Article: Revised Antitrust Playbook for Dealmakers – Takeaways from CCI’s updated Merger Control FAQs

Revised Antitrust Playbook for Dealmakers – Takeaways from CCI’s updated Merger Control FAQs

I.  Introduction

The Competition Commission of India (“CCI”) has long played a pivotal role in regulating combinations¹ (“Combinations”) to ensure fair competition in the Indian market. In May 2025, the CCI released a comprehensive Frequently Asked Questions document (“FAQs”),² to replace the erstwhile FAQs pertaining to the CCI (Procedure in regard to the transaction of business relating to Combinations) Regulations, 2011 (“2011 Combination Regulations”), clarifying several nuanced aspects of the Indian merger control regime (and specifically in relation to the Competition (Combination) Regulations, 2024 (“2024 Combination Regulations”)). The following article provides a detailed analysis of the regulatory position before and after these FAQs, focusing on key topics such as control-conferring rights, deal value threshold (“DVT”), commercially sensitive information (“CSI”), open offer exemptions, inter-connected transactions, among many others. It also highlights practical considerations, pertinent for deal makers to navigate the regulatory landscape.

II. Key Highlights 

In 2023, CCI released substantial amendments to the Competition Act, 2002³ which came into effect on September 10, 2024 (hereinafter referred to as the “Amendment Act, 2024”). These amendments brought a paradigm shifting change to the competition regime by introducing the DVT, redefining control, expanding penalty bases, and providing for settlements and commitment mechanisms amongst others. However, over the course of two years, many ambiguities came to the forefront and were hence addressed by CCI in these FAQs. 

A. Control

• Pre-FAQs position

  “Control” under Indian competition law had always included not just the ability to influence management or policy decisions but also negative control, such as veto rights over strategic commercial decisions. The CCI’s decisional practice considered any right, even minority shareholder protection rights, that allowed a party to block or influence key business decisions, as conferring control. The Amendment Act, 2024 evolved the definition of control by broadening it from “decisive influence” to the ability to exercise “material influence”, which is the lowest degree of control.⁴

   

• Post FAQ position

  a. Material Influence

  The determination of “control” under Indian competition law hinges on the ability to exercise material influence over the management or strategic affairs of an enterprise⁵. This assessment is not limited to shareholding or board representation but extends to a range of factors, including veto or affirmative rights over key business decisions such as approval of budgets, business plans, or appointment and removal of senior management.

  b.  Ambit of control-conferring rights

  Aspect	Material Influence	Control-Conferring Rights	Previous Jurisprudence
  Post FAQ position	As discussed above, “material influence” can be attributed to the ability to influence management of the enterprise6. This assessment is not limited to shareholding or board representation but extends to a range of factors, including veto or affirmative rights over key business decisions such as approval of budgets, business plans, or appointment and removal of senior management.	Affirmative rights are considered to confer control if they allow a party to block or significantly influence strategic decisions; however, rights that merely protect minority interests, like anti-dilution rights, or tag-along rights, are generally not regarded as control-conferring rights. Similarly, consultation rights or the right to participate in meetings7 (such as observer status8) do not by themselves amount to control unless they are accompanied by either additional rights, or “material influence”. On the other hand, purely informational rights, standard minority protections, and routine operational matters are explicitly excluded from the scope of control-conferring rights.	CCI, over the years has defined several levels of control and they are as follows: (i) Material Influence: In UltraTech/Jaiprakash9, CCI defined material influence as the lowest level of control, considering shareholding, special rights, board representation, and financial arrangements. (ii)  De Facto Influence: In Meru Travel Solutions Pvt. Ltd.10, CCI observed that de facto control implies a situation where an enterprise holds less than the majority of voting rights, but in practice exercises control over more than half of the votes actually cast at a meeting   (iii) Controlling Interest/ De Jure Influence:   In UltraTech/Jaiprakash, CCI defined de jure control as higher forms of control. However, CCI limited the scope of controlling interest only to shareholding amounting to more than 50% shareholding in the company.   The CCI’s approach is fact-specific and not straitjacketed; broader affirmative matter buckets have led to case-by-case assessments rather than rigid thresholds, reflecting the open-ended and inclusive nature of the material influence test.

   

   

• Points to note for the deal teams:

  The bifurcation of rights into “rights that may potentially confer control” and “rights not ordinarily leading to a presumption of control” under the FAQs, is a welcome development which provides much-needed clarity on the intent of the regulator when assessing the rights packages of investors. While the bifurcation of these rights was practically understood amongst stakeholders through limited jurisprudence of the CCI on this topic, their codification in the FAQs will help investors assess the rights (right from the time of negotiation of the transaction to the execution of the definitive documents) in order to determine the potential notifiability requirement, given that this will largely be linked to whether the incoming investor has the ability to influence the outcome on policy and commercially strategic and operational matters.

