Abstract
The Indian legal regime for Mergers and Acquisitions (M&A) is primarily governed by the Companies Act, 2013 and the Competition Act, 2002. While the National Company Law Tribunal (NCLT) acts as the adjudicatory body overseeing corporate restructuring, the Competition Commission of India (CCI) ensures that such transactions do not lead to anti-competitive effects in the market. However, overlaps between their jurisdictions have led to interpretational and procedural conflicts. This article analyses the evolving roles of the NCLT and CCI, examines key statutory provisions and case laws, and explores the jurisprudential tension between corporate restructuring and competition regulation.
1. Introduction
Mergers and Acquisitions (M&A) have become essential instruments of corporate growth, consolidation, and restructuring in India. The post-liberalization era witnessed significant economic reforms that encouraged corporate combinations, but these developments also necessitated regulatory safeguards to prevent market dominance and protect stakeholders.
In India, two major authorities regulate the M&A process:
- The National Company Law Tribunal (NCLT) — under the Companies Act, 2013, focusing on procedural and shareholder protection aspects of mergers.
- The Competition Commission of India (CCI) — under the Competition Act, 2002, ensuring that combinations do not result in an “Appreciable Adverse Effect on Competition (AAEC)”.
Although these authorities function in different domains, their roles often intersect, especially in large-scale mergers, leading to jurisdictional overlap and procedural conflicts.
2. Statutory Framework
2.1. Role of NCLT under the Companies Act, 2013
The Companies Act, 2013 (Sections 230–240) lays down the legal framework for mergers, amalgamations, and compromises. The NCLT, established under Section 408, is the adjudicating authority empowered to sanction schemes of arrangement.
Relevant Provisions:
- Section 230: Power to make compromises or arrangements between a company and its creditors or members.
- Section 231: Power of NCLT to enforce and supervise such arrangements.
- Section 232: Deals specifically with mergers and amalgamations.
- Section 233: Simplified procedure for mergers between small companies or holding-subsidiary companies.
- Section 234: Permits cross-border mergers, subject to RBI approval.
- Section 238: Gives overriding effect to provisions relating to mergers over other laws.
Functions of NCLT in M&A:
- Sanctioning schemes of merger/amalgamation.
- Ensuring compliance with procedural requirements.
- Protecting interests of shareholders, creditors, and minority stakeholders.
- Overseeing post-merger integration and fairness.
2.2. Role of CCI under the Competition Act, 2002
The Competition Act, 2002 aims to prevent anti-competitive practices and regulate combinations. Sections 5 and 6 specifically deal with mergers, acquisitions, and amalgamations that cross certain asset or turnover thresholds.
Relevant Provisions:
- Section 5: Defines “combination” — includes mergers, acquisitions, and amalgamations that exceed prescribed thresholds.
- Section 6(1): Prohibits combinations that cause or are likely to cause an Appreciable Adverse Effect on Competition (AAEC).
- Section 6(2): Requires parties to notify CCI prior to consummating a combination.
- Section 6(2A): Stipulates that the combination cannot be given effect until CCI approval is obtained.
- Section 31: Empowers CCI to approve, modify, or reject a proposed combination.
Objective of CCI in M&A:
- Maintain market competition and prevent monopolies.
- Protect consumer welfare and market efficiency.
- Conduct economic analysis of market concentration (Herfindahl-Hirschman Index, etc.).
3. Overlapping Jurisdiction between NCLT and CCI
The jurisdictional conflict arises from the fact that both authorities deal with the same transaction but from different regulatory lenses.
- The NCLT focuses on corporate restructuring and stakeholder fairness.
- The CCI examines market competition and economic concentration.
However, both processes often occur simultaneously, and their orders may conflict in timing or effect.
For example, a merger approved by NCLT may still be blocked by CCI if it results in anti-competitive market dominance. Conversely, a CCI-approved merger may be rejected by NCLT on procedural or shareholder grounds.
4. Judicial Interpretation and Case Laws
4.1. Hindustan Lever Employees’ Union v. Hindustan Lever Ltd.
(1995) 83 Comp Cas 30 (SC)
In this pre-Competition Act case, the Supreme Court held that while sanctioning a merger, the court must ensure fairness and public interest. However, competition issues were not then separately regulated — a gap later filled by the Competition Act, 2002.
4.2. CCI v. Steel Authority of India Ltd. (SAIL)
(2010) 10 SCC 744
The Supreme Court clarified that the CCI has a distinct regulatory role in maintaining market competition. The judgment emphasized that the CCI’s jurisdiction begins once a combination notice is filed, independent of other corporate regulators.
4.3. Thomas Cook (India) Ltd./Sterling Holiday Resorts (India) Ltd.
(CCI Combination Order No. C-2014/05/170)
This case highlighted how the CCI views“control” and “combination thresholds.” Although the merger was sanctioned under the Companies Act, the CCI imposed certain conditions to prevent market dominance, showing the need for dual compliance.
