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Sec 5, Competition Act 2002: Combination

Section 5 under Chapter II (Prohibition of certain agreements, abuse of dominant position and regulation of combinations) of the Competition Act, 2002: Combination

The acquisition of one or more enterprises by one or more persons or merger or amalgamation of enterprises shall be a combination of such enterprises and persons or enterprises, if—

(a) any acquisition where—

 (i) the parties to the acquisition, being the acquirer and the enterprise, whose control, shares, voting rights or assets have been acquired or are being acquired jointly have,—
   (A) either, in India, the assets of the value of more than rupees one thousand crores or turnover more than rupees three thousand crores; or
   (B) in India or outside India, in aggregate, the assets of the value of more than five hundred million US dollars or turnover more than fifteen hundred million US dollars; or

 (ii) the group, to which the enterprise whose control, shares, assets or voting rights have been acquired or are being acquired, would belong after the acquisition, jointly have or would jointly have,—
   (A) either in India, the assets of the value of more than rupees four thousand crores or turnover more than rupees twelve thousand crores; or
   (B) in India or outside India, in aggregate, the assets of the value of more than two billion US dollars or turnover more than six billion US dollars; or

(b) acquiring of control by a person over an enterprise when such person has already direct or indirect control over another enterprise engaged in production, distribution or trading of a similar or identical or substitutable goods or provision of a similar or identical or substitutable service, if—

 (i) the enterprise over which control has been acquired along with the enterprise over which the acquirer already has direct or indirect control jointly have,—
   (A) either in India, the assets of the value of more than rupees one thousand crores or turnover more than rupees three thousand crores; or
   (B) in India or outside India, in aggregate, the assets of the value of more than five hundred million US dollars or turnover more than fifteen hundred million US dollars; or

 (ii) the group, to which enterprise whose control has been acquired, or is being acquired, would belong after the acquisition, jointly have or would jointly have,—
   (A) either in India, the assets of the value of more than rupees four thousand crores or turnover more than rupees twelve thousand crores; or
   (B) in India or outside India, in aggregate, the assets of the value of more than two billion US dollars or turnover more than six billion US dollars; or

(c) any merger or amalgamation in which—

 (i) the enterprise remaining after merger or the enterprise created as a result of the amalgamation, as the case may be, have,—
   (A) either in India, the assets of the value of more than rupees one thousand crores or turnover more than rupees three thousand crores; or
   (B) in India or outside India, in aggregate, the assets of the value of more than five hundred million US dollars or turnover more than fifteen hundred million US dollars; or

 (ii) the group, to which the enterprise remaining after the merger or the enterprise created as a result of the amalgamation, would belong after the merger or the amalgamation, as the case may be, have or would have,—
   (A) either in India, the assets of the value of more than rupees four-thousand crores or turnover more than rupees twelve thousand crores; or
   (B) in India or outside India, the assets of the value of more than two billion US dollars or turnover more than six billion US dollars.


Explanation.—For the purposes of this section,—

(a) “control” includes controlling the affairs or management by—
  (i) one or more enterprises, either jointly or singly, over another enterprise or group;
  (ii) one or more groups, either jointly or singly, over another group or enterprise;

(b) “group” means two or more enterprises which, directly or indirectly, are in a position to—
  (i) exercise twenty-six per cent. or more of the voting rights in the other enterprise; or
  (ii) appoint more than fifty per cent. of the members of the board of directors in the other enterprise; or
  (iii) control the management or affairs of the other enterprise;

(c) the value of assets shall be determined by taking the book value of the assets as shown, in the audited books of account of the enterprise, in the financial year immediately preceding the financial year in which the date of proposed merger falls, as reduced by any depreciation, and the value of assets shall include the brand value, value of goodwill, or value of copyright, patent, permitted use, collective mark, registered proprietor, registered trade mark, registered user, homonymous geographical indication, geographical indications, design or layout-design or similar other commercial rights, if any, referred to in sub-section (5) of section 3.





Extra Notes for Readers

(1) Modifications to Section 5 - by the Competition (Amendment) Act, 2007 (Act 39 of 2007) w.e.f. 20-May-2009:

 o item (B) in sub-clause (i) in clause (a) was substituted;
 o item (B) in sub-clause (ii) in clause (a) was substituted;
 o item (B) in sub-clause (i) in clause (b) was substituted;
 o item (B) in sub-clause (ii) in clause (b) was substituted;
 o item (B) in sub-clause (i) in clause (c) was substituted;
 o item (B) in sub-clause (ii) in clause (c) was substituted.






This page was last updated on 26th May, 2017.

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