dynamic business environment. In conclusion,
Cyril Amarchand and Mangaldas' "Merger Regulation in India: Cheat Sheet" serves as a valuable
resource for practitioners, businesses, and other stakeholders involved in M&A transactions in
India. Its concise and user-friendly format provides a comprehensive overview of the regulatory
framework, procedural requirements, and practical implications for M&A transactions, making it
an indispensable tool for navigating the complexities of India's dynamic business environment.
Moving forward, further research and dialogue are needed to address emerging issues, promote
regulatory coherence, and enhance the effectiveness and efficiency of M&A regulations in India.

Srivastava A, Yadav A, “Evolving Character of the Indian Merger Control Regime” (2003)
Volume 3 Competition Commission of India Journal on Competition Law and Policy
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Srivastava and Yadav's article provides a comprehensive examination of the legislative

framework governing merger control in India. They trace the historical development of merger
regulations, from the absence of specific provisions to the enactment of the Competition Act,
2002, which introduced comprehensive provisions for regulating mergers and acquisitions.
Scholars have praised the authors' analysis of the legal framework, including the criteria for
assessing the competitive effects of mergers, the notification and review process, and the role of
the Competition Commission of India (CCI) in enforcing merger control regulations. Moreover,
Srivastava and Yadav's analysis sheds light on the broader context of competition policy in India,
including the policy objectives underlying the Competition Act and its implications for market
dynamics and consumer welfare. They highlight the dual objectives of promoting competition
and protecting consumer interests through the regulation of mergers and acquisitions. Scholars
have engaged with their analysis to assess the effectiveness and efficiency of the Indian merger
control regime in achieving these objectives while balancing the interests of market participants
and society at large. In conclusion, Srivastava A and Yadav A's article, "Evolving Character of
the Indian Merger Control Regime," offers a comprehensive analysis of the development and
evolution of merger control regulations in India. Their examination of the legislative framework,
enforcement practices, and implications for competition policy provides valuable insights into
the challenges and opportunities facing competition authorities, market participants, and society
at large. Moving forward, further research and dialogue are needed to address emerging issues,
promote regulatory coherence, and enhance the effectiveness and efficiency of merger control
regulations in India and beyond.

Tyagi K, “Big Data Mergers: Bridging the Gap for an Effective Merger Control Framework”
(2022) Volume 3 Competition Commission of India Journal on Competition Law and Policy

Tyagi's article provides an insightful exploration of the regulatory landscape governing mergers
involving big data companies. He examines the unique characteristics of big data markets,
including network effects, economies of scale, and data-driven innovation, which pose
challenges for traditional merger control frameworks. Scholars have praised Tyagi's analysis of
the evolving nature of competition in the digital economy and the need for regulatory authorities
to adapt their enforcement strategies to address emerging antitrust concerns. Moreover, Tyagi's
examination of recent merger cases involving big data companies sheds light on the approaches
 P a g e | vii

adopted by competition authorities worldwide to assess the competitive effects of such

transactions. He highlights the role of economic analysis, market definition, and data access
considerations in merger review processes, as well as the challenges of quantifying the value of
data assets and predicting their impact on competition. Scholars have engaged with Tyagi's
analysis to assess best practices and emerging trends in the regulation of big data mergers,
including the role of data privacy, consumer protection, and innovation in shaping competition
policy.

c. Statement of Problem

The merger control regulation in India is well regulated with comprehensive regulations in place,
although the same is in the context of a conventional relevant market without accommodating for
a digitized economy and companies performing solely on the basis of the data pool available to
them. The current regime thus needs a change to accommodate to meet the gaps posed by
thedigital economy. Having this in mind, the introduction of the ‘deal value threshold’ to for
Merger Control. Therefore, it is relevant to understand the implications of such changes and the
implications of pre DVT regime, along with a cross jurisdictional assessment of the law on the
subject-matter.

d. Scope of Study

The study will be limited to the Combination and Merger Regulation pre and post the
introduction of Competition Commission of India (Combinations) Regulation, 2023, alongside
cross-jurisdictional comparative analysis of the subject-matter law specifically in the countries
like the United States, United Kingdom and the European Union.

