CCI Approval for Foreign Acquisitions of Indian Companies

Why CCI Approval Matters for Foreign Acquisitions

The Competition Commission of India (CCI) is the statutory body that regulates mergers, acquisitions, and combinations to prevent anti-competitive practices in the Indian market. Under Sections 5 and 6 of the Competition Act, 2002 (as amended in 2023), any acquisition, merger, or amalgamation that exceeds specified thresholds must be pre-notified to the CCI and cannot be consummated until approval is granted.

For foreign companies planning to acquire an Indian target, CCI approval is one of the most critical regulatory gates. Unlike FEMA compliance or RBI filings, which are procedural, CCI review examines whether the acquisition will cause an Appreciable Adverse Effect on Competition (AAEC) in the relevant market in India. A negative CCI determination can block the entire transaction.

The Competition (Amendment) Act, 2023, which took effect on 10 September 2024, introduced significant changes to India's merger control regime. These include a new deal value threshold (DVT), revised asset and turnover thresholds, a reduced review timeline of 150 days (from 210 days), and updated de minimis exemptions. Foreign acquirers must understand this revised framework before structuring their India acquisition strategy.

When Is CCI Notification Required?

CCI notification is required when an acquisition, merger, or amalgamation qualifies as a "combination" under Section 5 of the Competition Act. The determination depends on whether the parties breach specified thresholds based on assets, turnover, or deal value.

Asset and Turnover Thresholds

A transaction triggers CCI notification if the combined entity (or the acquiring group) exceeds either of the following sets of thresholds:

Deal Value Threshold (DVT) — New Since 2024

The 2023 Amendment introduced a deal value threshold: any transaction where the deal value exceeds INR 2,000 crore (approximately USD 240 million) requires CCI notification, provided the target enterprise has "Substantial Business Operations" (SBO) in India. This was designed to capture acquisitions of high-value digital or asset-light companies that may not meet traditional asset/turnover thresholds but have significant market impact in India.

SBO is determined based on factors including the number of users, subscribers, or customers in India; gross merchandise value generated in India; and the proportion of India-derived revenue to global revenue.

De Minimis Target Exemption

Even if the acquirer breaches the thresholds above, the transaction is exempt from CCI notification if the target enterprise has:

• Assets in India of not more than INR 450 crore, OR
• Turnover in India of not more than INR 1,250 crore

However, this de minimis exemption does not apply to transactions that meet the Deal Value Threshold. If the deal value exceeds INR 2,000 crore and the target has SBO in India, notification is mandatory regardless of the target's asset or turnover size.

Types of CCI Notification: Form I vs Form II

The CCI accepts two types of combination notification forms, each suited to different transaction profiles:

Form I (Short Form)

Form I is a simplified notification used when the combined market share of the parties in the relevant market is not significant. Specifically, Form I is appropriate when:

• The combined market share of the parties does not exceed 15% in any relevant market for horizontal overlaps
• The individual or combined market share does not exceed 25% for vertical relationships
• There are no complementary product/service concerns

The filing fee for Form I is INR 30 lakh (approximately USD 36,000). Most foreign acquisitions of Indian companies — particularly those involving entry into a new market or vertical — qualify for Form I.

Form II (Long Form)

Form II is a detailed notification required when the transaction involves significant market share in the relevant product or geographic market. This form requires extensive market definition analysis, competitive assessment, and economic data. The filing fee for Form II is INR 90 lakh (approximately USD 108,000).

Foreign acquirers should note that filing the wrong form can delay the review. The CCI may ask parties to convert a Form I filing to Form II if it determines the short form is insufficient, adding 15-30 days to the review timeline.

The Green Channel Route

The CCI introduced a "green channel" route for transactions where the parties (including their group entities and affiliates) have:

• No horizontal overlaps in any product or service market in India
• No actual or potential vertical relationships
• No complementary product or service relationships

Transactions filed through the green channel are deemed approved upon the CCI acknowledging receipt of the notification. This means approval is effectively instant. The green channel is particularly useful for foreign companies entering India for the first time through an acquisition, where the acquirer has no existing presence in the Indian market.

However, the CCI retains the right to revoke green channel approval within the normal review period if it later determines that overlaps or complementary relationships exist. Filing false or misleading information to qualify for the green channel can attract penalties under Section 44 of the Competition Act (up to INR 1 crore) and potential criminal liability.

CCI Review Process and Timeline

The merger review process under the 2023 Amendment operates in two phases with a total review period of 150 calendar days (reduced from 210 days under the previous regime).

