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Published : January 03, 2017 | Author : Snehasuman02
Category : Miscellaneous | Total Views : 3096 | Rating :

  
Snehasuman02
Advocate at Calcutta High court... 'LL.M (NLUO)
 

The Study of Merger And The Role of Competition Commission of India

The competition act, 2002 was enacted with an objective of promoting competition and protecting the interest of consumers. The article will begin with the study of the evolution of the MRTP act and will analyze the loopholes in the act that led to the passing of the competition act. The article will mainly focus on the concept of merger and will also lay emphasis on the factors that has led in the increase of this business arrangement so extensively. The article will also discuss several kinds of merger. The article will profoundly analyse the role of the competition commission of India and the powers conferred upon it in regard to combinations under the act. The article will also make comparative analysis of merger under the European Union and the Indian competition Act. The main motive of the author behind writing this article is to make an easy understanding of the concept of merger and how it is regulated by the competition commission.

The Study of Merger And The Role of Competition Commission of India.
Evolution of MRTP ACT, 1969

The word socialist was added in the Indian constitution by the 42nd amendment. The main objective behind inclusion of the word in the preamble was to eliminate all the discriminations leading to inequality in income, status and standard of life. In pursuant of this objective the government was against concentration of economic power in few hands which may adversely affect the interest of weaker sections. In pursuance of the recommendation made by the monopolies inquiry commission a bill pertaining to monopolies and restrictive trade practices was presented before the parliament and the same act came into effect in the year 1969. The constitution of India through its article 38 and 39 strives to promote the welfare of people by securing and protecting as effectively as it may, a social order in which justice – social economic and political shall inform all institutions of national life that the ownership and control of material resources of the community are so distributed as best to serve the common good. The MRTP act derives its inspiration from these constitutional provisions.

Objectives of MRTP Act
Ø Prevention of concentration of economic wealth in few hands which prejudicially affects the interest of others.
Ø To put control over monopolies
Ø Prohibition of restrictive trade practices
Ø Prohibition of monopolistic trade practices
Ø Prohibition of unfair trade practices.[1]

Evolution of Modern Competition Law
The factors which led to the passing of MRTP act underwent tremendous changes which led to the framing of new competition Act. After the passing of the new act the policies of the Government of India changed from command and control to liberalisation and globalisation of trade. MRTP Act was considered to be the competition Law of India because it was mainly concerned with restraining any trade practices which have the effect of preventing or restraining competition.[2] But with the passage of the time it was realized that MRTP Act of the country was a weaker legislation on competition in comparison to the competition Law of other countries.

Then Finance Minister of India in his Budget Speech on 27th February, 1999 stated that: ―
“The Monopolies and Restrictive Trade Practices Act has become obsolete in certain areas in the light of international economic developments relating to competition laws. We need to shift our focus from curbing monopolies to promoting competition. The Government has decided to appoint a commission to examine this range of issues and propose a modern competition law suitable for our conditions”.[3]

A high Level committee on Competition Policy and law was constituted by the Government of India known as Raghavan Committee for examining various aspects and give suggestions to the government regarding the competition policy. Raghavan Committee report on Competition Law observed as follows:-
‘The absence of domestic competition, along with the unconditional protection from imports provided to domestic industry together with the other aspects of the licensing regime discussed above, fostered a high cost industrial structure which was domestically inefficient in the utilization of resources and not competitive abroad. In addition to the static mis- allocation and inefficient utilization of recourses, the system was also dynamically inefficient insofar as it was not likely to encourage technical change. On the other hand, a competitive market structure with right prices would have promoted a dynamic, efficient, productive and competitive industrial sector. Competitive financial sectors ensure better utilization of scare financial resources and have had a positive impact on the productivity of industrial sector”.[4]

In India, the MRTP Act was enacted in 1969 and was mainly concerned with the control of monopolies and prohibition of monopolistic and restrictive trade practices, not on fostering competition or protecting the interest of the consumer. This led to the passing of competition Act, 2002 that came into effect in the year 2003.[5]

A broad definition of competition is- “situations in a market in which firms or sellers independently strive for the buyers’ patronage in order to achieve a particular business objective for example, profits, sales, or market share” (World Bank, 1999).

