Green Channel Route: Automatic Approval of Combinations under the Competition Regime of India

The Competition Act, 2002 defines ‘Combinations’ as acquisition of one or more enterprises or merger or amalgamation of enterprises which exceeds the threshold prescribed under the Act. The CCI keeps track of the market conditions and accordingly regularly updates the thresholds for the purposes of ‘Combinations’. The enterprises and groups are required to notify the CCI of the acquisition, merger or amalgamation, in case the joint assets or turnover or the total value of transaction(s) of the companies exceed the prescribed thresholds.

The CCI has introduced the ‘The Competition Commission of India (Procedure in regard to the transaction of business relating to combinations) Regulations, 2011’ (“Combination Regulations”) which regulates the procedure for the notification, review, and approval of the ‘Combinations’ by the CCI in India. The procedures and conditions laid down under the Competition Act and Combination Regulations, ensures that any resultant ‘Combination’ does not cause any appreciable adverse effect on competition in the relevant market in India.

As per the procedures laid down in the Competition Act and Combination Regulations, the entire process from notification to review to approval of a ‘Combination’ used to take 210+ days. However, vide the Competition (Amendment) Act, 2023, the time period has been reduced from 210 days to 150 days.

In 2019, the Competition Commission of India, considering the long period in ‘Combination’ review process, amended the Combination Regulations, and introduced the ‘Green Channel Route’ merger review process. The ‘Green Channel Route’ is an automated approval mechanism which acts to filter certain kinds of acquisition, merger or amalgamation transactions which are unlikely to cause any adverse effect to the competition regime. The ‘Green Channel Route’ bypasses the regular legal proceedings to enable speedy settlements and quicker administrative decisions, by eliminating the mandatory 150 days period under the Competition Act, otherwise applicable for ‘Combinations’.

Moreover, the Competition (Amendment) Act, 2023, has now formally included the ‘Green Channel Route’ to the Competition Act, by adding Section 6(4) and Section 6(5) in the Competition Act.

The Combination Regulations provide the methodology for self-assessment by a proposing party to a ‘Combination’. The proposing party is to consider all of the relevant market definitions in all cogent and reasonable manner to determine on their own whether the proposed transaction would come under the scope of the 'Green Channel Route’. The proposing parties should ensure that:

• There is no ‘horizontal overlap’ between the proposing parties, i.e., the proposing parties do not manufacture similar or identical or substitutable goods;
• There is no ‘vertical overlap’ between the proposing parties, i.e., the proposing parties are not involved in any activity relating to production, supply, sale and distribution of goods that belong to different levels of the product chain; and
• There is no ‘complimentary overlap’ between the proposing parties, i.e., the proposing parties are not involved in any activity relating to production, supply, sale and distribution of goods which act as complimentary to each other.

Proposing parties who meet the ‘Green Channel Route’ requirements, are required to submit the requisite form along with a declaration stating that the ‘Green Channel’ requirements & eligibility criteria have been met with and that the proposed ‘Combination’ will not have any significant negative impact on competition. If CCI determines that the transaction is suitable for processing via the ‘Green Channel Route’ an acknowledgment is issued which is deemed as approval under Section 31(1) of the Competition Act 2002.

Since the introduction of the Green Channel Route, the CCI has approved 80+ Combinations via the ‘Green Channel Route’. The ‘Green Channel Route’ provides for reliable and quick review of Combination cases, establishing an equilibrium between the proposing parties/companies and CCI, and creating a business friendly and healthy economic environment. The ‘Green Channel Route’ has also allowed ‘Combinations’ wherein the entities have exceeded the threshold limits as the actual proposed transaction did not pose any significant risks of negative impact on competition because their activities did not overlap.

The introduction of the CCI’s ‘Green Channel Route’ is another step forward in the ‘Ease of Doing Business’ initiative of the Government of India. The ‘Green Channel Route’ benefits the Indian and foreign corporations by creating a quick and smooth merger review system, that encourages more cross-border acquisitions, cross-border mergers and amalgamations.

Authors: Ms. Jayshree Navin Chandra is a Senior Partner and Mr. Naman Dutt is an Associate at Zeus Law. Views are personal.