An NCLT scheme of amalgamation or demerger is a "combination" for the purposes of the Competition Act, 2002 where it crosses the prescribed asset, turnover, or deal value thresholds. The CCI's approval is a condition precedent to the implementation of the scheme, and the NCLT will not sanction a scheme that requires CCI approval without the approval having been obtained or the application having been made.
The Thresholds
The traditional thresholds are based on the assets and turnover of the combining parties. The 2024 amendments introduced a deal value threshold: a transaction valued above ₹2,000 crore requires CCI approval where the target has substantial business operations in India, even if the asset and turnover thresholds are not crossed. The de minimis exemption covers targets with Indian assets up to ₹450 crore or turnover up to ₹1,250 crore. The deal value includes earn-outs and other deferred consideration, and control is tested against a "material influence" standard.
The CCI-NCLT Coordination
The CCI and the NCLT operate on parallel tracks, and the scheme must be notified to the CCI at the appropriate stage. The NCLT's regulations require the petitioner to disclose whether the scheme requires CCI approval, and the Tribunal may adjourn the hearing until the CCI has decided. The CCI's review period is now 150 calendar days, with a 30-day prima facie phase, and the CCI may grant a deemed approval where it does not issue an order within the period.
The Supreme Court has held that CCI clearance is a "non-negotiable procedural imperative" before a resolution plan involving a merger or amalgamation can be considered by the Committee of Creditors under the IBC. The same principle applies to an NCLT scheme: the CCI approval is a condition of the scheme's validity, not a post-sanction formality.
The Green Channel
The CCI's green channel route is available for combinations where the parties have no horizontal overlap, no vertical overlap, and no complementary overlap. A scheme that qualifies for the green channel receives a deemed approval upon filing, and the CCI's review is not required. The green channel is a significant procedural saving for group restructurings that do not raise competition concerns.
A company that is planning an NCLT scheme must conduct the CCI analysis before the first motion is filed. The failure to obtain the CCI approval, or to disclose the requirement in the NCLT petition, can result in the scheme being rejected or in the CCI initiating an investigation after the scheme has been implemented.
Call to Action
Anuj Desai & Associates advises companies on the CCI approval requirements for NCLT schemes—from the threshold analysis and the deal value computation to the green channel eligibility and the coordination of the CCI and NCLT timelines. If your scheme involves a combination that may require CCI approval, we can help you plan the notification strategy.
📧 office@anujdesaiassociates.com
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