e. Objectives

The Primary objectives of this paper are:

1. To analyze the implications and ramifications Combination Regulation, 2011 and the
gaps in the same with regards to Data based mergers and acquisitions.
2. To analyze the cross-jurisdictional merger control regulations
3. To analyze the implications and ramifications of the Competition Commission of India
(Combinations) Regulation, 2023.
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4. To highlight gaps and loopholes in the law, if any.

f. Research Question:

Whether the introduction of Competition Commission of India (Combinations) Regulation, 2023

fill in the gaps in the law pertaining to Merger Control through the lens of Competition in India,
and what can we adopt from various other national jurisdictions on the subject-matter?

g. Hypothesis

The introduction of Competition Commission of India (Combinations) Regulation, 2023 fill in

the gaps in the law pertaining to mergers control in India under the Competition Act.

h. Methodology:

This research paper will adopt a doctrinal method of study as the same is required to analyze the
implications of the law on the subject matter through the implementation and execution of the
law in several instances of Mergers and Acquisitions.

i. Chapterization

Chapter 1: Introduction/Synopsis

Chapter 2: Analysis of the Law under Competition Act 2002 and Merger Control Regulation
2011.

Chapter 3: Analysis of the Competition Commission of India (Combinations) Regulation, 2023

Chapter 4: Comparative Analysis of Merger Control Regulation in several other Jurisdictions

Chapter 5: Conclusion

2. Analysis of the Law under Competition Act 2002 and Merger Control Regulation
2011
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The Competition Act, 2002, marked a significant milestone in India's economic landscape,
aiming to foster healthy competition and prevent anti-competitive practices. A crucial pillar of
this framework is the Merger Control regime, operationalized in 2011 through the Competition
Commission of India (Procedure in regard to the transaction of business relating to
combinations) Regulations, 2011 (hereafter referred to as MCR). This part critically analyzes the
MCR within the ambit of Indian Competition Law, exploring its strengths, limitations, and
potential areas for improvement.

The MCR has demonstrably contributed to a more competitive market environment in India. The
MCR establishes a threshold system for merger notification, based on the asset size and turnover
of the merging entities. This streamlines the process by exempting smaller mergers with minimal
impact on competition6. The Indian merger control regime is mandatory and suspensory.
Notifiable transactions cannot be consummated (entirely or in part) before CCI approval. Inter-
connected transactions (including internal reorganizations, in some cases) must remain in
abeyance till the CCI approves the transaction7. The threshold limit for notification to the CCI
for any combination to initiate the trigger event is as following:

The MCR initially incorporated a "Green Channel" provision for expeditious approval of
mergers with minimal competition concerns. While repealed in 2023, it demonstrably reduced

6
Nishith Desai Associates. (2023, March 1). Analysis of the Competition Commission of India (Combinations)
Regulations, 2023. https://www.nishithdesai.com/NewsDetails/10776
7
Cyril Amarchand and Mangaldas, “Merger Regulation in India: Cheat Sheet”, https://www.cyrilshroff.com/wp-
content/uploads/2020/09/Merger-Regulation-in-India-Cheat-Sheet.pdf
 Page |x

processing time for certain transactions8. The Government of India, further came up with a
notification for the benefit of mergers and acquisitions involving start-up companies working on
the economies of scale until they meet a breakeven point called the De minimis exemption, under
which if the enterprise being acquired, taken control of, merged or amalgamated has (i) assets
less than INR 350 crore, or (ii) turnover less than INR 1000 crore. This exemption is valid for a
period of 5 years from the date of publication of its notification in the official gazette. The de-
minimis has been extended by Central Government for a further 5 year period vide notification
dated 16th March 2022.