  That said, the CCI has clarified that the bifurcation of rights is illustrative, and that the ability to influence outcomes within the target will continue to remain a factual case-to-case analysis. Accordingly, acquirers will have to view their consolidated bundle of rights (which may or may not be documented within transaction documents¹¹ and can be inferred factually) to assess the notifiability requirements. Examples of deals where this will have to be carefully gauged include co-invest arrangements or consortium bids, where inter se rights / shareholding may also contribute to the assessment of de facto control.

   

B.  Deal Value Threshold and Substantial Business Operations 

• Pre FAQ position

  Section 5(d) of the Competition Act¹², as amended by the Amendment Act, 2024 introduced the DVT as a new trigger for mandatory merger notification to the CCI. A Combination must be notified if (i) the transaction value exceeds INR 2,000 crore (approx. USD 231 million), and (ii) the target has substantial business operations (“SBO”)¹³ in India. Under Section 5(d) and Regulation 4(1) of 2024 Combination Regulation, “value of transaction” was interpreted broadly to include all forms of consideration, direct or indirect, immediate or deferred, inter-connected, in cash or otherwise¹⁴. 

   

• Post FAQ position 

  a. Substantial Business Operations in India

  Under the FAQs, the CCI clarified that share swaps are treated as two inter-connected acquisitions and must be aggregated to determine the overall deal value of the transaction. In other words, each limb of the share swap is assessed, which would make both parties to the transaction as “acquirers”, for the purposes of assessing the notifiability requirements.

  Additionally, when accounting for subsequent transactions, such as when an investor funds Entity A, which then acquires Entity B, the SBO test is applied differently.

  (i) For the investor’s funding of Entity A – the combined turnover or GMV of both Entity A and Entity B is considered, whereas;

  (ii) For Entity A’s acquisition of Entity B – only Entity B’s turnover or GMV is relevant, as the SBO test is applied at the level of the enterprise being acquired, i.e., the target.

  Further, acquirers are required to aggregate prior acquisitions by their group and the target’s group, in the same target if these occurred within two years of the transaction being notified.¹⁵ The FAQs further expand this requirement to include prior acquisitions by an investor or its group (within the last two years) in a target where their “affiliates”¹⁶ are proposing to invest¹⁷. Additionally, earnouts payable to key managerial personnel that are contingent on future growth must be included in the DVT calculation, on a best estimate basis.

  b.Inclusion of assumed debt in deal value

  When it comes to the inclusion of debt, pure debt transactions (such as for non-convertible debt instruments) are not notifiable and their value is not included in the value of the transaction. However, if the acquirer assumes any debt as part of the consideration for an acquisition, the amount of assumed debt must be included in the deal value. Finally, if a private equity fund invests in the same target through different special purpose vehicles, the value of the second transaction must include the first transaction for the purpose of evaluating the value of the transaction, ensuring comprehensive regulatory scrutiny of inter-connected investments.

  c. Inter-connected transaction 

  Under the FAQs, CCI has clarified that acquisitions by different investors in the same entity as part of a common funding round should not be treated as inter-connected transactions if there is no mutual understanding among them (which can be inferred from factors such as simultaneity, common agreements, mutual interdependence/conditionality, functional links and internal consideration of the investors)¹⁸. Furthermore, in the event there is a “meeting of minds” inter-se between the investors in the same series round, the transaction shall be considered as inter-connected in nature. This distinction ensures that only transactions involving a common understanding among investors are classified as inter-connected under CCI regulations.

• Points to note for the deal teams:

  The clarifications regarding SBO test lay down the evaluation metrics for downstream investments and share swaps much more clearly. Previously, the ambit of which entities’ turnover may be considered for subsequent acquisitions was not clearly outlined by the CCI. Additionally, the FAQs clarified that greenfield joint ventures do not require notification under the current regime.

  In the context of funding rounds involving investments from multiple institutional investors, it was previously unclear whether the investments of each of these investors (investing simultaneously) was to be considered to check whether these investments would potentially be considered inter-connected. The FAQs being much needed clarity on this through the prescription of a “meeting of the mind” test. That said, notification requirements may have to be assessed for investments being made for entities that may have a Limited Partners / General Partners relationship.

