CCI sets sights on local presence as global digital economy merger deals surge

Antitrust watchdog, the Competition Commission of India (CCI), has tightened its grip on global mergers and acquisitions in the digital economy. New regulations, issued late Monday, mandate stricter scrutiny for companies with a significant Indian presence. Any global deal involving a target company with over 10% of its global customers in India will now require CCI approval.

Additionally, transactions valued at ₹2,000 crore (approximately $240 million) or more must also undergo CCI clearance, as notified earlier on Monday. 

To further define substantial Indian operations, CCI has outlined additional criteria, such as 10% of a company’s global merchandise value or sales originating from India. If 10% of the company’s global merchandise value over the last 12 months comes from India and exceeds ₹500 crore, or if 10% of global sales stem from India, CCI approval is required.

The ₹500 crore exemption for small players does not apply to digital service providers, the CCI added.

With these rules in place, all global transactions exceeding ₹2,000 crore, where the target has a significant Indian nexus, must now be notified to the CCI. This requirement applies even to deals that are signed but not yet closed or partially completed.

The CCI has warned that if parties fail to notify deals meeting the new criteria, the regulator will initiate its own investigation to assess whether the transaction could have an adverse effect on competition within India.

Moreover, the CCI will consider all payments made within two years of the transaction, including those for technology assistance, intellectual property rights, branding, and marketing, when evaluating the deal’s value. Call options to purchase shares and open offers must also be factored into the notification process.

The move targets deals involving digital economy firms, which often have significant valuations and market influence but may not meet traditional asset and sales-based merger thresholds.

Exemptions and carve-outs narrowed

Anisha Chand, partner at law firm Khaitan & Co., noted that the existing carve-out for deals involving businesses with low assets and sales will not apply to the new regulations based on global deal value. The existing de minimis (based on asset and turnover) and deal value threshold are mutually exclusive, said Chand.

“Expect a number of transactions that were benefiting from de minimis exemption to require a prior clearance from the CCI now if they meet the deal value threshold criteria. Deals that are yet to be signed or will be signed on or after 10 September must re-examine their reportability status to the CCI,” Chand added.

As of March, acquisitions of companies valued up to ₹450 crore or with annual sales up to ₹1,250 crore were exempt from CCI review. However, this exemption no longer applies to entities that meet the new deal value and substantial Indian operation criteria.

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