Role Of Competition Commission Of India In The Corporate Resolution Process: An Interplay

The acquisition of stressed assets or shares under the CIRP is not yet exempted from obtaining a clearance from the CCI

The Insolvency and Bankruptcy Code, 2016 (“IBC”) was enacted on May 28, 2016 with the primary objective to provide a consolidated law relating to reorganization and insolvency resolution of corporate persons, partnership firms and individuals in a time-bound manner for maximization of value of assets of such persons/entities.1 The IBC provides a time limit of 180 plus 90 days (subject to approval) for the completion of the Corporate Insolvency Resolution Process (“CIRP”) from the date of admission of the Insolvency Application by the National Company Law Tribunal (“NCLT”).2

Whereas, the Competition Act, 2002 (“Act”) was enacted to establish the Competition Commission of India (“CCI”) as a regulator, inter alia, entrusting it with the duty to prevent practices having an adverse effect on competition in India, promote and sustain competition in markets, and protect interests of consumers and ensure freedom of trade carried on by other participants in markets.3

It is mandated under the Act that all combinations meeting the prescribed asset and turnover threshold are to be notified to the CCI, provided they do not fall under any exemptions4, and the CCI is then required to approve or disapprove the same within 210 plus 60 days from the date of notifying.5

The acquisition of stressed assets or shares under the CIRP is not yet exempted from obtaining a clearance from the CCI. Therefore, in such an event where the proposed acquisition under the CIRP meets the prescribed asset or turnover threshold, it is mandatory for the parties to notify the CCI about the same and seek clearance for the proposed transaction.

The Interplay