Deal value threshold
Topic: Market Structures, Market Failure and Competition · NCERT: Beyond NCERT
Meaning
A deal value threshold makes a merger or acquisition reportable because of the price paid, not because of the target's assets or turnover. The Competition (Amendment) Act 2023 added it, and it came into force on 10 September 2024. A deal must now be notified to the CCI if both of these are true:
- its value is above ₹2,000 crore;
- the target has substantial business operations in India.
It targets digital and other asset-light start-ups. These firms can be very valuable while having little in assets or sales. Without this rule, "killer acquisitions" of such firms could escape review. A killer acquisition is when a big firm buys a young rival mainly to shut it down.
Example
Suppose a large tech firm pays ₹3,000 crore for an Indian app with millions of users but tiny revenue. The target is small enough to fall under the de minimis exemption (for small targets). Even so, the deal must be notified, because its value is above ₹2,000 crore.
Don't confuse with
- De minimis exemption: this exempts small targets from notification. From March 2024 that meant assets up to ₹450 crore or turnover up to ₹1,250 crore in India. The deal value threshold overrides it for high-value deals.
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