Author: Kause Hrishikesh Eknath, Siddharth College of Law, Mumbai, Maharashtra
To the Point
India’s merger-control regime underwent a major transformation on 10 September 2024, when the Ministry of Corporate Affairs notified key provisions of the Competition (Amendment) Act, 2023 and the Competition Commission of India (Combinations) Regulations, 2024. The most significant reform is the introduction of the Deal Value Threshold (DVT). Under this regime, a transaction whose value exceeds INR 2,000 crore (INR 20 billion) requires prior approval from the Competition Commission of India (“CCI”) if the target has substantial business operations in India (“SBOI”), even where the transaction would otherwise qualify for the de minimis exemption.
This change is especially important for private-equity investments, technology acquisitions, start-up buyouts, and cross-border transactions where the target may have limited Indian turnover or assets but considerable commercial value. The DVT ensures that economically significant deals affecting Indian markets cannot escape scrutiny merely because the target is small by conventional asset or turnover tests.
The DVT operates alongside the traditional “combination” thresholds under Section 5 of the Competition Act, 2002. A “combination” includes an acquisition of shares, voting rights, assets, or control; a merger; or an amalgamation. Where the prescribed thresholds are met, the parties must notify the CCI and obtain approval before giving effect to the transaction.
The new test has two cumulative limbs:
1. Deal Value Test: The aggregate value of the transaction must exceed INR 2,000 crore. “Value” includes direct, indirect, immediate, and deferred consideration.
2. Substantial Business Operations Test: The target must have substantial business operations in India. For non-digital businesses, this is generally satisfied where Indian turnover or gross merchandise value (“GMV”) is at least 10% of global turnover or GMV and exceeds INR 500 crore. For digital-sector enterprises, the test may be met where India accounts for at least 10% of the target’s global business users or end users.
The reform also strengthens the concept of control. Indian merger control does not confine control to majority shareholding or formal board domination; it includes de jure control, de facto control, and material influence over management or strategic commercial decisions.
The legal basis for the DVT lies in the Competition (Amendment) Act, 2023, which amended the Competition Act, 2002 to introduce transaction-value-based notification. The Ministry of Corporate Affairs implemented this reform through notifications dated 9 September 2024, with effect from 10 September 2024.
The CCI’s Combinations Regulations, 2024 clarify how the deal value is to be computed. Where the transaction documents do not specify a definitive value, the consideration determined or estimated by the board of directors or the relevant approving authority may be treated as the deal value. This prevents parties from structuring consideration in a manner that obscures the real economic value of the acquisition.
The DVT is particularly relevant because it applies notwithstanding the de minimis exemption. Ordinarily, acquisitions of targets below certain asset and turnover levels may be exempt from notification. However, if the transaction value exceeds INR 2,000 crore and the target has SBOI, CCI approval remains necessary.
For example, suppose a foreign technology company acquires an Indian start-up for INR 2,500 crore. The start-up may have modest Indian revenue but a large Indian user base. If it satisfies the SBOI criteria, the acquirer must file a combination notice with the CCI before closing, despite the target’s limited traditional financial footprint.
This article examines India’s newly operational Deal Value Threshold and its implications for mergers,acquisitions, and private-equity transactions. Traditionally, Indian merger control focused on the assets and turnover of the acquirer, target, and group. The DVT introduces a complementary test based on the overall transaction value, ensuring that high-value acquisitions with an Indian nexus are subject to pre-closing antitrust review. The article analyses the statutory framework, the meaning of substantial business operations, the treatment of control and material influence, and the practical compliance obligations of transaction parties. It concludes that the DVT enhances regulatory oversight of modern, intangible-asset-driven deals but also increases diligence, structuring, and timing considerations for acquirers, investors, and legal advisers.
1. PVR Limited v. Competition Commission of India
In the PVR/DT Cinemas matter, the CCI examined an acquisition in the cinema-exhibition sector and emphasised the importance of assessing the competitive impact of a combination in the relevant market. The case illustrates that merger review is not merely a threshold-based formality; the CCI evaluates whether the transaction is likely to cause an appreciable adverse effect on competition (“AAEC”) in India
2. UltraTech Cement/Century Textiles
In the UltraTech–Century Textiles combination, the CCI adopted a broad interpretation of control. It held that control includes not only de jure and de facto control but also material influence over the affairs and management of an enterprise. Factors such as shareholding, special rights, board representation, financial arrangements, and commercial dependencies may establish material influence
This interpretation is significant for DVT analysis because a transaction may require notification even where the acquirer acquires minority rights, provided those rights confer material influence over the target’s strategic decisions.
In Zomato’s acquisition of Uber Eats’ India business, the CCI assessed the competitive effects of a transaction in the food-delivery market. Although predating the DVT, the case demonstrates the CCI’s willingness to examine transactions involving digital platforms, network effects, and market concentration. Such transactions are precisely the category most likely to be captured by the new user-based SBOI test.
The Deal Value Threshold marks a decisive shift in Indian merger control from a purely asset-and-turnover-based regime to one that also captures the economic value of a transaction. It closes a regulatory gap that previously allowed high-value acquisitions of low-turnover or asset-light targets—particularly digital and start-up businesses—to proceed without CCI scrutiny.
For M&A practitioners, the DVT has three practical consequences. First, competition-law analysis must begin at the term-sheet or letter-of-intent stage, not merely before signing. Second, transaction documents must clearly define consideration, including earn-outs, deferred payments, and interconnected transactions. Third, parties must assess SBOI early, especially where the target has a substantial Indian user base or GMV despite limited revenue.
The reform strengthens India’s merger-control framework and aligns it with global antitrust practices. However, it also demands greater precision in deal structuring, valuation, and regulatory strategy. For acquirers, the central lesson is clear: deal value alone can now trigger CCI notification. A transaction that appears small in operational terms may still be legally significant if its price and Indian nexus meet the statutory thresholds.
1. What is the Deal Value Threshold in India?
It is a merger-control trigger requiring CCI approval where the transaction value exceeds INR 2,000 croreand the target has substantial business operations in India.
2. Does the DVT apply even if the target is small?
Yes. The DVT can apply despite the de minimis exemption, provided the deal value and SBOI conditions are met.
3. What counts as “deal value”?
It includes direct, indirect, immediate, and deferred consideration. This may include upfront payment, earn-outs, and other forms of consideration connected with the transaction.
4. What is “substantial business operations in India”?
For non-digital businesses, it generally requires Indian turnover or GMV exceeding INR 500 crore and constituting at least 10% of global turnover or GMV. For digital businesses, India-based users may be the relevant measure.
5. Can a minority investment trigger merger control?
Yes, if the investment confers control or material influence over the target and the applicable thresholds are met.
6. When must the CCI filing be made?
The parties must obtain CCI approval before giving effect to the combination. Closing the transaction without approval may attract consequences under the Competition Act, 2002
