Battle For Regulatory Supremacy Ambiguity in The Definition Between SEBI and CCI
Battle For Regulatory Supremacy Ambiguity in The Definition Between SEBI and CCI
Battle For Regulatory Supremacy Ambiguity in The Definition Between SEBI and CCI
09
Cyril Shroff
Nisha Kaur Uberoi
JUNE 2014
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Suggested Citation:
Shroff, Cyril & Uberoi, Nisha Kaur. 2014. Battle for Regulatory Supremacy: Ambiguity in the
Definition of Control between SEBI and CCI, CIRC Working Paper No. 09. New Delhi: CUTS Institute
for Regulation & Competition.
Authors Bio:
Mr. Cyril Shroff is the Managing Partner of Amarchand & Mangaldas & Suresh A. Shroff & Co.,
Mumbai region.
Email: [email protected]
Nisha Kaur Uberoi is a Partner and Head of the Competition Law Practice, Amarchand & Mangaldas
& Suresh A. Shroff & Co., Mumbai region.
Email: [email protected]
The authors would like to acknowledge the contribution of Bharat Budholia, Senior Associate, Surya
Kiran Banerjee and Jayati Handa, Associates in the Mumbai Competition Law Practice. The views
expressed in the paper are personal.
Published By:
CUTS Institute for Regulation & Competition
R 75, First Floor
Greater Kailash I
New Delhi 110048
http://circ.in
[email protected]
+91 11 26463021/22/23
Abstract
The Indian regulatory regime is a complex system with multiple regulators
actively implementing parallel regulatory practices. The re are regulatory bodies
established in various sectors ranging from the Securities and Exchange Board
of India (SEBI), the Competition Commission of India (CCI), the Reserve
Bank of India (RBI), Telecom Regulatory Authority of India (TRAI), the
Insurance Regulatory and Development Authority (IRDA), the Central
Electricity Regulatory Commission (CERC),etc. The overlapping jurisdictions
of these regulators carries the risk of transactions being needlessly stalled due
to the multiple (and in some cases, contradictory) regulatory requirements that
need to be met to get a transaction approved. In light of the above, it is critical
that the various parallel regulatory approval processes are aligned to ensure
that the merger and acquisition ( M&A) activity is not hindered due to lack of
co-ordination between the various regulators or cumbersome procedural
formalities. This working paper analyses the potential areas of overlap between
the CCI and SEBI in reviewing transactions which require merger control
approval as well as trigger open offer obligations.
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Treatment of Acquisitions of
Control
Other than share acquisitions, the Takeover
Code and the merger control regime are also
simultaneously triggered in cases where there
is an acquisition of control. However, the
precise scope and threshold for the definition
of control under the Takeover Code and
under the Act is the subject of closely
scrutinized litigation and review by both
regulators and is determined on a case-bycase basis.
MANU/SC/1587/2011.
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(no
C-2013/05/122.
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Mismatch of Timelines
A big concern is the potential mismatch
between the timelines for an open offer and
the review of a merger notification for a listed
company. While both these processes run in
parallel, there have been instances where an
acquirer has had to pay interest under the
Takeover Code on account of the CCI review
process taking longer than the open offer
process (typically 60-90 days). The CCI is
required to provide its prima facie view within
30 days (excluding clock stops) of receipt of a
merger notification (Phase I review). If the
CCI is of the view that the proposed
transaction could raise competition concerns,
it can conduct an in-depth review of a further
180 days (excluding clock stops) (Phase II
review).
The proposed combination cannot be given
effect to until the CCI approves the merger
notification under the Act. However, under
the Takeover Code, the acquirer is required to
pay the shareholders who have tendered
shares within 15 days from closure of the
open offer process or pay interest until such
payment is made (even if such delay is on
account of other pending regulatory
approvals). Unlike the UK City Code on
Takeovers and Mergers, there is no process
for suspension of the Takeover Code while the
CCI is reviewing the merger notification.
http://www.sebi.gov.in/cms/sebi_data/attachdocs
/1399545948533.pdf
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Mismatch of Remedies
Conclusion
At present, there seems to be a lack of
consistent
coordination/co-operation
between CCI and other regulators in India.
However, this position is partially sought to be
addressed
under
the
Competition
(Amendment) Bill, 2012 (Bill), which
includes a proposal that other regulators are
required to mandatorily refer issues of
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About CIRC
CUTS Institute for Regulation & Competition (CIRC) was established in 2008 by
CUTS International (www.cuts-international.org). With the mission to be a Centre
of Excellence on Regulatory and Competition Issues, CIRC primarily focuses on
economic regulation in infrastructure sectors, and competition policy and law
with an objective of reaching out to the target audience in India and other
developing countries in Asia and Africa. Its crucial role in research and capacity
building in the area of competition policy and law and regulatory reforms has
created an intellectual knowledge base. This rich experience of working on
regulatory issues and competition policy and law has resulted in many national
and international publications which has enriched a more informed discourse on
public policies and greatly benefited different stakeholders in the society. Since
its inception, CIRC has been undertaking several trainings, seminars and public
lectures on competition policy and law in India and abroad. It also organises
international symposia on the political economy of competition and regulation in
the developing world and India.
CIRC offers practical focus on educational and training programmes on economic
regulation, and competition policy and law. The Institute aims to facilitate
research to enhance understanding and explore inter-disciplinary linkages
among the identified subjects. Increasing demand of long and short-term courses
offered by CIRC is appreciated by many national and international organisations.
The Institute has also made cerebral contribution in the work of the High Level
Committee on National Competition Policy.