In a significant development for the Indian mergers and acquisitions (M&A) landscape, the Union Ministry of Corporate Affairs (MCA) has officially implemented the deal value threshold (DVT) provision under the Competition (Amendment) Act, 2023.
Effective from September 10, this regulation introduces stricter scrutiny for high-value transactions, particularly within the digital market.
The DVT provision requires that mergers or acquisitions with a deal value exceeding ₹2,000 crore must undergo review by the Competition Commission of India (CCI) if the target company has substantial business operations in India. This measure addresses potential gaps left by traditional asset or turnover-based thresholds, ensuring that significant digital market transactions don’t escape regulatory oversight.
The Competition (Amendment) Act, 2023, which was passed by the Lok Sabha in March last year, complements existing merger control thresholds by introducing this new deal value criterion.
Initially, the amendment proposed that both the acquiring and target companies must have substantial operations in India. However, following recommendations from a parliamentary panel, the focus was narrowed to apply solely to the target entity.
Additionally, the MCA introduced new rules under the Competition (Minimum Value of Assets or Turnover) Rules. These rules provide a “safe harbor” for certain combinations, exempting transactions from CCI approval if the involved enterprise has assets below ₹450 crore and turnover under ₹1,250 crore. This aims to reduce regulatory burdens on smaller transactions that are unlikely to raise anti-competitive concerns.
The MCA has also indicated that the CCI will soon notify accompanying regulations for the DVT provision, which will provide further clarity on its implementation and enforcement.
