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Supreme Court Resolves Regulatory Ambiguity Between IBC and the Competition Act February 6, 2025
Published in: Articles
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The Competition Act, 2002 mandates the Competition Commission of India (“CCI”) to regulate large sized mergers and acquisitions beyond high value thresholds (in terms of assets or turnovers) prescribed for “combinations” under the Competition Act, 2002 (“the Act”) to assess whether such transactions could adversely affect competition in the relevant markets, It is an ex-ante process which requires a deep and forward-looking economic analysis of the competition scenario likely to emerge post such proposed combination. In most cases, the CCI accords “conditional approvals”, requiring modifications such as disinvestment of overlapping assets to protect competition in the markets. On the other hand, the acquisition of strategic assets of distressed companies by resolution applicants under the corporate insolvency resolution process (“CIRP”) as envisaged under the Insolvency and Bankruptcy Code, 2016 (“IBC or Code”), may require prior approval from the CCI, if the Resolution plan contains and qualifies as a “combination” under the Act, before such Resolution plan is placed before the Committee of Creditors (“CoC”) for its approval.
This regulatory overlap between IBC and the Act, that is, the moot issue whether obtaining prior CCI approval for such Resolution Plans, which qualify as “combinations” under the Act, is mandatory or discretionary under the Proviso to Section 31(4) of the IBC has now been settled by the Supreme Court in Independent Sugar Corporation Ltd. v. Girish Sriram Juneja & Ors. decided on 29.01.2025.
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Article authored by:
Mr. MM Sharma
Head of Competition Law
E: [email protected]
and
Mr. Ankit Singh Rajput
Associuate
E: [email protected]