Regulation of Combinations
The Competition Act, 2002 (as amended), is mainly concerned with promoting competition and providing protection to the Indian market by prohibiting any practices causing appreciable adverse effect. The act is mainly concerned with prohibiting three kinds of agreement that includes anti-competitive agreements, abuse of dominant position and the regulation of combinations (mergers and acquisitions). A combination is not void per se but if CCI is of prima facie opinion that the outcome of such transaction may results in appreciable adverse effect on competition (AAEC), then the CCI may issue a show cause notice to the parties under Section 29(1) of the Act to ask such parties to the combination as to why no investigation should be carried against them.[6]

Section 5 of the act defines combination and the provision pertaining to the regulation of the combination is contained in section 6 of the act. The competition commission of India is conferred with several powers under the act. Section 7 of the act provides provision for the constitution of the commission under the Act. Under section 29 of the Act the commission is empowered to conduct investigation into any combinations having detrimental effect on the competition in the market. There are certain orders which can be passed by the commission under Section 31 of the Act.

The competition commission Act also contains provisions pertaining to the establishment of Competition Appellate Tribunal under section 53A of the act. Any person aggrieved by the decision of the commission may appeal before the Appellate Tribunal.[7]

Mergers And Acquisitions (Combinations) Under The Competition Act,2002

In the last few decades the process of globalisation and liberalisation has rapidly changed. In the quest of this globalisation, there was liberalisation of the Indian economy which took place in the year 1991. The globalisation of the economy resulted in increasing the competition within and outside the Indian market. There has been rapid increase in cross- border merger and acquisitions activities of the Indian companies. The situation became so alarming that the immediate need was felt to prevent activities which was detrimental to the competition and which caused appreciable adverse effect in the market. The competition Act, 2002 was enacted with an objective for promoting competition and protecting the interest of the consumer. The competition act, 2002 mainly deals with three kinds of agreements like anti-competitive agreement, abuse of dominance and regulation of combination.[8]

Before discussing about combination, it is necessary to throw some light on the two important provisions contained under the competition act which is related to anti-competitive agreement and abuse of dominance. Section 3 of the competition act prohibits from entering into any kind of arrangement pertaining to production, supply, distribution, storage, acquisition or control of goods or provision of services, which causes or are likely to cause an ‘appreciable adverse effect on competition’’ in India.

Section 4 of the act contains provision pertaining to abuse of dominant position by an enterprise. Under the monopolies act, a threshold of 25% was constituted as apposition of strength in the market. But this threshold limit does not find any place under the competition act. Competition act for the purpose of determining the abuse of dominant position is mainly concerned with the relevant geographic market and the relevant product market.
Section 6 is considered to be a vital provision pertaining to combination. This section provides provision for the regulation of combination. Under this section the competitions act restrains from entering into any agreement that cause or are likely to cause an appreciable adverse effect on competition within the relevant market in India.

Combination Under Competition Act

Section: 5 of the Act provide the definition of the term combinations. It states that:
The acquisition of one or more enterprises by one or more persons or merger or amalgamation of enterprises shall be a combination of such enterprises and persons or enterprises, if-
1. If the parties to the acquisition acquire control over the voting rights, or control the shares or assets of the enterprise and the value of the asset is more than rupees one thousand crores or the turnover is more than rupees three thousand crores or where the value of the asset in or outside India is more than five hundred million US dollars.

2. Combinations also takes place when any group acquires an enterprise and control the shares, voting rights and assets of the enterprise in India where the value of the asset is more than four thousand crores or the turnover is more than twelve thousand crores, or when the aggregate value of the asset is two billion US dollar in or outside India.[9]

3. Combination also takes place when a person acquires control over an enterprise and directly or indirectly exercises control over another enterprises engaged in production, distribution, or trading of a similar or identical or substitutable services.

4. Combination is also considered to take place when the value of the asset of the enterprise after amalgamation or merger is more than rupees one thousand crores, or when the aggregate value of the asset within or outside India is more than five hundred million US dollars.

