The government has hiked the threshold for mergers and acquisition that do not need the Competition Commission of India’s approval.

In the new regime, companies are not required to notify the regulator if the acquired entity has assets (including subsidiaries) of less than Rs 450 crore and a turnover below Rs 1,250 crore. Previously, the thresholds were Rs 350 crore for assets and Rs 1,000 crore for turnover.

The Corporate Affairs Ministry (MCA) has in two separate notifications revised the ‘de-minimis’ or small target exemption threshold for exempting M&As from the purview of the Competition Act. It has also simultaneously revised upwards the ‘jurisdictional’ thresholds that trigger notification to and approval of the CCI before the deals are consummated.

Hitherto de-minimis or small target exemption is an absolute exemption available to transactions where the asset value in India does not exceed Rs 350 crore or the revenue from India does not exceed Rs 1,000 crore.

For the jurisdictional thresholds, the MCA has revised the thresholds — from the year 2016 specified levels — both at the enterprise level as well as group level in line with wholesale price index changes.

Vaibhav Choukse, partner and head of competition law, JSA Advocates and Solicitors, said: “This is a very important development concerning M&As in India. The government has increased the existing thresholds as prescribed under Section 5 of the Competition Act by 150 per cent.

“Further, the De Minimis or the Small Target Exemption thresholds have also been increased. This is in line with the government motto of ease of doing business in India as fewer M&A deals would require CCI approval.”

Amit Agarwal, partner, Nangia & Co LLP, said: “This is a significant development with respect to ease of doing business as well as mergers and acquisitions in India.”

Analysts, however, said revising the exemption limits upwards has its own challenges. For instance, a large number of start-ups don’t have assets or revenues in their initial years to qualify for CCI inspections at the time of their acquisitions. But they do add immense value for the acquiring companies after the deal, and could have implications for competition in the relevant markets.

When Facebook acquired WhatsApp in 2014, the deal didn’t come under the CCI’s purview because WhatsApp didn’t breach the thresholds.

Later, the deal caused a great deal of discomfort amongst regulators across the world, including the CCI, which couldn’t interfere in it despite the deal having a far-reaching consequences on the instant messaging market.