The MCR emphasizes assessing mergers based on their potential to cause an Adverse Affecting
Competition (AAEC) in the Indian market, not just global market share9. This ensures a more
nuanced approach that safeguards domestic competition. The MCR empowers the Competition
Commission of India (CCI) to impose remedies on mergers that raise competition concerns.
These remedies can involve structural changes, divestments, or behavioral undertakings,
mitigating potential harm10.

The MCR's definition of "control" for triggering merger notification has been subject to debate11.
The lack of clarity has led to inconsistencies in application and potential loopholes for
circumventing notification requirements. The proposed amendment bill of 2020 aims to address
this by introducing a "material influence" test for control.

The current thresholds might not effectively capture all mergers with potential competition
concerns, particularly in niche markets. Regularly reviewing and revising the thresholds based on
economic data can ensure better coverage12.

The MCR does not explicitly recognize an "efficiency defense," which allows mergers that
generate efficiencies outweighing potential anti-competitive effects. While the CCI can consider
efficiencies in its assessment, a formal framework could provide greater clarity13.
8
Nishith Desai Associates. (2023, March 1). Analysis of the Competition Commission of India (Combinations)
Regulations, 2023. https://www.nishithdesai.com/NewsDetails/10776
9
AZB & Partners. (2023, February 23). India: The Merger Control Review
10
Ibid.
11
Tyagi K, “Big Data Mergers: Bridging the Gap for an Effective Merger Control Framework” (2022) Volume 3
Competition Commission of India Journal on Competition Law and Policy
12
Srivastava A, Yadav A, “Evolving Character of the Indian Merger Control Regime” (2003) Volume 3
Competition Commission of India Journal on Competition Law and Policy
13
Kakkar A, Chauhan VP, “Evolving Character of the Indian Merger Control Regime”, (2003) Volume 3
Competition Commission of India Journal on Competition Law and Policy
 P a g e | xi

The MCR prescribes timelines for the CCI to review mergers. However, complex cases might
require additional time for thorough analysis. Introducing a flexible framework with the
possibility of extensions upon justification can enhance the quality of the review process.

The Indian digital economy has witnessed explosive growth in recent years. This has been
accompanied by a surge in mergers and acquisitions (M&A) activity, particularly within the
digital and data-driven space. However, the existing Merger Control Regulations, 2011 (MCR)
designed to assess the competition implications of mergers, may not be adequately equipped to
address the unique challenges posed by these digital transactions. This essay critically analyzes
the shortcomings of the MCR in regulating digital and data-driven mergers in India.

The MCR relies on a threshold-based system for triggering merger notification, based on the
asset size and turnover of the merging entities. While streamlining the process for smaller
mergers, this system can inadvertently overlook potentially problematic digital mergers that fall
below the thresholds. The MCR's reliance on traditional financial metrics might miss the
significance of data and user base in digital markets. A dominant player with a lower turnover
could still possess a vast user base or control a significant share of user data, granting them an
undue competitive advantage post-merger.

The MCR's reliance on traditional financial metrics might miss the significance of data and user
base in digital markets. A dominant player with a lower turnover could still possess a vast user
base or control a significant share of user data, granting them an undue competitive advantage
post-merger14.

Digital markets are often characterized by network effects, where the value of a platform
increases with the number of users it attracts. Additionally, data has emerged as a key
competitive asset in these market15s. ergers involving digital platforms can lead to a
consolidation of user bases and data, strengthening the merged entity's position and potentially
hindering competition by making it difficult for new entrants to compete16. Mergers involving
data-rich companies raise concerns about data aggregation and potential anti-competitive uses of
this combined dataset. The MCR lacks clear guidelines for evaluating how such mergers might
affect consumer privacy and innovation.
14
Ibid.
15
AZB & Partners. (2023, February 23). India: The Merger Control Review
16
Autorité de la concurrence. (2022, July 12). The Challenges of Regulating Mergers in the Digital Sector.
 P a g e | xii

The MCR's definition of "control" for triggering merger notification primarily focuses on
traditional notions of shareholding and voting rights. However, the digital landscape often
involves complex ownership structures and control can be exercised through informal means.
Companies might evade notification requirements by structuring mergers through acquisitions of
smaller entities with significant user bases or data, even though they effectively gain control over
these assets17. The MCR does not explicitly recognize an "efficiency defense" that allows
mergers that generate efficiencies outweighing potential anti-competitive effects. While the
Competition Commission of India (CCI) can consider efficiencies in its assessment, a lack of a
clear framework can make it challenging to Quantify Digital Efficiency Claims. Companies
merging in the digital space might claim efficiency gains in areas like data analytics or user
experience. The MCR lacks clear guidelines for the CCI to assess the validity and potential anti-
competitive implications of such efficiency claims18.