5. Where the group after merger or amalgamation would belong to the enterprise and it would have the assets of the value of more than rupees four thousand crores or the aggregate value of the assets is more than two billion US dollar within or outside India.[10]

Mergers Under The Competition Act

The term Merger has been used broadly in the competition act as to include amalgamation and acquisition of shares and control over the assets and the voting rights of an enterprise. Merger is a kind of event which brings tremendous change in the management of the affairs of one enterprise by another enterprise. Through merger one enterprise is entitled to exercise control over the significant part of the assets and the decision making power of the other enterprise. Merger is an ordinary activity which takes place between the business entities in order to expand their business. Merger is considered to be a significant activity for the enterprise as it provides the enterprises to run their business on a large scale.

But there are certain mergers which are considered detrimental and adversely affect the competition. The most negative impact of merger is that it leads to the reduction of competition in the market by reducing the number of entities in the market. Merger between entities also leads to the increase in price of the goods and services which prejudicially affects the interest of consumers as the merged enterprises exercises full control over the market and restrain the entry of new players in the market which confers on them the advantage of limiting the output and restricting market access.

Kinds of Merger
Ø Horizontal merger –This type of merger takes place between the enterprises that are engaged in the trading of similar goods and services. It mainly takes place to improve the market share and to carry out the operations of the enterprises on a large scale. This kind of merger has an adverse affect on the competition as it creates collaboration between the enterprises pertaining to pricing of the good and limiting the output.[11]

Ø Vertical Merger -Vertical merger is a kind of merger in which enterprises are engaged in different stages or levels of production chain in different markets, in respect of production, supply, distribution, storage, sale or price of, or trade in goods or provision of services.[12]

Ø Conglomerate Merger - Conglomerate merger is a kind of merger where two enterprises that merge together are involved in different kind of business. [13]The significance of conglomerate merger is that it helps the merging companies to enhance their activities and strengthen their financial position. There are two kinds of conglomerate merger, the first one is known as pure conglomerate merger which basically takes place between the companies who are doing business which is not related to each other. The other kind of conglomerate merger is known as mixed merger which is a kind of merger in which the main object of the enterprises are to expand their business and to gain market access and to increase the range of their products.[14]

Reason Behind Mergers And Acquisitions
In the recent years mergers between the enterprises has rapidly increased. The point listed below discusses the main reason behind increased mergers taking place:
i) Market share- Companies amalgamate to reduce competition and to gain dominant position in the market. The increase in the market share helps the enterprises in exercising their will and limiting the production and increasing the prices.
ii) Large economy- One of the most important significance of merger is that the scales of the business entities are enlarged and they carry operations on a large scale which in turn leads to the generation of huge amount of revenue.
iii) Diversification- Diversification leads to the increase in the trust of the consumers as diversification yields fruitful earnings for the companies.[15]
iv) Tax consequences- Companies amalgamate to evade tax. So it is one of the major factors which are considered while granting the order to merge as tax evasion creates loss of revenue to the government and prejudicially affects the economic development of the country.[16]

MRTP Act, 1969 Vis-À-Vis Competition Act (Combinations Provisions)

In the MRTP act, 1969 there was a requirement to obtain assent from the central government before entering into any merger or amalgamation between the enterprises. Howsoever this provision was deleted in the MRTP (amendment) Act, 1991. But the competition act, 2002 has made it obligatory for every enterprise to give a notice of such merger between the enterprises. Under MRTP Act, power was vested in the central government whereas in the competition act the power for regulation of the combination is vested in the commission constituted under the act and is known as the competition commission. The concept of asset or turnover outside India is a new concept and is implicit in the competition act but it had no place under the MRTP act. The concept of cross border merger was also introduced for the first time in the competition act, 2002.[17]

Merger Control Vis-À-Vis European Union and India
Merger takes place when two enterprises join hands for better and efficient functioning of their business enterprises. Merger is a common practice which prevails among the business entities. Different enterprise has different objective behind merger like reducing the output or raise objection to the merger.[18] The government may reject the merger on the ground that it is against the industrial or foreign policy which may yield adverse effect on the competition as it may lead to the production of illegal quality or quantity of a particular product of illegal quality or quantity of a particular product. Market players may raise objection against the merger as the merger result in anti-competitive practices merger restricts the entry of the new player in the market which increases the monopoly practices by the enterprises. Shareholders may also object if the merger is prejudicially affecting their interest. Similarly, individuals could oppose to a merger if the merger between the enterprises results in the increase of the price, reduction in the equality of the goods or other analogous practices.[19]

