Legislative Note: Regulation 5(9) of the Combination Regulations under the Competition Act, 2002

Abstract

After the provisions relating to combinations under the Competition Act, 2002 were brought into force accompanied with the coming into force of the Competition Commission of India (Procedure in regard to the transaction of business relating to combinations) Regulations, a number of uncertainties cropped up with respect to its applicability. Even after amending the regulations, in February 2012, the affected sectors still grappled with certain ambiguities in the finer details. One such issue deals with partial acquisition of an enterprise under Regulation 5(9) which has been discussed in this paper. It has been argued that no parameters have been laid down as regards the determination of the ‘purpose’ of the transfer of assets in cases where the transaction does not specify an express purpose. There have also been issues with regard to interpretation of these regulations in as much as even a liberal interpretation of these regulations would render the objectives of these regulations unfulfilled. Also, the dissonance between the global and Indian interpretation of these Regulations has inconvenienced the stakeholders. Taking these issues into account, it has been concluded that appropriate guidelines should be laid down to ensure that ‘purpose’ of the transaction can be determined with certainty and unrelated transactions are not treated as forming part of the same transaction. It has also been concluded that following the internationally accepted position in this area of law may actually be a beneficial position to take. The paper subscribes to doctrinal research through the use of primary and secondary sources of information, which have been critically analysed.