Phase I: Initial Review (30 Days)

Upon receiving a valid notification (complete Form I or Form II with the correct filing fee), the CCI must form a prima facie opinion within 30 calendar days on whether the transaction is likely to cause AAEC. During Phase I, the CCI reviews the notification and supporting documents, may request additional information from the parties (which pauses the 30-day clock), and consults with sector regulators if applicable (e.g., SEBI for listed company acquisitions, RBI for financial sector deals).

If the CCI concludes in Phase I that the transaction does not raise competition concerns, it issues an approval order. Approximately 85-90% of transactions are cleared in Phase I, typically within 20-30 working days.

Phase II: Detailed Investigation (Up to 120 Days)

If the CCI identifies potential AAEC concerns, it moves the transaction to Phase II for a detailed investigation. Phase II involves extensive market analysis by the CCI's investigation teams, requests for information from competitors, customers, and industry bodies, potential hearings with the parties and third parties, and negotiation of remedies (behavioral or structural) if the CCI finds competition concerns.

Phase II approvals are rare — fewer than 5% of notified transactions reach this stage. However, Phase II investigations can take the full 120 remaining days (or longer, accounting for clock-stops).

Possible Outcomes

The CCI can issue one of three outcomes:

1. Unconditional Approval: The transaction is cleared without conditions
2. Conditional Approval: The transaction is approved subject to remedies (e.g., divestiture of overlapping business, behavioral commitments, market access obligations)
3. Prohibition: The transaction is blocked entirely (extremely rare in India; the CCI has not formally blocked any transaction to date, though some have been withdrawn after CCI raised concerns)

Filing Fees and Costs

The total cost of CCI merger notification goes beyond the filing fee:

Payment is made by demand draft or banker's cheque payable to the Competition Commission of India (Competition Fund), or via ECS direct remittance to the CCI's designated bank account at Punjab National Bank.

Gun-Jumping Penalties: What Happens Without CCI Approval

"Gun jumping" — consummating a notifiable transaction without or before CCI approval — carries severe penalties under Section 43A of the Competition Act:

• Penalty amount: Up to 1% of the total turnover or total assets of the combination, whichever is higher
• Recent enforcement: In 2025, the CCI imposed penalties ranging from INR 20 lakh to INR 1 crore on companies that consummated transactions before filing or obtaining approval
• Broader consequences: The CCI can order unwinding of the completed transaction, which is commercially devastating for all parties

Gun-jumping also includes pre-closing coordination where the acquirer exercises control over the target's business decisions before approval. This includes directing pricing decisions, vetoing the target's commercial contracts, or integrating operations. Even exchanging competitively sensitive information between signing and CCI clearance can constitute gun-jumping.

Foreign acquirers must ensure that the Share Purchase Agreement (SPA) or other transaction documents include a CCI condition precedent and that the management of the target company continues to operate independently until CCI clearance is received.

Interaction with Other Regulatory Approvals

CCI approval is typically one of several regulatory gates for foreign acquisitions of Indian companies:

• FDI Approval: If the sector requires government approval route for FDI, DPIIT/sectoral ministry approval must be obtained. CCI and FDI approvals can be pursued in parallel.
• RBI/FEMA Filings: FC-GPR filing with the RBI is required within 30 days of share allotment. This is a post-closing requirement but depends on CCI clearance being obtained first.
• SEBI Requirements: If the target is a listed company, the acquirer must comply with SEBI Takeover Code (SAST) requirements, including mandatory open offer if acquiring 25% or more of voting rights.
• Sector-Specific Regulators: Insurance (IRDAI), banking (RBI), telecom (DoT), or defence (MoD) acquisitions may require additional sector-specific approvals.

The typical foreign acquisition timeline accounts for 2-4 months for CCI clearance, running concurrently with other regulatory processes. Companies should also factor in post-acquisition RBI and ROC filings that must be completed after CCI clearance and deal closing. A comprehensive valuation analysis should be completed during due diligence to support the CCI notification with defensible market data. Working with experienced FDI advisory professionals ensures that all regulatory workstreams — CCI, FDI, SEBI, and sector-specific approvals — are managed cohesively. Understanding the CCI merger approval framework in detail is essential before initiating any cross-border acquisition in India.

Practical Strategies for Foreign Acquirers

Pre-Notification Assessment

Before filing, foreign acquirers should conduct a detailed assessment of whether notification is required. This involves calculating whether thresholds are triggered at both the enterprise and group level (including all affiliates worldwide), analyzing whether the de minimis exemption applies, determining whether the deal value threshold is triggered, and mapping horizontal overlaps, vertical relationships, and complementary products/services with the target.