Hence, it can be said that merger apart from creating efficiency causes appreciable adverse effect on the competition and henceforth merger control is required. Merger control is based on the preventive theory and generally operates ex ante, i.e. to prevent a transaction adversely affecting competition, before it is put into practice. The cost of de-merging entities after the merger transaction is very heavy and not an easy operation for competition and other regulatory authorities.[20]

There has been rapid increase in the International trade and commercial activities. Cross-border transaction has increased rapidly with the growth of globalisation and liberalisation of trade. It has become vital for the nations engaged in cross-border merger to evolve a law for regulating merger and to be in consonance with the international trade community for nation states to have merger laws which are in concord with the international trade community.

Merger Control Under European Commission
On May 1st 2004 a new Merger Regulation was adopted by European Commission replacing the old EU merger regulation of 1990.EU Merger Regulation of 1990 prohibits the mergers that: “create or strengthen a dominant position as a result of which effective competition would be significantly impeded ”. The old substantive test basically has two interpretations. Firstly it states that concentration is prohibited if there is a creation of dominant position. Secondly it states that if the effect of change is such that it amounts to significant impediment of effective competition (SIEC). The Merger regulation adopted on May 2004 reformulated the substantive test and it states as follows: - "A concentration which would significantly impede effective competition, in particular by the creation or strengthening of a dominant position, in the common market or in a substantial part of it shall be declared incompatible with the common market”. Several critics has criticised this dominance based test. [21]The definition of dominance was laid down by European court Of Justice in United Brands v Commission[22]. The Court stated that: “The dominant position thus referred to (by Article [82]) relates to a position of economic strength enjoyed by an undertaking which enables it to prevent effective competition being maintained on the relevant market by affording it the power to behave to an appreciable extent independently of its competitors, customers and ultimately of its consumers.” The court stated that the concept of acting independently does not empower to make discrimination between dominant and non-dominant firms. Arguably the concept of "acting independently” does not provide an adequate basis for discriminating between dominant firms and non -dominant firms.[23] The court also stated that the enterprises are not at discretion to increase the prices without considering the customers or consumers. There are several advantages attached to merger, it helps in the expansion of business and develop new products. In Air France[24]the CFI found that: “… the Commission is bound to declare a concentration compatible … where two conditions are fulfilled, [1] the transaction … should neither create nor strengthen a dominant position and [2] competition … must not be significantly impeded by the creation or strengthening of such position”. Dominance is an important criterion for SIEC, so the court argued that “If therefore, there is no creation or strengthening of a dominant position, the transaction must be authorised, without there being any need to examine the effects of the transaction on effective competition”. The court stated that if there is no creation of dominant position, such kind of transactions must be authorised.

New Siec Test

The new SIEC does not consider dominance either necessary or sufficient. It was contended that that the old SIEC test leads to under-enforcement. It was stated that the merger may have anti-competitive effects even in the absence of dominance; it was argued that making dominance as one of the most important criteria the old test offered no legal basis to challenge anti-competitive agreement.[25]

Need For Adopting The New Test

There are two views to justify the need for then adoption of new test. The old two-tier test was incapable to address the perceived problems, such as the gap or the incorporation of efficiencies. The adoption of new test was needed to make it clear that what kinds of mergers are prohibited under the Act so that those kinds of mergers are not attempted.

The second view is that the new test makes a difference in the analysis of mergers itself. Dominance is mainly concerned with market power of the merged entity and ignoring these equilibrium effects may lead to significant errors. There are several benefits of the new merger regime and the new test should increase merger control effectiveness. The benefits can be classified into two categories.

a) Less false negatives: The main justification for reformulating the test is to eliminate the requirement to show dominance to challenge a merger. It reduces the anti-competitive mergers. Expected benefits can be classified into less false negatives (under enforcement) and less false positives (over-enforcement).[26]

b) less false positives- The new test focuses on the merger-induced changes to the competitive environment, not on whether the merged entity reaches an intolerable level of market power.[27]
By eliminating dominance as a necessary condition the new test focuses more directly on the principal economic question raised by a merger, namely whether competition is likely to be reduced.