C. Call options 

• Pre FAQ Position

  For the purpose of evaluating deal value, the value of “call options” was required to be considered as though the call option has been fully exercised. The 2024 Combination Regulations clarified that in case any values cannot be established with reasonable certainty for undertaking the “value of the transaction test” for assessment of DVT, a best estimate can be taken from the board of directors / approving authorities of the proposed acquirer. However, this did not account for: (i) the various types of call options; and (ii) the impact of their vesting / exercise conditions on the potential utilization of the call option in the future. 

• Post FAQ Position

  FAQ 48 clarifies that a call option, as defined under Regulation 4(1)(d) of the 2024 Combination Regulations, is a contractual right, not an obligation, to acquire shares or securities at a future date, and its inclusion in DVT calculations does not depend on whether the holder ultimately exercises the option. Accordingly, the assessment for DVT is to include: (i) the consideration for the call option; and (ii) consideration for shares acquired pursuant to exercise of the call option.

  Conversely, the FAQs also clarify that a put option (i.e. a right (but not a requirement) to sell securities at a pre-agreed price / contractually determined price) shall not be included in the assessment of DVT.¹⁹

  Several factors determine whether an arrangement qualifies as a call option for DVT purposes.

  • Timing of Vesting of Call Option: Considering that call options typically vest into a holder: (a) once the binding arrangement capturing its availability is signed, or (b) upon a specified date / completion of a specified period, the FAQs test the vesting of the call option based on the underlying eventupon which such vesting is based. To clarify, where the vesting of the option is based on the conditionality of a possible future event which is not in control of the contracting parties or their affiliates, the value of such option is not considered for calculating deal value. The FAQs provide the example of a call option where vesting is linked to changes in FDI sectoral caps in the future. Considering that this event is not within the control of the parties or their affiliates, the value of such call option can be excluded for calculating DVT.

    That said, interestingly, it remains to be seen what type of trigger events may be deemed to be within the ‘control’ of contracting parties and their affiliates, and whether contractually added conditions (not linked to an underlying legal / regulatory change) such as performance criteria may be considered for the purposes of calculating DVT.

    Lastly, the FAQs state that if the entitlement vests only after two years, the option is excluded from DVT calculations. However, the acquirer must evaluate whether the exercise of such option, at a later date, is independently a notifiable transaction. It is possible that this clarification has been brought in to ensure that call options exercisable after two years (that may otherwise have been inter-connected to the Combination as on date), are reviewed by the CCI at a later point in time.

  • Underlying Security: If the entity whose shares can be purchased is pre-identified, the arrangement is treated as a call option and included in DVT calculations. This will even include call options entitling an acquirer to obtain shares of multiple entities at the same time.
  • Pricing: If the price or pricing formula is fixed in advance within the transaction documents, the call option is recognized and factored into the DVT calculation. Accordingly, call options linked to financial targets of the company will also be considered for assessment of DVT. This is based on a principle set out in the FAQs which clarifies that since the DVT, for the purposes of call options, is based on the “consideration” and not on the “fair value”, the agreed consideration between the parties for the call option would be the value of the transaction (regardless of any subsequent increase in the fair value of the consideration for the call option).
  • Number of Shares: If the number of shares or a formula (including formulas linked to shareholding of the acquirer) to determine the number is pre-determined in the transaction documents, this too qualifies as a call option and must be included in DVT calculations.
• Points to note for the deal teams:

  Few points that deal teams will have to take into consideration are as follows –

  1. Disclosures recommended: Investors will need to (i) closely monitor the vesting and exercise of call options and ensure timely filings when notifiability thresholds are crossed, and (ii) disclose call options in the notification if they form part of the consideration, even if they are not exercised immediately or ultimately do not materialize. The CCI FAQs indicate that call options must be assessed against the four key parameters outlined for DVT applicability and should be viewed in a consolidated manner, as the regulator aims to capture a wide range of call option permutations.
  2. Control of parties to be assessed with caution: Notably, the interpretation of ‘control’ of parties in the context of vesting remains unclear beyond the narrow example provided in the FAQs, placing greater responsibility on deal teams to negotiate trigger events with caution. This becomes particularly complex when targets are part of larger group structures with multiple affiliates, some of which may be capable of influencing or controlling the vesting event.
  3. “Affiliates” to be defined broadly: The inclusion of ‘affiliates’²⁰ in this context, could significantly expand the scope of analysis, especially in cases where the acquirer or its affiliates may be involved in the post-investment operations of the target.
  4. Transactions beyond two-year period to be approached with caution: Additionally, deal teams must be vigilant about the exercise of call options beyond the two-year period from the original transaction, as such events may independently trigger a fresh notification requirement under the Competition Act.

  Hence, structuring call options will therefore require careful attention to vesting conditions, pricing mechanisms, and exercise triggers.