Pre-Notification Consultation

The CCI allows parties to seek an informal pre-notification consultation before filing. This is particularly useful for complex transactions where the parties are unsure about market definition, the appropriate notification form (Form I vs Form II), or whether the green channel is available. Pre-notification consultations are confidential and do not start the review clock.

Structuring the Transaction

Transaction structure can affect CCI analysis. For example, a phased acquisition (first acquiring a minority stake, then increasing to majority control) may avoid triggering thresholds initially but will require notification when control shifts. Acquirers should also consider whether to structure the deal as an asset purchase or share purchase, as each has different implications for market share calculation and competitive assessment.

Timeline Management

Build CCI clearance into your transaction timeline from day one. Best practices include:

• Begin CCI analysis during due diligence, not after signing
• Prepare the CCI notification in parallel with SPA negotiation
• File the CCI notification within 1-2 weeks of signing
• Engage specialized Indian competition law counsel early
• If green channel is available, file immediately upon signing for near-instant approval

Due Diligence Checklist for CCI Compliance

Foreign acquirers should integrate CCI compliance into their acquisition due diligence from the outset. The following checklist ensures no critical steps are missed:

Pre-Signing Phase

• Threshold analysis: Calculate combined assets and turnover at both enterprise and group level. Include all affiliates, subsidiaries, and joint ventures worldwide in the group calculation
• Market definition: Identify the relevant product and geographic markets in India. Assess horizontal overlaps, vertical relationships, and complementary products/services between the acquirer's group and the target
• Green channel eligibility: Determine if the transaction qualifies for the green channel route by confirming zero horizontal, vertical, or complementary overlaps
• DVT assessment: If deal value exceeds INR 2,000 crore, assess whether the target has Substantial Business Operations in India based on users, revenue, and market presence

Signing to Filing Phase

• SPA provisions: Include a CCI condition precedent clause, specify cooperation obligations for information sharing, and address risk allocation if CCI imposes conditions or blocks the transaction
• Information barriers: Establish clean team protocols to prevent exchange of competitively sensitive information between signing and closing, which could constitute gun-jumping
• Notification preparation: Engage Indian competition law counsel to prepare Form I or Form II immediately after signing. Early preparation can reduce filing time by 2-3 weeks

Post-Filing Phase

• Response management: Designate a team to respond to CCI queries promptly — delays in responding pause the review clock but extend the overall timeline
• Remedies planning: If Phase II is likely, prepare potential remedy proposals (divestiture plans, behavioral commitments) in advance
• Integration planning: Plan post-closing integration activities but do not implement them until CCI clearance is received. Premature integration constitutes gun-jumping

Recent Trends in CCI Merger Review (2025-2026)

Several trends are shaping the CCI's approach to foreign acquisitions in 2025-2026:

• Increased scrutiny of digital markets: The DVT was specifically designed to capture acquisitions of digital platforms, data-rich companies, and tech startups that may have limited revenue but significant market influence
• Focus on innovation markets: The CCI is increasingly examining whether acquisitions eliminate potential competition or reduce innovation incentives, particularly in pharma, fintech, and AI sectors
• Faster clearance timelines: Data from 2025 shows the CCI averaging 25-35 working days for Phase I clearance, significantly faster than the 150-day statutory limit
• Active enforcement of gun-jumping: The CCI imposed multiple gun-jumping penalties in 2025, signaling zero tolerance for procedural shortcuts
• Press Note 3 interactions: Acquisitions by entities from countries sharing a land border with India (China, Pakistan, Bangladesh, Nepal, Myanmar, Bhutan, Afghanistan) require additional government approval under Press Note 3, adding a parallel regulatory layer to CCI clearance

Key Takeaways

• CCI approval is mandatory for foreign acquisitions exceeding asset/turnover thresholds or the INR 2,000 crore deal value threshold — the de minimis target exemption (assets below INR 450 crore or turnover below INR 1,250 crore) may exempt smaller transactions
• Form I (INR 30 lakh fee) suits most foreign acquisitions; Form II (INR 90 lakh fee) is for transactions with significant market share overlap — filing the wrong form causes delays
• The green channel provides instant deemed approval for transactions with no horizontal, vertical, or complementary overlaps — ideal for first-time India market entrants
• The 150-day statutory timeline includes Phase I (30 days) and Phase II (up to 120 days), but most transactions clear in Phase I within 25-35 working days
• Gun-jumping penalties can reach 1% of total turnover or assets — ensure the SPA includes a CCI condition precedent and maintain target independence until clearance