Mergers and Acquisitions

What is 'Mergers and Acquisitions'?

Mergers and Acquisitions (M&A) refers to the process through which two or more businesses combine their operations, ownership, or control. In business language, these transactions represent methods through which companies restructure themselves to achieve growth or consolidate market positions. The terms merger and acquisition while used in common parlace have distinct meanings:​

Merger describes the legal consolidation of two or more business entities into a single entity. Typically, a merger occurs when two companies of relatively equal strength combine to form one unified company, which may retain the name of either original company or adopt a new corporate identity. The historical precedent frequently cited is the 1999 merger between Exxon Corporation and Mobil Corporation, which created Exxon Mobil Corporation as a consolidated entity ​(e.g. Company A + Company B = Company C).

Acquisition (or takeover) denotes the process whereby one company, typically larger, purchases another company, the target. The acquiring company assumes ownership of all or substantially all of the target company's assets, liabilities, and operations. One of the example is Amazon's acquisition of Whole Foods for USD 13.7 billion in 2017, after which Amazon assumed direct ownership and operational control (e.g. Company A buys Company B).

Official Definition of 'Mergers and Acquisitions'

The term 'Mergers and Acquisitions' does not have a specific definition in any single legal source. Rather, the concept is defined across multiple legislative frameworks, each addressing M&A from different regulatory perspectives and interpretation according to various case laws.

'Mergers and Acquisitions' as defined in legislation(s)

Companies Act, 2013

The Companies Act, 2013 forms the primary structural and procedural foundation for M&A transactions in India. While the Act does not explicitly define 'Merger' or ‘Acquisition', Section 232 addresses "Merger and Amalgamation of Companies" and provides operational definitions-

Section 232(1) provides the framework for mergers and amalgamations:​

"Where an application is made to the Tribunal under section 230 for the sanctioning of a compromise or an arrangement proposed between a company and any such persons as are mentioned in that section, and it is shown to the Tribunal that the compromise or arrangement has been proposed for the purposes of, or in connection with, a scheme for the reconstruction of the company or companies involving merger or the amalgamation of any two or more companies..."​

Key Definitions within Section 232:​

The Explanation to Section 232 provides classifications:

1. Merger by Absorption: Where the undertaking, property, and liabilities of one or more companies (including the company for which the arrangement is proposed) are transferred to another existing company.​
2. Merger by Formation of a New Company: Where the undertaking, property, and liabilities of two or more companies are transferred to a new company (whether or not a wholly-owned subsidiary of a holding company).​
3. Division (Demerger): Where the undertaking, property, and liabilities of the company are divided among and transferred to two or more companies, each being either an existing or new company.​

Competition Act, 2002

The Competition Act, 2002 does not define "Mergers and Acquisitions" as a unified term. Instead, it defines the term "combination," under Section 5 as follows:​

"Acquisition of one or more enterprises by one or more persons or merger or amalgamation of enterprises shall be a combination of such enterprises and persons or enterprises."​

This definition covers three transaction types: acquisition of enterprises, merger of enterprises, and amalgamation of enterprises. The CCI's regulatory definition further operationalizes this by noting:​

"As per Section 5 of the Competition Act, acquisition of one or more enterprises or merger or amalgamation of enterprises, which exceeds the threshold prescribed therein shall be a 'Combination' for the purposes of the Act."​

Within this framework, Section 2(a) of the Competition Act defines "Acquisition" more precisely as:​

"The act of directly or indirectly obtaining or agreeing to obtain any enterprise's shares, voting rights, or assets; any enterprise's control over management or control over its assets."​

Income Tax Act, 1961

The Income Tax Act provides explicit statutory definitions for tax purposes:

Amalgamation (Section 2(1B)):

"Means the merger of one or more companies with another company or the merger of two or more companies to form one company in such a manner that..."

The definition continues to specify conditions under which the amalgamation qualifies for tax benefits under the Act. Notably, Section 2(1B) states that merely acquiring property of one company by another does not constitute "amalgamation" under this definition. Demerger [Sec 2(19AA)]:

"Means the transfer of one or more undertakings by a demerged company to another company."

Resulting Company (Sec 2(19B)):

"The company which is the result of amalgamation or demerger."

SEBI Takeover Regulations, 2011

SEBI's framework focuses on listed companies and defines terms specific to takeover transactions:

Acquirer (Sec 2A):

"Any person who, whether by himself, or through, or with persons acting in concert with him, directly or indirectly, acquires or agrees to acquire shares or voting rights in, or control over a target company. An acquirer can be a natural person, a corporate entity or any other legal entity."

Target Company (Sec 2Z):

"The company/body corporate or corporation whose equity shares are listed in a stock exchange and in which a change of shareholding or control is proposed by an acquirer."

