CCI to spell out norms on significant business operation
- September 5, 2023
- Posted by: OptimizeIAS Team
- Category: DPN Topics
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CCI to spell out norms on significant business operation
Subject: Economy
Section: National Income
In News: Competition Commission of India is likely to issue draft proposals this month on the calculation of deal value threshold (DVT) and what constitutes significant business operations (SBO).
Key Points:
- After the amendment of the Competition Act, 2002, in April this year, CCI’s nod is needed for Mergers and acquisitions (M&A) is needed if
- the transaction is valued at over Rs 2,000 crore, and
- if the target entity being acquired or merged has substantial business operations in India.
- Why was the change brought?
- In the past, several transactions, especially in the digital space, were concluded without the CCI’s review, despite the potential impact on competition.
- With so many companies being multinational, there is a need to have objective criteria for jurisdiction in competition matters.
- What is the SBO test ?
- Tests for significant business operations to be similar to that applied in Germany, Austria.
- For digital companies, the determinants could include monthly subscribers, unique visitors.
- Turnover from India, market share, location and access to data of Indian customers are other factors.
- For pharma firms an R&D centre or a contract manufacturing unit in India could determine SBO.