The Competition Commission of India (‘CCI’) on March 31, 2022 revised the Form II notification (‘Long Form’) by way of an amendment to the CCI (Procedure in regard to the Transaction of Business relating to Combinations) Regulations, 2011 (‘Combination Regulations’). Long Form filings to be made after May 01, 2022 will need to be made in the revised format.
Long Form filing is typically notified to the CCI when either the combined market share of the parties to the transaction in any of the horizontal or vertical markets is above 15% and 25%, respectively. CCI’s revisions to the Long Form are primarily structural and seek to ensure consistency with the flow and manner of information requirement in Form I. Since most transactions are notified in Form I, streamlining information requirement across different type of filings will ensure consistency. Further, the revisions in the Long Form have introduced certain additional information requirements, but has balanced it out by reducing certain disclosures that required time-consuming information collection. We have set out the key revisions to the Long Form below:
I. Key Additional Disclosure Requirements
● Market facing information such as market shares of the parties, and their competitors; details of five largest customers and suppliers, for previous five years, for horizontal overlaps as well as vertical and complementary relations. Previously, the long form didn’t specify the time period for which such details were to be provided and in practice, such details were provided for the previous one to three financial years depending on the complexity of the transaction; ● A new section on vertical and complementary relations has been introduced which requires information in relation to structure of market and demand, factors effecting entry into the market, regulatory requirements, supply arrangements, entry/exits from and into the upstream – downstream relevant markets; and ● Details of potential disruptions in the relevant market, specifically technological disruptions, change in business models, etc., which seems to be driven towards assessing new age markets.
II. Reduced Disclosure Requirements
The Long Form no longer requires certain time consuming information, for example:
● Information on pricing policies and price lists for previous two years of the parties, competitors and by way of imports for each relevant product/service; ● Aggregate financial information for the proposed combination on a quarterly basis and for the last two financial years. Parties are now required to only provide their financial information for one year; ● Minimum viable scale, plant size, production volume, etc., required by parties to attain any cost savings; ● In-house consumption in terms of quantity and value for each relevant product/service; ● Details of the parties’ distribution channels and service networks including those that exist in the market; and ● Documents to show shipping or transportation costs incurred in the distribution of the similar or identical or substitutable products or services.
Key Takeaways This is the first time that the CCI has revised the Long Form since the merger control provisions were notified in 2011 in India. The CCI consulted the stakeholders before revising the Long Form to strike a right balance by adopting a more analytical approach for transactions that may significantly impact the market while reducing the burden on parties to collect information that was difficult to obtain. The revisions also structurally align the Long Form with Form I to bring in a degree of standardisation to merger control review in India. The CCI in its Press Release of April 04, 2022 also set out its intention to issue guidance notes for the revised Long Form in due course.