Legal provision(s) relating to 'Mergers and Acquisitions'

Companies Act, 2013

Section	Provision	Description
Section 230	Compromise and Arrangements	Power of tribunal to enforce compromises and arrangements; foundational provision for M&A schemes
Section 231	Power of Tribunal	Enforcement mechanism for compromises and arrangements
Section 232	Merger and Amalgamation	Procedural framework and definitions for mergers and amalgamations
Section 233	Fast-Track Mergers	Streamlined procedure for mergers between small companies, holding and subsidiary companies
Section 234	Cross-Border Mergers	Merger or amalgamation of Indian companies with foreign companies
Section 235	Acquisition of Dissenting Shareholders	Power to acquire shares of shareholders who dissent from the scheme
Section 236	Purchase of Minority Shareholding	Mechanism for majority shareholders to acquire remaining minority shares
Section 237	Central Government Power	Authority for Central Government to order amalgamation in the public interest

Content Source: Dushyant Sharma,"Mergers & Acquisitions Under the Companies Act, 2013” Registerationwala

URL: https://www.registrationwala.com/knowledge-base/business-registrations/company-registration/mergers-and-acquisitions-under-the-companies-act-2013

Competition Act, 2002

Jurisdictional Thresholds triggering CCI Notification:

Section 5 operates conjointly with Section 6(2), which mandates notification to the Competition Commission of India when a combination exceeds prescribed financial thresholds. These thresholds are:

Threshold Category	Criterion	Domestic Threshold	Global Threshold
Parties Test (Acquisition)	Assets value in India OR Turnover in India	Assets > INR 2,000 crores OR Turnover > INR 6,000 crores	Worldwide assets > USD 1 billion with min. INR 1,000 crores in India OR Worldwide turnover > USD 3 billion with min. INR 3,000 crores in India
Parties Test (Merger/Amalgamation)	Combined asset or turnover value	Same as acquisition	Same as acquisition
Target Exemption	Small target entity	Assets ≤ INR 350 crores OR Turnover ≤ INR 1,000 crores	Applicable for relief from notification

Content Source: Vijay Yerubandi,”Combination under Section 5” iPleaders

URL: https://blog.ipleaders.in/combination-under-section-5-of-the-act-made-entirely-outside-india-with-insignificant-local-nexus/

Section 6(2) mandates:

"Parties to a combination shall file a notice of the transaction with the CCI, including prescribed fees, and cannot consummate the transaction until clearance is obtained from the CCI."

The CCI applies a substantive test to determine whether a transaction qualifies as a combination, considering factors such as:

• Creation of barriers to entry for new market entrants
• Driving out existing competitors
• Foreclosure of competition
• Potential benefits to consumers
• Improvements in production or distribution
• Promotion of technical, scientific, or economic development

'Mergers and Acquisitions' as defined in international instrument(s)

UNCTAD - Cross‑Border M&A in development

In World Investment Report 2000, cross‑border M&As are described as the form of FDI “dominating” flows among developed countries, referring to- mergers and acquisitions between dominant TNCs, resulting in even larger TNCs, especially in pharmaceuticals, autos, telecoms, and finance. The operative idea is acquisition of control over existing enterprises.

OECD - Cross‑Border Mergers and Acquisitions: Their Role in Industrial Globalisations

The OECD’s paper define an M&A, “strictly,” as a transaction “when an operating enterprise acquires control over the whole or a part of the business of another enterprise.”​

The industrial‑organisation glossary further distinguishes merger (two firms combine to form one) from acquisition, which “refers to obtaining ownership and control by one firm, in whole or in part, of another firm or business entity.” Here, again, control and ownership change are the core conceptual elements.

Types of 'Mergers and Acquisitions'

Types of Mergers-

• Horizontal Mergers

Horizontal mergers involve the consolidation of companies operating within the same industry, providing identical or substantially similar products and services. These transactions represent the most straightforward form of market consolidation, characterized by overlapping customer bases and competitor relationships.

• Vertical Mergers

Vertical mergers unite companies at different stages of a single supply chain—from raw material extraction through manufacturing to distribution and retail.

• Conglomerate Mergers

Conglomerate mergers combine enterprises operating in wholly unrelated industries, pursuing portfolio diversification rather than operational synergy.

Example: Electronics manufacturer acquiring food and beverage company.

Types of Acquisition-

• Equity Acquisition

Buyer acquires shares/voting rights, obtaining the target company as an intact legal entity.

• Asset Acquisition

Buyer selects and acquires a defined portfolio of target's assets and assumes specified liabilities, target company (or seller) retains unselected assets and liabilities.