To effectively regulate digital and data-driven mergers, the MCR can benefit from the following
improvements:

 Revision of Thresholds: Consider incorporating alternative notification triggers based on

user base, data volume, or market share within specific digital segments.
 Focus on Market Dynamics: Develop guidelines for the CCI to assess the impact of
mergers on network effects, data dominance, and potential for data abuse.
 Refine the Definition of "Control": Introduce a broader definition of control that
encompasses not just ownership but also the ability to exercise significant influence over
the target company's assets and operations, particularly in the digital context.
 Establish a Framework for Efficiency Defense: Develop a framework for the CCI to
evaluate efficiency claims in digital mergers, ensuring a balanced assessment that weighs
potential benefits against potential anti-competitive harms.

The MCR has played a significant role in fostering competition in India. However, the rise of
digital and data-driven mergers necessitates adapting the framework to address the unique
challenges of these transactions. By incorporating the recommendations outlined above, the

17
Kakkar A, Chauhan VP, “Evolving Character of the Indian Merger Control Regime”, (2003) Volume 3
Competition Commission of India Journal on Competition Law and Policy
18
Ibid.
 P a g e | xiii

MCR can become a more effective tool for safeguarding competition and promoting innovation
in the dynamic Indian digital market.

3. Analysis of the Competition Commission of India (Combinations) Regulation, 2023

The Competition Commission of India (CCI) plays a crucial role in safeguarding fair
competition within the Indian market. In 2023, the Competition Amendment Act introduced
significant changes to the merger control regime. To align with these changes, the CCI released
the draft Competition Commission of India (Combinations) Regulations, 2023 (Draft
 P a g e | xiv

Regulations) in September 2023. This part will delve into the key features of these Draft
Regulations, their potential impact, and the remaining areas of ambiguity.

The Competition Amendment Act introduced changes to India's merger control regime. To
provide more details and implement these changes, the Competition Commission of India (CCI)
issued draft regulations in September 202319. These draft regulations, called the CCI
(Combinations) Regulations, 2023, aim to replace the existing merger control regulations from
2011. The Act introduced a new rule requiring approval for mergers exceeding 20 billion rupees
(INR) if the target company has a significant presence in India 20. The draft regulations define
how to calculate the deal value and what constitutes a substantial business presence.

The Amendment Act established a new notification threshold known as the DVT. Under this
threshold, a transaction involving the acquisition of any control, shares, voting rights, or assets of
an enterprise, merger, or amalgamation, with a deal value exceeding INR 2000 crores (Indian
Rupees Two Thousand Crores)21 is required to be approved by the CCI in advance. Additionally,
the target, or company being acquired, merged, or amalgamated, must have significant business
operations in India. According to the Amendment Act, every valuable compensation—direct or
indirect—including deferred consideration, was included in the transaction's value. It is also
important to remember that if the deal value requirements are reached, a transaction could be
reported to the CCI even in cases where a "de minimis exemption" is available. Last but not
least, the Amendment Act mandated CCI to create regulations to address the lack of clarity in the
conditions pertaining to significant business operations and the method used to calculate the deal
value.

