The Effects Doctrine In Action: Extraterritorial Jurisdiction, AAEC And The Limits Of CCI's Cross-Border Merger Control (2020-2025)
- IJLLR Journal
- May 8
- 1 min read
Kratika Jaswani, School of Law, Prestige Institute of Management and Research, Indore
ABSTRACT
The Competition Act of 2002 provides a legal basis for CCI's extraterritorial jurisdiction through the Effects Doctrine in regulating cross-border mergers. This paper critically examines the doctrine's application to cross-border mergers in India during 2020-2025, a period marked by digital consolidation, the Competition (Amendment) Act, 2023, and high-value technology-sector acquisitions. The paper undertakes a doctrinal analysis of the Appreciable Adverse Effect on Competition (AAEC) standard, along with a comparative assessment of effects-based frameworks in the United States (US), European Union (EU), and China and analyses key CCI decisions such as Sun Pharma/Ranbaxy and Microsoft/Activision Blizzard. The main premise is that although India has embraced the Effects Doctrine, its application lacks logical coherence and consistency.
With effect from September 10, 2024, transactions with a Deal Value Threshold (DVT) of ₹2000 crores and Substantial Business Operations (SBO) in India must be reported, according to the Competition (Amendment) Act, 2023. This reform seeks to close the killer acquisition loophole and expand jurisdictional reach. However, the absence of a defined nexus standard to determine whether or not a foreign transaction has an AAEC in India remains a key doctrinal vacuum which the DVT and SBO fail to address.
The paper concludes with proposals for structured merger guidelines, safe harbour thresholds, strengthened international cooperation, and digital market-specific analytical tools that can be put into practice without the need for extra legislative power but are necessary to establish legitimate extraterritorial jurisdiction over merger activity.
