Meaning of Mergers & Acquisitions

Mergers & Acquisitions Under The Competition Act

The method of globalization and liberalization has evolved rapidly. As for globalization, liberalization in the Indian economy gained attention in the year 1991. Globalization of the market succeeded in developing competition within and outside Indian business.

There has been a rapid growth in cross-border mergers and profit projects of Indian companies. The situation had become so dangerous that the urgent need was known to limit actions.

The Competition Act, 2002 was instituted with the intention of increasing engagement and preserving the importance of the customer. 

The Competition Act, 2002 three types of transactions – 

a) The anti-competitive settlement, 

b) abuse of dominance, and 

c) organization.

Some Important Sections Of The Competition Act – 

• Section 3 of the Competition Act – It prohibits entering into an agreement of any kind – composition, supply, distribution, storage, possession, or administration of goods or prerequisite of assistance. Either it produces or is expected to produce an ‘appreciable adverse effect on competition’’ in India.

• Section 4 of the Competition Act – It contains a condition regarding the exploitation of a commanding position by an industry. After the Monopoly Act, a limit of 25% was created as an allocation of power in business.

• Section 5 of the Competition Act – Acquisition of one or more applications or strengthening of initiatives by one or more groups shall be the sum total of such organizations and businesses, if-

1. If the participants of the investment obtain jurisdiction over voting rights or take over the divisions or assets of the company and the success of the assets exceeds one thousand crore rupees.
2. The combination also occurs when a group acquires an enterprise and manages business pieces, voting rights, and property in India where the profit of the assets exceeds four thousand crores or the turnover exceeds twelve thousand crores, or when The value of the total assets in or outside India is US$2 billion.
3. The combination also occurs when a person gains authority over the industry. It directly or indirectly controls various enterprises employed in the production, distribution, or speculation of the same or similar, or substitutable aid.
4. The combination is also supposed to take a position when the cost of the asset of the company after amalgamation or organization is more than rupees one thousand crores, or when the aggregate amount of the asset within or outside India is more than five hundred million US dollars.
5. Where the organization after consolidation or combination would apply to the company and it would have the assets of the importance of more than rupees four thousand crores or the total amount of the assets is more than two billion US dollar in or outside India.

• Section 6 Of the Competition Act – It is considered a requirement of the organization. This section presents the prerequisites for managing the sequence. Following this section, the Competition Act sets limits on penetrating any arrangement that creates a significant adverse effect on competition within a significant business in India.