core sector communique

Government is Committed to bringing in a fair merger and Acquisition Regime in the Country however mergers that Create Monopolies or abuse of Dominance are Unaccetable - Murli Deora 

Union Minister of Corporate affairs Shri Murli Deora has assured the stakeholders especially the CEOs and Representatives of Corporate India that the Competition Commission of India (CCI ) will speedily clear mergers that increase efficiencies due to economies of scale, combined production plants, integrating procurement and pooling of R&D resources. Shri Deora was addressing a One day Conference on “Regulation of Combinations” at FICCI auditorium jointly organised by the FICCI and the Competition Commission of India here today. However, the Minister cautioned the industry that Competition Commission of India (CCI) will check mergers that end up in creating monopolies or abuse of dominance harmful to consumers and small producers and impede orderly economic growth.

Shri Deora said Government is committed to bringing in a fair merger and acquisition regime in the country, so that these regulations become an instrument of economic growth of the country. He said there is no denying the fact that effective and fair competition is a must for an orderly development of economy and compliance with the provisions of the competition law absolutely essential to attain this goal. However, this should not stifle the pace of M & A activity in India which is absolutely necessary for India’s economic growth at this juncture.

He said that the experience of developed capital markets and economies such as the US and Europe has made it increasingly evident that regulation of mergers and acquisitions helps in strengthening the market and its competitiveness to the advantage of consumers and the national economy. “It is in this context that the Government had notified Section 5 and 6 of the Competition Law relating to combinations including acquisitions, enquiries of control and mergers and amalgamations,” Shri deora added.

The minister opined that once the regulations come into force, they will have far reaching impact on the industry. FICCI has been actively involved in the consultative process with the Ministry of Corporate Affairs and CCI for having a law which does not impede the mergers and acquisitions and cross border transactions. The conference discussed, evaluated and sought industry’s feedback on the draft merger regulations so that these could be considered before its implementation

The Minister said that International experience shows that most mergers lead to increase in efficiencies that may result from achieving economies of scale, combined production plants, integrating procurement and pooling research and development resources and so on. He said since some mergers may end up in creating monopolies or abuse of dominance which may harm consumers’ and small producers’ welfare and impede orderly economic growth, the role of Competition is to check such mergers through merger regulations.

The one day conference was organised jointly by the Federation of Indian Chamber of Commerce and Industry (FICCI) and the Competition Commission of India (CCI) to provide an opportunity to various stakeholders to express their opinion and offer valuable suggestions on the draft framed by CCI on the Regulation of Combinations which would come into effect from 1st June, 2011.

Mr. R P N Singh, Minister of State for Corporate Affairs, said that the onus was on industry to see that the government formulates a policy that serves industry. He urged industry representatives to voice their concerns, inform the government and the Commission if they are wrong and suggest progressive steps for the implementation of the law.

Mr. D K Mittal, Secretary, Ministry of Corporate Affairs and Mr. Dhanendra Kumar, Chairman CCI, assured industry that the Commission was totally conscious of the imperative of ensuring that the Competition Law does not act as a brake, rather it should act as an accelerator for India’s business growth.

The conference was also addressed by Mr. Sidharth Birla, Chairman, FICCI Corporate Law Committee, Dr. Geeta Gouri, Member, CCI and Mr William E. Kovacic, Commissioner, Federal Trade Commission.

The conference witnessed presentations on the key provisions of the Competition Act on mergers and acquisitions; regulations on M & A activity in India; cross border transactions-the international experience and issues of Indian industries related to combinations.