Since 10 September 2024, a transaction can require clearance from the Competition Commission not because of the assets or turnover involved, but because of what it is worth and where the target operates. The deal value threshold captures the high-value, low-asset deals that once slipped through, and it rewrites how acquirers must test a transaction before they sign.
Indian merger control was, for two decades, a test of size. A transaction needed notification to the Competition Commission of India only if it crossed asset or turnover thresholds, and a generation of digital and high-growth deals, long on valuation but short on balance-sheet assets, sat comfortably outside the net. The notification of the Competition (Criteria of Combination) Rules, 2024 and the revised Combinations Regulations, effective 10 September 2024, closes that gap by adding a wholly different test: the value of the deal itself.
The new rule is direct. Where the value of a transaction exceeds two thousand crore rupees and the target enterprise has substantial business operations in India, the combination must be notified to the Commission and cannot be completed until it is cleared, regardless of whether any asset or turnover threshold is met, and even where the target would otherwise have qualified for the small-target exemption. Size has not been abolished as a test; it has been joined by a value test that catches precisely the deals the old test missed.
Two concepts carry the regime, and both demand careful reading. 'Deal value' is expansive: it includes every form of consideration, direct and indirect, immediate and deferred, cash and share-swap, together with amounts agreed for ancillary arrangements such as non-compete covenants, licensing or supply, and the value of call options and open offers assumed as exercised. 'Substantial business operations in India' is defined through user and revenue metrics: for digital services, ten per cent or more of global users in India; for others, ten per cent or more of global turnover or gross merchandise value coupled with an Indian figure above five hundred crore rupees.
The procedural architecture tightened at the same time. The overall review timeline was compressed from two hundred and ten days to one hundred and fifty, filing fees for the long and short forms rose, and the standstill obligation, the bar on consummating a notifiable deal before clearance, applies with full force. The combination of a broader catchment and a firmer standstill means that more transactions are caught, and the cost of misjudging whether a deal is notifiable, in the form of gun-jumping penalties, is higher than before.
The grey area is assessment, and it bites earliest at signing. Computing deal value for a transaction laden with earnouts, options and non-compete payments is a matter of judgement as much as arithmetic, and a conservative reading in the term sheet can become an expensive one if the Commission takes a wider view. Assessing substantial business operations for a global digital target with diffuse Indian usage is harder still, and the regime applies to deals signed but not yet closed as of the commencement date, so transactions already in motion were pulled in without notice.
The disciplined response is to run the deal value and substantial-business-operations analysis at the letter-of-intent stage, not after signing, to document the basis on which notifiability was assessed, and to build the standstill and the clearance timeline into the transaction calendar rather than discovering them as obstacles.