The Draft Regulations have now further clarified the criteria for determining "value of the
transaction" and "substantial business operations in India" in light of this22. Furthermore, it is
made clear in the explanation provided for Regulation 4 of the Draft Regulations that the
transaction value should be determined by the board of directors or a comparable approving body

19
Sharma P, Kataria S, Dalal K, “ANALYSIS OF THE COMPETITION COMMISSION OF INDIA
(COMBINATIONS) REGULATIONS, 2023”, Nishith Desai and Associates, Available At:
https://www.nishithdesai.com/NewsDetails/10776
20
Regulation 30 of the Draft Regulations
21
Section 6 (B) of the Amendment Act
22
Sharma P, Kataria S, Dalal K, “ANALYSIS OF THE COMPETITION COMMISSION OF INDIA
(COMBINATIONS) REGULATIONS, 2023”, Nishith Desai and Associates, Available At:
https://www.nishithdesai.com/NewsDetails/10776
 P a g e | xv

of the acquirer in cases where the true and complete value of the transaction is not documented
in an agreement signed by the parties23.

Furthermore, the explanation suggests that the notifying party should assume that the threshold
of INR 2,000 crores (Indian Rupees Two Thousand Crores) has been met if the transaction value
of a contract cannot be ascertained with reasonable certainty.

The Competition Commission of India's (CCI) Merger Control Regulations, 2011 (MCR 2011)
played a vital role in safeguarding competition within the Indian market. However, the rapid rise
of the digital economy in recent years exposed limitations in the MCR 2011's ability to
effectively address data-driven mergers and acquisitions (M&A). This essay will analyze the
shortcomings of the MCR 2011 in dealing with digital mergers and highlight the need for an
update, which culminated in the draft Competition Commission of India (Combinations)
Regulations, 2023 (Draft Regulations)24.

One key limitation of the MCR 2011 was its reliance on deal value thresholds for triggering
merger notification. While effective for traditional brick-and-mortar businesses, this approach
struggles to capture the value of digital companies25. These companies often possess significant
user bases and generate invaluable troves of data, even if their traditional financial metrics might
not meet the notification thresholds. This meant that crucial data-driven mergers, potentially
leading to a concentration of market power, could escape scrutiny under the MCR 2011.

The MCR 2011's definition of "relevant market" primarily focused on product and geographic
boundaries. This approach fell short in the digital realm, where competition can transcend
physical borders and product categories. Data can be used to create substitute products or
services, blurring traditional market definitions. The MCR 2011 lacked the tools to assess the
potential anti-competitive effects of a data-driven merger on the broader digital ecosystem.

The MCR 2011 primarily focused on the merging entities' existing market share and financial
performance. It did not adequately address the competition concerns arising from the acquisition

23
Explanation (c), Regulation 4 of the Draft Regulations
24
Kakkar A, Chauhan VP, “Evolving Character of the Indian Merger Control Regime”, (2003) Volume 3
Competition Commission of India Journal on Competition Law and Policy
25
Tyagi K, “Big Data Mergers: Bridging the Gap for an Effective Merger Control Framework” (2022) Volume 3
Competition Commission of India Journal on Competition Law and Policy
 P a g e | xvi

of vast amounts of user data. A digital merger could potentially lead to the combined entity
gaining an unfair advantage by controlling a significant portion of user data or hindering access
to data for competitors. The MCR 2011 lacked the framework to assess these data-related aspects
of a merger effectively26. The MCR 2011, while effective for its time, struggled to keep pace
with the evolving digital landscape. Its reliance on traditional financial metrics and product-
based market definitions overlooked the unique challenges posed by data-driven mergers. The
introduction of the Draft Regulations, with their focus on deal value thresholds, a broader
definition of "substantial business operations," and the potential for a more nuanced assessment
of data acquisition, signifies a necessary modernization of India's merger control regime. As the
final regulations are drafted, ensuring clear guidelines for valuing data and assessing its
competition implications will be crucial for fostering a healthy and competitive digital ecosystem
in India.

