Seeking to provide more flexibility for businesses, the Competition Commission has proposed changes to combination regulations to do away with the requirement for disclosing certain non-compete restrictions while seeking the watchdog’s approval.
Combinations – generally mergers and acquisitions -beyond a certain threshold need clearance from the regulator under the Competition Act.
The Competition Commission of India (CCI) plans to omit part of the combination regulation that seeks information regarding non-compete restrictions agreed between the parties to combination and justification for the same.
This would allow the parties flexibility in determining non-compete restrictions, while also reducing the information burden on them.
“However, the parties will be responsible for ensuring that their non-compete arrangements are competition compliant. Competition concerns, if any, that may arise from non-compete restrictions can be looked into under Sections 3 and/ or 4 of the Act,” CCI said in a release on Friday.
The regulator has been looking at non-compete restrictions stipulated in mergers and acquisitions while reviewing combinations. Notifying parties are required to furnish information on non-compete restrictions.
There is also a guidance note explaining the circumstances under which a non-compete restriction would be regarded as ‘ancillary’ or ‘not ancillary’.
“It has been observed that prescribing a general set of standards for assessment of non-compete restrictions may not be appropriate in modern business environments.
“While it may be possible to conduct a detailed examination on case by case basis, the same may, however, not be feasible considering the timelines followed in combination cases,” the release said.
Stakeholders can give their comments on the draft amendment to the combination regulations by June 15.