4.4. Amazon.com NV Investment Holdings LLC v. CCI (2021)
The Delhi High Court observed that the CCI has broad discretion to assess transactions even after initial approvals, if concealment or misrepresentation is discovered. This case emphasized that CCI’s jurisdiction runs parallel to company law mechanisms.
4.5. Zee Entertainment Enterprises Limited–Sony Pictures Networks Merger (2022–2024)
This ongoing merger demonstrates modern complexities — while the NCLT evaluates shareholder and procedural compliance, the CCI assesses competition effects in the media and entertainment sector. The case exemplifies how NCLT and CCI roles intertwine and sometimes create regulatory delays.
5. Illustrative Example
Consider a hypothetical merger between Alpha Telecom Ltd. and Beta Communications Pvt. Ltd., two leading telecom operators.
- Under Section 230–232 of the Companies Act, they must approach the NCLT for sanctioning the scheme of merger.
- Simultaneously, under Section 6(2) of the Competition Act, the transaction qualifies as a combination and must be notified to the CCI for prior approval.
- The CCI conducts a market study and finds that post-merger, the combined entity would control 65% of the market share — likely to cause AAEC.
- CCI proposes structural remedies (divestiture of certain assets).
- NCLT, on the other hand, ensures that shareholders and creditors have approved the merger and that procedural fairness is maintained.
Thus, both approvals are required. If NCLT sanctions the merger before CCI clearance, the implementation remains in abeyance until CCI’s decision — illustrating the regulatory interdependence.
6. Jurisdictional Conflicts and Practical Challenges
6.1. Sequential vs. Parallel Approval
There is no uniform sequence on whether CCI or NCLT should approve first. Often, simultaneous applications create procedural uncertainty.
6.2. Conflicting Objectives
- NCLT → Protects corporate interests, fairness, and compliance.
- CCI → Protects market competition and consumer welfare.
Different priorities may result in contradictory conditions or timelines.
6.3. Time Sensitivity
While CCI has a 210-day review limit (Section 6(2A)), NCLT proceedings can be delayed due to hearings, objections, and notices, impacting deal finalization.
6.4. Lack of Coordinated Framework
No statutory mechanism currently mandates information-sharing or coordination between CCI and NCLT, leading to duplication of analysis and delay.
7. Harmonizing the Roles of NCLT and CCI
7.1. Sequential Regulatory Approval
A structured mechanism could be adopted where CCI approval precedes NCLT sanction, ensuring competition clearance before procedural sanction.
7.2. Inter-Agency Coordination
A Memorandum of Understanding (MoU) between CCI and MCA (Ministry of Corporate Affairs) could facilitate data sharing and synchronized decision-making.
7.3. Amendment to Section 230
Incorporating a clause mandating CCI clearance before final NCLT sanction can reduce conflicts.
7.4. Judicial Guidelines
Judicial pronouncements emphasizing complementary rather than conflicting roles of these authorities can ensure smoother implementation.
8. Comparative Perspective
In the United States, the Federal Trade Commission (FTC) and Department of Justice (DOJ) handle antitrust review independently before corporate approval, ensuring non-overlap.
In the European Union, mergers are subject to ex ante clearance by the European Commission, and corporate procedures follow thereafter.
India could adopt a similar “pre-clearance” model for CCI review before NCLT approval.
9. The Evolving Role
Over time, both authorities have evolved:
- The NCLT has transitioned from a procedural adjudicator to a quasi-judicial authority safeguarding stakeholder interests.
- The CCI has matured into a sophisticated regulator analysing market structures, vertical integration, and regulating digital economy mergers.
Recent CCI guidelines and faster combination approvals reflect this evolution. Similarly, NCLT benches are increasingly coordinating with other regulators, denoting institutional maturity and growth.
10. Conclusion
The Indian M&A landscape reflects a growing intersection between corporate and competition law. While both NCLT and CCI serve distinct purposes — one ensuring procedural and stakeholder fairness, the other safeguarding market competition — their concurrent jurisdiction often results in friction.
Judicial precedents, regulatory reforms, and better inter-agency coordination are essential to harmonize their functions. A sequential approval framework, where CCI clearance precedes NCLT sanction, could provide legal certainty and procedural efficiency.
As India continues to witness transformative mergers, particularly in the telecom, media, and technology sectors, the roles of NCLT and CCI must evolve in synergy rather than in conflict — ensuring that corporate growth aligns with market fairness and public interest.
Key References
- Companies Act, 2013 — Sections 230–240
- Competition Act, 2002 — Sections 5, 6, 20, 29–31
- Hindustan Lever Employees’ Union v. Hindustan Lever Ltd., (1995) 83 Comp Cas 30 (SC)
- CCI v. SAIL, (2010) 10 SCC 744
- Thomas Cook (India) Ltd./Sterling Holiday Resorts (India) Ltd., CCI Order (2014)
- Jet Airways/Etihad Airways, CCI Order (2013)
- Amazon v. CCI (2021)
- Zee Entertainment–Sony Pictures Merger, NCLT & CCI proceedings (2022–24)
Author Name- Abhineet Srivastava is a 2nd-year law student at the University of Allahabad