One of the key features of the Draft Regulations is the introduction of a Deal Value Threshold
(DVT). Mergers exceeding INR 2 billion and involving a target with substantial business
operations in India now require CCI approval27. This threshold, coupled with the potential
removal of exemptions previously listed in Schedule I, could lead to increased scrutiny of data-
driven mergers. Digital companies often possess significant user bases and generate valuable
data, even if their traditional financial metrics might not meet previous thresholds28. Under the
Draft Regulations, such companies merging with established players or even smaller data-rich
startups could fall under the CCI's purview. This increased scrutiny could potentially lengthen
the merger approval process and add a layer of complexity for data-driven transactions 29. The
Draft Regulations define "substantial business operations" based on thresholds for users, gross
merchandise value (GMV), or turnover. While seemingly objective, applying these criteria to
data-driven mergers might pose challenges. The value of a digital company often lies not just in
its financial performance but also in the vast amount of data it possesses. This data can be
difficult to quantify using traditional metrics. The Draft Regulations do not explicitly address
26
Ibid.
27
Khaitan and Co., “Indian Competition Authority Publishes the Draft Merger Regulations with Guidance on Deal
Value Threshold”, (2023) https://www.khaitanco.com/thought-leaderships/Indian-Competition-Authority-Publishes-
the-Draft-Merger-Regulations-with-Guidance-on-Deal-Value-Threshold
28
Majumdar and Partners, (2023), “M&A impact due to changes in India’s competition law”, Available at
https://www.majmudarindia.com/ma-impact-due-to-changes-in-indias-competition-law/
29
Cyril Amarchand and Mangaldas, “Merger Regulation in India: Cheat Sheet”, https://www.cyrilshroff.com/wp-
content/uploads/2020/09/Merger-Regulation-in-India-Cheat-Sheet.pdf
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how data itself will be factored into the assessment of "substantial business operations." This
ambiguity could lead to uncertainty for companies contemplating mergers, particularly those
where data is a core asset.

Despite the potential challenges, the Draft Regulations could also have positive implications for
data-driven mergers in India. Increased scrutiny by the CCI could help prevent anti-competitive
mergers that could stifle innovation and limit consumer choice in the digital space. By reviewing
the data acquisition aspects of a merger, the CCI can assess whether the combined entity could
gain an unfair advantage by controlling a significant portion of user data or hindering access to
data for competitors. This could foster a more competitive digital ecosystem where data is not
used to create monopolies but to drive innovation and benefit consumers.

Several areas in the Draft Regulations remain ambiguous, particularly regarding data-driven
mergers. The lack of clear guidelines on how data will be valued and factored into the
assessment of "substantial business operations" creates uncertainty for companies. Additionally,
the absence of details on the "Green Channel" route, intended for faster approvals of less
problematic mergers, could further complicate the process for data-driven transactions.
Addressing these ambiguities through stakeholder feedback and providing further guidance in
the final regulations will be crucial. The Combination Regulation 2023 represents a significant
development for data-driven mergers in India. While increased scrutiny could pose challenges, it
also holds the potential to promote a more competitive digital landscape. As the final regulations
are drafted, addressing the concerns around data valuation and providing clear guidelines will be
essential for ensuring a predictable and efficient merger approval process for data-rich
companies in India. This will ultimately lead to a more balanced environment where competition
thrives in the digital age.

4. Comparative Analysis of Merger Control Regulation in several other Jurisdictions

The burgeoning digital economy, characterized by data-driven business models and rapid
innovation, has challenged traditional merger control regimes. This essay will compare the
approaches taken by the United States and India in regulating data-driven mergers and
acquisitions (M&A). It will analyze the strengths and weaknesses of each system, highlighting
areas where one may offer insights for the other.
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The United States antitrust authorities, primarily the Federal Trade Commission (FTC) and the
Department of Justice (DOJ), rely on the Hart-Scott-Rodino Antitrust Improvements Act (HSR
Act) for merger notification. Unlike India's threshold-based system, the HSR Act focuses on the
size of the merging parties, triggering notification for transactions exceeding specific revenue or
asset thresholds30. This approach offers flexibility in capturing potentially problematic mergers,
regardless of the companies' traditional financial metrics. However, the HSR Act's focus on
market effects can be criticized for neglecting the specific challenges posed by data. While the
FTC and DOJ can consider data when assessing competition, the current framework lacks clear
guidelines on how data is valued and how its acquisition might impact competition31.