Merger Control In India
Though the competition act came into force in the year 2003 but the provisions pertaining to anti-competitive agreements, abuse of dominant position came into effect in the year 2009. In the year 2011 proposal for the amendment to the provisions to the merger control was made by cci after consulting law firms, business entities and the stake holders.

In India Merger as a part of the combinations has been defined in section 5 of the competition act and the provisions relating to the regulation of the combination is defined in section 6 of the Act. Merger is an ordinary practice in the business world. It has several advantages like increasing efficiency and economy but there are several detrimental effects of merger. The effects are so severe that there was need felt to control merger. Any merger is considered to be prejudicial if it causes “Appreciable Adverse Effect” on competition. The term appreciable adverse effect has not been defined in the Competition act but any kind of merger having this effect is prohibited under the competition act. Section 20(4) of the Competition Act, 2002 provides the substantive test whether the combination has or is likely to have ―appreciable adverse effect on combination -. The substantive test encompasses examination of certain factors incorporated in the above section.

Some of the factors are:

a) Restraining entry of new players in the market
b) Advantage of the combination to the economy of the country
c) Extent of elimination of competition from the market.
d) The availability of substitutes in the market.
e) Whether the benefits of combination outweighs the adverse effect on competition.

Analysis of The Role of Competition Commission

Competition commission of India is a significant body of the Government of India. It is accountable for the enforcement of the competition act, 2002. Competition Commission plays an imperative role in preventing adverse effect on competition in India. Competition commission acts as a market regulator of all the sectors and primarily draws focus on curbing the anti-competitive practices which is detrimental to the competition. Competition Commission of Indiais empowered to take cognizance of the anti-competitive practices prevailing in the Indian market.[28] The Competition commission was established on 14 October and came into effect on May 2009.

Duties of Competition Commission
Competition commission has been entrusted with several duties under the competition act 2002. The primary duties of the competition commission are:
· To eliminate practices having appreciable adverse affect on competition
· To maintain competition in the market.
· To promote freedom of trade and eliminate any constraints in the entry in the market.
· To protect the interest of the consumers and to eliminate all the practices prejudicially affecting the interest of the consumers.[29]

To persuade new entities to enter in the market for producing better quality of good and delivering better services.
· Competition commission is also required to give its opinions on vital matters affecting competition or any reference made to it by the statutory authority.
· It is also the duty of the competition commission to create consciousness among the public and impart training facilities on competition issues.
Section 18 of the competition act deals with the duties of the competition commission of India.[30]

Power of the competition commission

There are several Powers conferred on the competition commission:
· It has the power to regulate its own procedure
· The commission has the power to call upon and take assistance from experts from various fields like field of economics accountancy and commerce etc. in the conduct of any inquiry it undertakes.
· In the discharge of its functions competition commission is required to follow the principle of natural justice and should comply with the provisions of the competition act 2002.[31]

Power of Competition Commission In Regard To Combination Under The Competition Act

There are certain powers conferred on the competition commission for regulating combination.section-6 of the competition act deals with the provision pertaining to regulation of combination. It states that no person should enter into any combination which is likely to cause appreciable adverse effect on competition within the relevant market in India and such a combination shall be void. [32]

1. Mandatory Notice- It is obligatory for any enterprises entering into any combination to notify the competition commission about the merger if the value of the aggregate assets and turnover exceeds the threshold limit provided under section 5 of the act. The required notice should be forwarded to the commission within a period of 30 days.

2. 210-Days Waiting Period- under the competition act it is provided that no combination will come into effect until 210 days have elapsed since the date of receiving the notice pertaining to combination by the commission or the date of passing of the order whichever is earlier.

3. Relevant Market-
Relevant market means ‘the market which may be determined by the Commission with reference to the relevant product market or the relevant geographic market or with reference to both the markets’. Relevant geographic market means ‘a market comprising the area in which the conditions of competition for supply of goods or provision of services or demand of goods or services are distinctly homogenous and may be distinguished from the conditions prevailing in the neighboring areas. Relevant product market means ‘a market comprising all those products or services which are regarded as interchangeable or substitutable by the consumer, by reason of characteristics of the products or services, their prices and intended use.