   

D.  Digital services 

• Pre FAQ Position

  Explanation 2(d) to Regulation 4(2) of the 2024 Combination Regulations, defined digital service to mean the provision of a service or one or more pieces of digital content, or any other activity by means of an internet whether for consideration or otherwise to the end user or business user, as the case may be. This was a very ambiguous position that needed clarification, as the definition in this form could be interpreted to include any business which made use of the internet for its business operations.

• Post FAQ Position

  For a service to be classified as a digital service, two key criteria must be satisfied. First, the activity in question must qualify as a service and secondly, the mere use of the internet as a distribution channel does not automatically render an activity as a digital service.

• Points to note for the deal teams

  Even if a company has minimal assets or turnover, a large Indian user base can trigger CCI scrutiny as it will fall within the criteria for assessment of “digital services” under the 2024 Combination Regulations. Further, activities such as leveraging online platforms for distribution does not, by itself, transform a traditional product sale into a digital service. For instance, the FAQs provide a factual example in the context of an insurance company, to clarify that the utilization of digital channels by an insurance company to provide indemnification services does not ipso facto constitute a digital service, given that the underlying service is non-digital in nature.²¹

  This clarification is essential in that: (i) the analysis of “digital services” in the context of the target will be limited to offerings made through digital means (such as, for instance, platform-based services, e-commerce, clouds, online gaming, etc.); and (ii) accordingly, so long as any form of service and transaction (which, in both cases, is not non-digital in nature) is facilitated / coordinated through the use of an online platform, it may constitute a “digital service”. Therefore, the CCI has effectively broadened the ambit of the “digital services” test to also include assessment of whether any transactions (constituting an underlying digital offering) are undertaken by the target through digital means.

  That said, deal teams should err on the side of caution, typically in case of business models that operate interchangeably, both on digital and physical modes, and must additionally assess the underlying offering in order to determine whether these would constitute a “digital service”.

E. Commercially Sensitive Information (CSI) 

• Pre-FAQ Position

  There was ambiguity regarding the exchange of CSI and the ambit of what precisely constitutes CSI. Although CSI was formally introduced as a concept through the Competition (Criteria of Combinations) Rules, 2024 and Competition (Criteria for Exemption of Combinations) Rules, 2024 (“Exemption Rules”), the CCI has, through these FAQs, clarified its position with respect to the scope of CSI.

  This clarification is also important since it comes in the backdrop of a penalty imposed by the CCI on a financial investor in January 2025 (which was one of the first pronouncements on this topic after the introduction of the above rules),²² where the CCI had held that access to certified true copies of board / committee / shareholder meetings, coupled with information relating to the shareholding pattern of the portfolio company, constituted CSI. While this order provided some insight into what could constituted CSI, the FAQs have gone a step ahead in clarifying information that constitutes and does not constitute “CSI”, given that ambiguity continued to exit even in the aftermath of this pronouncement. 

• Post-FAQ Position

  CCI clarified that CSI refers to information that is important for maintaining / improving a business’s competitive position. CCI listed down the set of information that will be considered as CSI. These can be divided further into four broad categories, namely;

  1. Product related CSI – this will include prices, costs, profit margins, capacity, production, outputs, quality, and quantities including inventories;
  2. Customer related CSI – quality,sales, market shares, territories, terms with customers, customers list;
  3. Innovation and technology related CSI – variety or innovation, pipelines products, technology, research and development, trade secrets, marks and product patents; and
  4. Business operation related CSI – strategic planning, marketing plans, promotion plans, plans to enter/ exit the market, risks, investments, future business plans, budgets, annual business plans, and minutes of board meetings.

  Pertinently, CSI does not include unaudited or audited financial statements prepared as per generally accepted accounting principles that only contain such information as may need to be furnished to the Indian Registrar of Companies / equivalent foreign authority, information available to ordinary shareholders of the company which is not ordinarily required for commercial decision making, information disclosed by the enterprise in the public domain or otherwise readily ascertainable, ownership structure, general information, etc. It was further clarified that if an investor obtains only observer rights at board meetings through the initial round of investment and later gains access to certain CSI in subsequent investment rounds, they cannot claim the benefit of Exemption 3 under the Exemption Rules, as this exemption is strictly available to investors who hold a board seat as a director, not merely observer status.

• Points to note for the deal teams:

  These clarifications reflect the CCI’s intent behind restricting the access to CSI both: (i) during the standstill period (and including at the time of due-diligence and pre-closing phases of the transaction), and (ii) upon consummation of the investment.