Both the US and Indian systems share a common goal: to prevent mergers that stifle competition
and harm consumers. However, their approaches diverge in key areas. The US system's
flexibility in capturing mergers might be advantageous, but its lack of specific data valuation
guidelines creates uncertainty. Conversely, India's new focus on data-driven mergers offers a
more targeted approach, but the effectiveness of the Draft Regulations' data-related criteria
remains to be seen. The US system could benefit from establishing clearer guidelines on data
valuation and its impact on competition assessments. India, on the other hand, can draw insights
from the US approach in terms of flexibility and ensuring the Draft Regulations' data criteria are
not overly complex or burdensome for businesses. Both the US and India are actively seeking to
adapt their merger control regimes to the realities of the digital age. While there are distinct
approaches, opportunities exist for mutual learning. The US can develop a more nuanced
framework for valuing data in mergers, while India can refine its data-related criteria to ensure
clarity and efficiency. Ultimately, robust and adaptable merger control regimes are essential for
fostering a competitive digital landscape that benefits both businesses and consumers. The EU
merger control framework, governed by the European Commission's Merger Regulation32, adopts
a notification system based on turnover thresholds. However, unlike India's system (discussed
later), the EU allows national competition authorities to intervene in mergers with a "Community
dimension" even if they fall below the thresholds33. This flexibility allows the EU to capture
potentially problematic data-driven mergers that might otherwise escape scrutiny.

30
Federal Trade Commission, "Hart-Scott-Rodino Antitrust Improvements Act of 1976"
31
American Bar Association Section of Antitrust Law, "A Framework for Merger Analysis in a Digital Economy
32
EC Regulation 139/2004
33
Council Regulation (EC) No 139/2004, Article 21
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The heart of the EU approach lies in the concept of "significant impediment to effective
competition." The Commission assesses whether the merged entity is likely to gain a dominant
position that could harm competition by, for instance, hindering access to data for competitors or
manipulating user data to influence consumer behavior [European Commission, "Guidance on
merger control"]. While this approach allows for a nuanced assessment of the competition
concerns raised by data-driven mergers, it can also be criticized for its reliance on a relatively
undefined concept of "significant impediment". Both the EU and India share a common goal: to
prevent mergers that stifle competition and harm consumers. However, their approaches diverge
in key areas. The EU system offers greater flexibility in capturing mergers, but its reliance on the
concept of "significant impediment" introduces some ambiguity. Conversely, India's new focus
on data-driven mergers and the DVT offer a more targeted approach, but the effectiveness of the
Draft Regulations in practice remains The EU could benefit from providing clearer guidance on
how data is assessed within the concept of "significant impediment." India, on the other hand,
can draw insights from the EU's experience in handling mergers with a "Community dimension"
to ensure its own regulations capture mergers with broader implications to be seen.

Both the EU and India are actively refining their merger control regimes to address the
challenges of the digital age. While there are distinct approaches, opportunities exist for mutual
learning. The EU can develop a more transparent framework for assessing data's role in
competition, while India can leverage the EU's experience in handling cross-border mergers.
Ultimately, robust and adaptable merger control regimes are essential for fostering a competitive
digital landscape that encourages innovation and protects consumer welfare.

5. Conclusion

The Competition Commission of India's (CCI) Merger Control Regulations (MCR) have played
a vital role in fostering a competitive market landscape in India. However, the digital revolution
and the rise of data-driven mergers necessitated a significant update. The introduction of the
Competition Amendment Act of 2023 and the subsequent Draft Competition Commission of
India (Combinations) Regulations, 2023 (Draft Regulations) represent a positive step towards
addressing this challenge.

The landscape of Indian competition law has undergone a metamorphosis, driven by the
burgeoning digital economy. The once-reliable Merger Control Regulations (MCR) of 2011,
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designed for a brick-and-mortar world, struggled to capture the nuances of data-driven mergers.
This lacuna necessitated a paradigm shift, culminating in the Competition Amendment Act of
2023 and its offspring, the Draft Competition Commission of India (Combinations) Regulations,
2023 (Draft Regulations).

