Mergers, Amalgamations And Acquisitions Under Competition Law
Vyshna Sunil, CSI School of Legal Studies Kannkary
INTRODUCTION
Mergers, amalgamations and takeovers are central instruments of modern corporate restructuring. They may enable economies of scale, access to technology, expansion into new markets, diversification and improved use of resources. However, a transaction that removes a significant competitor or creates control over an important input, distribution network, technology or platform can materially alter market structure.
Competition law therefore performs a preventive function. Instead of waiting for market power to be abused after a transaction has been completed, merger control permits the regulator to assess specified transactions before consummation. In India this function is principally exercised by the Competition Commission of India (CCI) under the Competition Act, 2002.
Sections 5 and 6 establish the basic combination regime. Section 5 identifies qualifying combinations and section 6 prohibits combinations that cause or are likely to cause an appreciable adverse effect on competition (AAEC). The Competition (Amendment) Act, 2023 modernised the framework, including through a transaction-value threshold.
The topic is also significant from a corporate-governance perspective because mergers and takeovers change control, board composition, ownership structures and the interests of shareholders and other stakeholders. Competition-law approval therefore operates alongside company law, securities regulation and sector-specific regulation.
MEANING AND NATURE OF MERGER, AMALGAMATION AND TAKEOVER
• Merger. A merger ordinarily combines two or more businesses, with one entity surviving or a consolidated corporate structure continuing. Commercial purposes include cost reduction, economies of scale, market expansion and acquisition of capabilities.