  During the standstill period, the FAQs have introduced the concept of a “Clean Team”, which refers to limited teams of individuals that will have access to CSI during the due diligence and pre-transaction integration planning phases, in order to ensure that standstill obligations of the notifying parties are not violated. The FAQs also clarify that the Clean Teams should not include personnel involved in pricing, marketing, sales so as to ensure that commercially sensitive information is not accessed by persons that can impact the competitive prospects of the enterprise. However, it will be interesting to see how this interplays with the practical process of due diligence and commercial discussions at the structuring stage, particularly since a wide array of information will be required by acquirers to complete diligence. Further, information about critical litigations, material contract terms and settlements involving an enterprise may not be available

  For the purposes of undertaking an analysis of the contours of CSI that may be available to a potential acquirer upon the consummation of the investment, while illustrative, the categorization of information into CSI and non-CSI (within FAQ 166) provides insights into the regulatory intent and principles behind the bifurcation. Pertinently, it appears that only such information that may be readily accessible will not constitute CSI. Given the fact that the bucket of such information is likely to be narrow, deal teams should err on the side of caution when evaluating whether any CSI will be available to them prior or pursuant to the proposed transaction.

  Further, under the new merger control regime, since (i) availability of exemptions; and (ii) calculation of value of transaction depend on the acquirer’s group entities and affiliates, intra-group sharing of CSI must be carefully considered to avoid non-compliance with notification requirements, and the entities constituting part of the “affiliates” must particularly be examined carefully. 

III.  Conclusion

The CCI’s FAQs mark a significant step forward in bright lining India’s merger control regime. By addressing long-standing ambiguities and aligning with global best practices, the FAQs provide greater certainty for deal makers. However, the onus remains on parties to carefully assess their transactions, maintain robust documentation, and seek expert advice early in the deal process. As the regulatory landscape continues to evolve, proactive compliance and strategic planning will be key to successful deal-making in India’s dynamic market.

Author

- Sonakshi Babel, Gurkeerat Singh, Parina Muchhala, Anirudh Arjun and Nishchal Joshipura

You can direct your queries or comments to the relevant member.

¹Section 5, Competition Act, 2002.

²Available at: https://www.cci.gov.in/images/whatsnew/en/faq-book-english-compressed1747724324.pdf.

³Competition (Amendment) Act, 2023.

⁴FAQ #12.

⁵Explanation to Section 6, Competition Act, 2002.

⁶Id.

⁷FAQ # 17.

⁸FAQ # 20.

⁹https://164.100.58.95/sites/default/files/Notice_order_document/order/OC-2015-02-246_Section%2044.pdf.

¹⁰https://www.cci.gov.in/images/antitrustorder/en/252017-262017-272017-and-2820171652332138.pdf.

¹¹FAQ # 19.

¹²Section 5(d) of Competition Act, 2002.

¹³Regulation 4(2) of the 2024 Combination Regulation, sets out objective criteria for establishing SBO in India, particularly for digital and tech-driven businesses. An entity will be deemed to have SBO if: (i) 10% or more of its global customers are based in India for digital services; (ii) the gross merchandise value (“GMV”) attributable to India over a 12-month period is at least 10% of total global GMV and exceeds INR 500 crore; or (iii) the turnover from India is at least 10% of total global turnover and exceeds INR 500 crore. For digital services, the INR 500 crore monetary threshold is not applicable—only the percentage-based user or GMV criteria apply. If only a part of an entity is being acquired, the value of the transaction and the assessment of SBO are restricted to the relevant business segment or assets being acquired, rather than the entire entity.

¹⁴Value of transaction includes, but is not limited to, covenants, undertakings, obligations, all inter-connected steps or transactions, transactions carried out in the previous two years with the same target entity, payments due within two years but forming part of the transaction, the full value of call options assuming their exercise, and the best estimate of any contingent or future consideration, and upon failure to provide a best estimate, the DVT will be deemed to have been breached.

¹⁵Explanation (c) to Regulation 4(1) of the 2024 Combination Regulations.

^{16Rule 3(2)(b), Competition (Criteria of Combination) Rules, 2024.}

¹⁷FAQ # 51.

¹⁸FAQ # 69.

¹⁹FAQ # 47.

²⁰An entity is considered to be an affiliate of another enterprise if that another enterprise has–

(i)  ten per cent. or more of the shareholding or voting rights of the enterprise; or

(ii) right or ability to have a representation on the board of directors of the enterprise either as a director or as an observer; or

(iii) right or ability to access commercially sensitive information of the enterprise.

²¹FAQ # 56.

²²Our analysis of this order is available at: https://nishithdesai.com/SectionCategory/33/Research-and-Articles/12/63/NDAHotline/15259/1.html.

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