The MCR's Achilles' heel was its dependence on traditional financial metrics, often overlooking
the significance of user base and data – the lifeblood of digital enterprises. The Draft Regulations
aim to rectify this by introducing the Deal Value Threshold (DVT) and a broader definition of
"substantial business operations." These provisions bring more digital mergers under the purview
of the Competition Commission of India (CCI), ensuring scrutiny of mergers that could stifle
competition despite lacking a hefty traditional financial profile.

Furthermore, the Draft Regulations pave the way for a more comprehensive evaluation of
mergers. The focus broadens beyond mere market share and financial performance to encompass
data acquisition and its potential anti-competitive ramifications. The CCI can now scrutinize how
a merger might affect access to data for competitors or enable the combined entity to manipulate
user data for its own gain. This empowers the Commission to ensure a balanced assessment in
the digital realm, safeguarding competition and consumer welfare.

However, the road ahead is not without its challenges. The lack of clear guidance on valuing data
in mergers creates uncertainty for companies, particularly those where data is their core asset.
Ambiguity in how the CCI will assess the worth of data-driven companies and the potential
impact of data acquisition on competition can lead to difficulties in applying the regulations. To
address this, India can learn from international best practices and develop clear methodologies
for data valuation.

Another consideration is streamlining the process. Balancing the need for increased scrutiny with
ensuring a predictable and efficient merger approval process is paramount. The potential for a
lengthier review under the Draft Regulations, especially for complex data-driven mergers, could
add an unwelcome layer of complexity for businesses. Striking a balance between effective
competition assessment and efficient procedures will be crucial for fostering innovation and
economic growth in the digital sector.
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The MCR's reliance on traditional financial metrics often overlooked the significance of user
base and data in digital markets. The new Deal Value Threshold (DVT) and the broader
definition of "substantial business operations" in the Draft Regulations bring more digital
mergers under the CCI's purview. This ensures that mergers with the potential to stifle
competition in the digital space, even if the companies involved have a lower traditional
financial profile, are not overlooked.

The MCR primarily focused on the merging entities' existing market share and financial
performance. The Draft Regulations pave the way for a more comprehensive evaluation of
mergers, considering factors like data acquisition and its potential impact on competition. By
scrutinizing how a merger might affect access to data for competitors or enable the combined
entity to manipulate user data for anti-competitive ends, the CCI can ensure a more balanced
assessment in the digital realm. However, some areas require further consideration to ensure the
Draft Regulations function effectively. The lack of clear guidance on valuing data in mergers can
create uncertainty for companies, particularly those where data is a core asset. Ambiguity in how
the CCI will assess the value of data-driven companies and the potential impact of data
acquisition on competition can lead to challenges in applying the regulations. Developing clear
methodologies for data valuation and incorporating insights from international best practices will
be crucial.

In conclusion, the Draft Regulations represent a significant step forward for India's merger
control regime in the digital age. By drawing insights from other jurisdictions like the EU and
US, and addressing the concerns around data valuation and process efficiency, India can create a
robust and adaptable regulatory framework. This, in turn, will foster a competitive digital
landscape that encourages innovation, protects consumer welfare, and allows businesses to
flourish in the data-driven economy. The embrace of the digital age by India's competition law is
ongoing, and the journey promises to be one of continuous adaptation and refinement, ultimately
leading to a vibrant and competitive digital ecosystem.

A robust and adaptable merger control regime is essential for fostering a competitive digital
landscape that encourages innovation, protects consumer welfare, and allows businesses to thrive
in the data-driven economy. The Draft Regulations represent a significant step forward in this
direction. By addressing the concerns around data valuation and streamlining the process, India
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can ensure a predictable and efficient regulatory environment that fosters a healthy digital
ecosystem. This, in turn, will benefit consumers by promoting competition, encouraging
innovation, and protecting user privacy in the digital age.