Whither Harmonization? India’s Draft Combination Regulations
Christine Wilson, Ellen Jakovic, Aaron Nielson, Apr 15, 2011
India's economy is fast becoming one of the largest and most vibrant in the world. While the recent global economic downturn has caused the economies of other large nations to stagnate, India's continues to thrive. Indeed, Willem H. Buiter, chief economist for Citigroup and a chaired professor at the London School of Economics, recently predicted that "India will be the largest economy in the world by 2050." The world is paying close attention to India and its remarkable progression into an economic superpower.
But rapid growth brings challenges. One formidable challenge facing India lies in crafting a merger review regime that protects the country's legitimate sovereign interests while avoiding the imposition of undue costs on merging parties and consumers. The magnitude of this challenge is apparent when one considers the remarkable amount of attention that has been paid to the lengthy process undertaken by the Competition Commission of India ("CCI") in preparing to launch India's merger regime. Each step in the process has been the subject of intense scrutiny and lively dialogue not only within India, but also around the globe. This lengthy process is drawing to a close: On March 1, 2011, the CCI published what it hopes will be the last draft of the Combination Regulations before they take effect on June 1, 2011.
The Draft Regulations present important questions for India, but also for international competition policy more broadly. Because a laudable relaxation of India's regulations governing both inbound and outbound investments has led to a rapidly increasing volume of trans-border deals, India's merger regime will affect countless transactions. Only with careful calibration can the CCI facilitate beneficial cross-border investment and trade while avoiding undue transaction costs on these deals and, consequently, unnecessary harm to consumers. Compounding India's challenge is the fact that many countries are creating or have recently created merger review regimes of their own. If India's merger review regime is perceived as being out of step with those of other countries, serious repercussions on deal flow could result.
This article examines the CCI's Draft Regulations in the context of India's rapid economic growth, with particular emphasis on how those regulations will impact the prospects of international harmonization of merger notification standards. While the CCI wisely has adopted many of the "best practices" suggested by the International Competition Network ("ICN") and the Organisation for Economic Co-operation and Development ("OECD"), it has not yet embraced key recommended practices. Accordingly, this article suggests that the CCI should review those aspects of its Draft Combination Regulations that depart from internationally accepted best practices and give careful consideration to whether conformity can be achieved.