NEW DELHI: There is a need for revisiting the uniform threshold framework under competition law for mergers and acquisitions (M&A) since the current system might have a “blind spot”, according to the Competition Commission of India’s chief D K Sikri. Speaking at at a conference organised by industry body Assocham, Sikri said that the current system based on assets and turnover of companies might not be effective when it comes to deals in the digital space. Sikri also said the regulator would be writing to the government proposing changes in the threshold framework for M&A transactions.
Mergers and acquisitions beyond a certain threshold require approval from the Competition Commission of India (CCI). At present, there is a uniform criteria across sectors in terms of deciding on whether a particular deal need the regulator’s nod. Sikri said that a firm legal framework for data protection is the foundation on which datadriven innovation and entrepreneurship can flourish while also keeping personal data of citizens secure.
“Merger between companies that hold big data would allow the resultant entity to have even more tools to profile individuals and invade privacy. It is well known that many large tech companies require other companies with the primary objective of having access to data owned by that firm. In most of these cases, the deal size is strikingly high, reflecting essentially the value of the data owned by the target company,” he said at a conference here. According to him, since data is not accounted for as an asset, “the traditional asset (and) turnover criteria under competition law might fail to capture those transactions during review. That is our worry”. “This is because targets in these sectors have limited actual turnover or physical assets.
That is asset, turnover base notification threshold which we have in force in the country, in the digital sector they may have a blind spot. If relied on solely, we will not be able to take stock and evaluate them in mergers,” the CCI chairperson said. Speaking Sikri also noted that probably time has come to revisit the desirability of uniform threshold across sectors and pitched for sector-wise thresholds. “We are just proposing... We are writing to the (Corporate Affairs) Ministry,” he told PTI on the sidelines of the conference.