1) Form Filing And Cost- There are certain forms which are prescribed by the competition commission to be filed with notice of the combinations. The competition commission is also empowered to issue show cause notice to the parties of combinations if the commission is of the opinion that such combination if allowed will cause appreciable adverse effect on the competition.

2) Extra-Territorial Jurisdiction- Section 32 of the competition act confers an imperative power on the commission to inquire into any act pertaining to any agreement, abuse of dominant position or combination taking place outside India but adversely affecting the competition in India. In the Indian Competition Act, 2002 has the extra territorial jurisdiction.

Determination of Appreciable Adverse Effect on Competition

Appreciable adverse effect on competition is on significant factor for the regulation of the combination. The competition act has empowered the commission to evaluate the effect of combinations. There are certain factors that are considered by the competition commission while evaluating the effect of combination on the competition in the market. The factors for the regulation of the combination are contained in section -20(4) of the act.

The relevant factors are:
a. The actual competition that prevails in the market through imports in the market.
b. The availability of the substitutes in the market
c. Degree of countervailing power in the market
d. The market share of the enterprises entering into combination in the relevant market.
e. Likelihood that competition will eliminate competitors from the market and reduce competition.[33]
f. Likelihood that the combination would result in the rise of prices and limiting the output.
g. Restraining the entry of new players in the market.
h. Possibility of failing of business
i. Advantages to the economy of the country
j. Nature and extent of vertical integration in the market.
k. Whether the benefits of the combination outweigh the adverse impact on combination.[34]

Investigation of Combinations

The Competition Commission after receiving the notice of proposal pertaining to combination forms prima facie opinion that such combination is likely to or has caused appreciable adverse effect on the competition within the relevant market in India, the commission is under such circumstances empowered to issue show cause to the parties to the combination asking them to respond within a period of thirty days as to why the investigation should not be initiated against them.

The competition commission after receiving the report from the Director General or the response of the show cause notice by the parties whichever is later may issue direction to the parties to publish details of the combination within ten working days of such direction for informing the public and for inviting any objection raised by any person whose interest will be affected by such combination. The commission invites written objection from any aggrieved person or any person who is likely to be aggrieved to submit his objection within fifteen working days from the date on which the details of the combination were published.
The commission on the expiry of fifteen days may call for additional information and such additional information is required to be furnished by the parties within a period of fifteen days from the expiry of the period. The commission may after receiving all the information and within a period of forty five working days from the expiry of the period proceeds to pass orders.

Orders Passed By The Commission

The commission after conducting inquiry and investigation is of the opinion that any combination regarding which the notice has been forwarded to the commission does not have any adverse effect on the competition and it does not injures the interest of the consumer , in such circumstances the competition commission has the authority to approve such combination. Under the competition act combination is permissible but it is subject t o the condition that it does not defeat the purpose of the act that is to maintain competition and protect the interest of the consumer. If after the completion of the required inquiry into the combination the commission forms an opinion that such combination are likely to cause appreciable adverse effect on the competition it may issue an order of restraining such combination. Circumstances may exist where commission is of the opinion that the combination can cause appreciable adverse effect on the competition but such adverse effect can be eliminated through certain modifications. So the commission is empowered to issue an order pertaining to modification in such combination.[35]

The modification proposed by the competition commission should be carried out by the parties to the combination within a specified period as granted by the commission. In case of the failure of the parties to carry out the order, the commission treats such combination as a combination causing adverse appreciable effect on the competition and deals with such combination according to the provisions of the competition act.
In case the modifications proposed by the competition commission are not acceptable by the parties to the combination, in this situation the parties are empowered to propose certain amendments to the modification. If the amendments to the modifications are accepted by the competition commission, then it approves such combination and if such amendments are rejected by the commission then the parties are granted further 30 days to incorporate such modification in combination proposal. If the parties fail to comply with the order of the commission, then the commission treats such combination as causing adverse effect on the competition.[36] The provisions related to orders of commission on certain combination are contained in section-31 of the Competition act.[37]

Power To Impose Penalty

The competition commission is also empowered under the act after conducting inquiry into the matter pertaining to combination to impose a fine that can be extended to one percent of the total turnover or the assets of the combination, whichever is higher, for failure to give notice to the commission of the combination.

