India is set to take a seat at the global M&A table. Prime Minister Narendra Modi’s government is preparing to give its antitrust enforcer a bigger say in overseas deals. India may have missed the boat to stymie Big Tech unions like Meta Platforms’ 2014 acquisition of WhatsApp, which boasts some 530 million users in the country today, but the new powers will nonetheless shake the world’s dealmakers.
Under a refreshed competition law, expected to be presented to parliament as early as today, all deals exceeding $253 million for firms with “substantial business operations in India” would require permission from the competition commission, according to Bloomberg. In the past, India focused on a merged entity’s asset size and turnover as a criteria to intervene. If lawmakers subsequently come up with a broad definition of what is deemed substantial, authorities will have a freer hand.
Antitrust blocks within the country are rare. In the first decade since India launched its merger control regime in 2011, the regulator approved over 700 filings; while it suggested some remedies for deals, it blocked none, lawyers at Shardul Amarchand Mangaldas say. Indeed, approval for Mukesh Ambani’s Reliance Industries to acquire its closest retail rival Future Group, a deal later torpedoed by the latter’s creditors in April, gives an impression that officials have been asleep at the wheel.
Pressure to act is building as M&A activity in the $3 trillion emerging market giant grows. Deals involving an Indian target amounted to $121 billion in the first half of the year, per Refinitiv, almost 6% of the total global value. That puts the country fourth after the United States, China and the UK.
Dealmakers can only hope India is a less complicating factor than its large neighbour. China has a track record of killing deals by withholding antitrust approvals: in 2018, for example, U.S. chipmaker Qualcomm was forced to walk away from its $44 billion acquisition of NXP Semiconductors after it failed to secure Beijing’s consent. At the time, the deal’s collapse was seen as collateral damage from China’s trade war with Washington. China may well have had concerns on patents or other business grounds but it left parties guessing, making it harder for companies to agree deals going forward.
India’s rising status as a huge consumer market and growing centre for global innovation give it plenty of reasons to have a big voice in making or breaking deals. Companies around the world will be paying close attention.
Source: Reuters.com