Combinations

Also called: Mergers and acquisitions (competition law) · Topic: Market Structures, Market Failure and Competition · NCERT: Beyond NCERT

Meaning

Combinations are mergers, acquisitions and amalgamations that cross set size limits. The size can be measured by the parties' assets or turnover, or since 10 September 2024 by the deal value. Such a deal must be notified to the Competition Commission of India (CCI) and approved before it closes. A combination that causes an appreciable adverse effect on competition (AAEC) is void, which means the law treats it as having no effect.

Why it matters: firms can gain market power (the power to raise prices above cost without losing all their customers) simply by buying their rivals. Merger control stops this problem before it is created. Cartel and abuse cases, by contrast, are usually punished only after the harm is done.

Explanation

How merger control works (Sections 5-6, Competition Act 2002)

• Step 1: Does the deal cross a threshold?
• Asset and turnover thresholds: notice is needed only if the parties' combined assets or turnover cross the set limits.

• Deal value threshold (DVT): a deal worth more than ₹2,000 crore must be notified if the target has substantial business operations in India [1].

• Step 2: Is the deal exempt?

• De minimis exemption (de minimis means "too small to matter"): from March 2024, the deal need not be notified if the target's assets in India are up to ₹450 crore or its turnover in India is up to ₹1,250 crore (verify current).

• Step 3: Notify the CCI and wait.

• India has a suspensory regime. The deal stays on hold until the CCI clears it.

• The overall time limit for review was cut from 210 days to 150 days by the 2023 amendment [1][3].

• Step 4: The CCI's test is AAEC.

• The CCI asks whether the merged firm would hurt competition in a real and noticeable way. For example, it might raise prices, block new entrants or push rivals out.
• It can clear the deal, clear it with changes, or block it.

Types of combinations (by how the parties are linked)

• Horizontal merger: between rivals at the same stage of production (for example, two cement makers).

• This type worries the CCI the most, because it directly cuts the number of competitors.

• Vertical merger: between firms at different levels of the supply chain (for example, a maker and its dealer).

• The risk is foreclosure, meaning rivals are shut out from supplies or from buyers.

• Conglomerate merger: between firms in unrelated or related-but-different businesses.

• Usually lower risk. But a firm can use leveraging (using its strength in one market to push into another).

• Green channel (2019): a deal with no overlaps is deemed approved on filing, so no wait is needed. "No overlaps" means the parties are not rivals, are not in a supply chain with each other, and are not in related businesses.

Why the deal value threshold was added (worked example)

• Problem: digital start-ups are asset-light. They have few physical assets and little revenue, but they have huge user bases and data. An old-style asset or turnover test misses them.
• Example:
• A global tech giant buys an Indian app for ₹5,000 crore.
• The app's assets are ₹100 crore and its turnover is ₹50 crore. Both are under the de minimis limits (₹450 crore / ₹1,250 crore).
• Before September 2024: no notice was needed. The deal escapes review.

• Now: ₹5,000 crore is more than ₹2,000 crore. If the app has substantial business operations in India, the deal must be notified [1].

• What this shows: in digital markets, the price paid often shows the target's competitive value better than its balance sheet does.

In India

• Law: Sections 5-6 of the Competition Act 2002. Merger control has been in force since 1 June 2011. The CCI itself was set up on 14 October 2003.
• Regulator: the CCI reviews combinations. The Ministry of Corporate Affairs sets the asset and turnover thresholds. It revised them in March 2024 as an "ease of doing business" step [5].
• 2023 amendment: the Competition (Amendment) Act 2023 (Act No. 9 of 2023, dated 11 April 2023) [2] made two changes to merger control:
• it added the ₹2,000 crore deal value threshold, in force from 10 September 2024 [1];

• it cut the review time from 210 to 150 days [1][3].

• Scale (2025): the CCI received 149 merger filings and disposed of 146 merger notices [3].

• Policy concern (2025): the Standing Committee on Finance asked the government to check whether the ₹2,000 crore DVT hurts the purchase of MSMEs (micro, small and medium enterprises) [4].
• Capacity gap: 42% of the CCI's 195 sanctioned posts were vacant in 2025 [4]. A shorter review clock puts more pressure on a small staff.

Don't confuse with

• Cartel (s.3 anti-competitive agreement): firms stay separate but secretly agree on prices, output or bids. In a combination, firms actually join through ownership or control. A cartel is punished after it happens. A combination is reviewed before it closes.
• Abuse of dominance (s.4): a firm that is already dominant misuses its power. Merger control stops a firm from becoming too powerful through a deal. Also, being big is lawful; only abuse is illegal.
• MRTP Act 1969 approach: it controlled firms by size alone. Under the 2002 Act, a large merger is allowed unless it causes AAEC. The law controls conduct and effect, not size.
• Green channel vs de minimis: a de minimis deal need not be filed at all because the target is small. A green channel deal is filed, but it is deemed approved on filing because the parties have no overlaps.

Prelims Hooks

• Merger control (ss.5-6) came into force on 1 June 2011. Anti-trust provisions (ss.3-4) came earlier, on 20 May 2009.
• India follows a suspensory regime: a notifiable combination cannot close until the CCI approves it. A combination causing AAEC is void.
• Deal value threshold: a deal above ₹2,000 crore, where the target has substantial business operations in India, must be notified. In force from 10 September 2024 [1].
• Trap: the 2023 amendment cut the merger review limit from 210 to 150 days. It did not raise it [1].
• Who does what: the Ministry of Corporate Affairs revises the asset and turnover thresholds (latest revision March 2024) [5]. The CCI reviews and approves the deals.
• Green channel (2019): deals with no horizontal, vertical or complementary overlaps are deemed approved on filing.

Mains Points

• Growth vs competition: after 1991, the shift from MRTP's "size" control to "conduct" control lets Indian firms merge to reach world scale. The March 2024 threshold revision and the green channel serve ease of doing business [5]. The CCI must still stop mergers that would leave consumers with too few choices. Use this to show that merger control links competition policy to the 1991 reforms.
• Digital markets and "killer acquisitions": large platforms can buy young rivals before they grow into a threat. The deal value threshold closes this gap for asset-light start-ups [1]. But the Standing Committee (2025) warned that it may also burden MSME acquisitions [4]. Argue for thresholds based on evidence, reviewed from time to time.
• Speed vs scrutiny: the 150-day clock and the green channel give businesses certainty [1][3]. But with 42% of CCI posts vacant (2025) [4], faster reviews risk being less careful. Reforms to suggest: more staff and tech experts, adequate budget, and formal coordination with sector regulators on deals in regulated sectors [4].

Related concepts

• Anti-competitive agreements
• Appreciable adverse effect on competition
• Horizontal agreement
• Bid rigging
• Vertical agreement
• Resale price maintenance
• Leniency programme
• Dominant position
• Relevant market
• Abuse of dominance

Read more

• Competition law in India: the Competition Act 2002 and the CCI