Appeals
The central government is empowered under the act to constitute Competition Commission Appellate Tribunal to hear any appeal or any direction issued or decision made by the competition commission under any provision of the act including any order related to combination. An appeal before the competition commission appellate tribunal is required to be filed within a period of 60 days after the passing of order or decision by the competition commission.

Conclusions
Combinations are the practices common to the business entities and the purpose of the combination is to accelerate economic growth and enhance trade practices which in turns benefit the consumers. Combinations are not always beneficial and might cause socio-economic implications on the competition as today’s competition may be tomorrow’s dominance. Before the enactment of the Competition Act, the Companies Act, 1956, MRTP Act, 1969 were the statutes mainly concerned with the regulation of merger. MRTP before its amendment which took place in the year 1991 had power to control restrictive trade practices (RTP) and monopolistic trade practices (MRTP) and was empowered to take action against any merger that has appreciable adverse effect on the competition. But after the amendment of MRTP Act which took place in the year 1991 for the liberalisation of trade resulted in the incompetence of the MRTP Act to control the unfair mergers. For the purpose of promoting fair trade practices and prohibiting any kind of practices which are detrimental to the competition, the competition act, 2002 was enacted. Competition laws of India underwent two amendments which took place in the year 2007 and 2012. These amendments had an imperative impact on the provisions of the merger under the competition act. By 2007 amendment the notification in regard to the combinations i.e. (Mergers, Acquisitions & Amalgamations) to the commission was made compulsory under the act. There was an increase in the combination limit by the 2012 amendment of the competition act which was a kind of relief for several kinds of merger.

The competition commission of India enjoys enormous power under the act. The main duty of the commission is to eliminate any adverse practices which are detrimental to the interest of the consumers. It is also empowered to conduct investigation if he forms a prima facie opinion that the combination is or are likely to cause appreciable adverse effect on the competition. It may also pass several orders for different mergers after considering several factors. It is also empowered to impose penalty which can exceed 1% of the total turnover or assets of the combination.

Henceforth it can be concluded that Merger has both positive and negative effect. In order to ascertain the true nature of merger it is necessary to study the objectives behind merger.

End Notes
[1]Brief outline of MRTP act. Available at www.businessgyan.com/node/133(Last visited on December 9, 2015)
[2]pradeep s. Mehta, evolution of competition laws and their enforcement
[3]Competition Law and Policy in India. Available at www.cci.gov.in/images/media/presentations (Last visited on December 9, 2015)
[4] “D.P. Mittal,Competition Law & Practice , (Taxmann Publishers)
[5]Repeal of the MRTP Act. Available at www.icsi.edu/cs/April2009/Articles/Repeal of the(Last visited on December 10, 2015)
[6]Combinations Regulations. Available at indiacorplaw.blogspot.com/2011/05/combination.( Last visited on December 10, 2015)
[7]Competition Appellate Tribunal, Available at mca.gov.in/Ministry/pdf/Competition_Appellate_Tribunal.
[8] DEVESH PANDEY, Mergers and Acquisitions (combinations)Under the Competition act, 2002. Available at 15, 2015)http://cacscorporatelaw.blogspot.in/2011/09/mergers-and-acquisitions-combinations.html (Last visited on December
[9] MR.M.GOVINDARAJAN, Regulation Of Combination Under Competition Act. Available At Https://Www.Taxmanagementindia.Com/Visitor/Detail_Article.Asp?Articleid=1113. (Last visited on December 16, 2015)
[10] H.K.Saharay, Competition Law, (Universal Law Publication Co. Pvt. Ltd., New Delhi, 2012).
[11]Horizontal Mergers. Available at http://www.lexuniverse.com/merger-acquisitions/US/Horizontal-Mergers.html (Last visited on December 18, 2015)
[13]Conglomerate Merger. Available at http://Www.Investopedia.Com/Terms/C/Conlgomeratemerger.Asp (Last visited on December 18, 2015)
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