International Experience

United States

In the United States, there is no single statutory definition of “merger” or “acquisition”, instead Section 7 of the Clayton Act focuses on any deal (share sale, asset sale, or contractual arrangement) that might reduce competition or help create a monopoly. Before big deals can close, the Hart–Scott–Rodino (HSR) Act requires the parties to notify the US antitrust agencies (FTC and DOJ) if the deal value and the size of the parties cross certain monetary thresholds (currently around USD 126.4 million for the transaction value), and then to wait 30 days while the agencies decide whether to let the deal go through or to open a deeper investigation. In practice, only a small fraction of notified deals (about 1.6 per cent in FY 2024) are challenged, but when the agencies do act, they now very often push parties to abandon or radically restructure the transaction rather than negotiate detailed settlements, especially after 2021. The FTC publishes monthly and annual HSR statistics, which show how many deals were notified, their broad size and sector profile, and how many attracted enforcement, although the identities and details of most individual deals remain confidential. Overall, the US model is effects based (focused purely on competition), uses deal-value tests rather than turnover tests, relies heavily on economic tools and merger guidelines for predictability.​

United Kingdom

In the United Kingdom, merger control is built around the idea that a merger happens when two previously separate businesses come under common ownership or control, which the Enterprise Act 2002 describes as two or more “enterprises” ceasing to be distinct, and this can happen not only through full share ownership but also through de facto control via veto rights or other influence mechanisms. Unlike the US or EU, notifying the UK Competition and Markets Authority (CMA) is technically voluntary, and the regime is formally non‑suspensory, meaning parties can close first and notify later, but in practice large or sensitive deals usually go to the CMA in advance because the agency can open an investigation on its own initiative and then impose “hold‑separate” orders to stop integration until it finishes its review. The CMA uses a “Substantial Lessening of Competition” (SLC) test, applied in a two‑phase system: a quick Phase 1 screening (25 working days) and, if concerns remain, an in‑depth Phase 2 inquiry (90 days, extendable), after which it can clear the deal, approve it with remedies, or prohibit it entirely. The CMA has strong remedial powers, it can force divestitures (even at no minimum price), require behavioural commitments on price or supply, and closely monitor compliance- so parties have strong incentives to reach a negotiated outcome. The Digital Markets, Competition and Consumers Act 2024 significantly increased maximum fines (up to 1 per cent of global turnover, plus daily penalties) and gave the CMA tougher investigative tools, which makes non‑compliance risky and appeals more difficult.​

European Union

In the European Union, merger control is governed by a dedicated EU Merger Regulation, which uses the concept of a “concentration” and defines it as any transaction that leads to a lasting change in control, either by merging two or more previously independent firms or by one firm acquiring control over another through shares, assets, contracts, or any other means. The idea is of decisive influence that even a minority shareholder can be treated as having control if it has strong veto rights or special powers over strategic decisions, so the test goes well beyond simple majority shareholding. The European Commission (DG COMP) acts as a single “one‑stop” authority for large cross‑border deals that meet EU‑wide turnover thresholds, so parties usually only have to notify Brussels once instead of filing in every Member State. Notification is mandatory and suspensory, so the parties cannot close before clearance, the Commission then has 25 working days for a Phase 1 review, and 90 days (extendable) for a Phase 2 if it thinks the deal may significantly impede effective competition (the SIEC test). A distinctive feature of the EU system is the formal efficiency defence, under which even a dominance‑creating deal can be cleared if the parties can show merger‑specific efficiencies that will clearly benefit consumers, and the Commission also recognises a structured failing‑firm defence in rescue situations. The Commission frequently imposes structural or behavioural remedies rather than prohibiting deals outright, and historically only a tiny fraction of notified transactions (around 0.4 per cent) are blocked, with about 95 per cent ultimately cleared, often with commitments. The EU regime is also very transparent it publishes detailed reasoned decisions, and academic databases have compiled thousands of cases (over 5,000 decisions with more than 30,000 market observations).

Appearance of 'Mergers and Acquisitions' in Database

Official Database maintained by Government Entity

CCI Combination Orders Database​

URL: https://www.cci.gov.in/combination/orders-section31

Competition Commission of India has made a page for Orders under Section 31/Form III, Section 43A, Section 44 and Approvals made with modification under Competetion Act, 2002.

CCI Combination Order Page, Available at: https://www.cci.gov.in/combination/orders-section31

Research that engages with 'Mergers and Acquisitions'

• IGIDR: "Mergers and Acquisitions in India: A Strategic Impact Analysis"

Authors- Rabi Narayan Kar and Amit Soni

Using financial data from Indian companies during the 2000s-2010s, the authors compared acquiring firms' performance before and after mergers- looking at metrics like sales growth, profit margins, return on assets. Their finding was nuanced: merged firms did show improved operating performance post-merger, suggesting that M&A can be value-creating when done strategically. However, the study revealed important variations: IT sector mergers outperformed manufacturing consolidations. This suggests that M&A success is not universal, it depends on industry dynamics and strategic fit. The research is particularly valuable because it addresses the "so what” question, showing that post-1991 liberalization, Indian firms had both the confidence and the opportunity to pursue M&A as a legitimate growth strategy, and in many cases, it worked. This institutional learning is crucial context for understanding why M&A activity in India surged after the 1996 industrial slowdown, firms learned that consolidation, not just growth through market share capture, could enhance profitability.

• Indiacorplaw: "NCLT's Shift: A Deeper Dive into Merger Schemes and Public Interest" (2024)

Authors- Arjim Jain and Shruti Asati

This research captures a institutional shift at the NCLT (National Company Law Tribunal). Traditionally, the tribunal's role was narrow- it checked whether parties followed the statutory procedures (did shareholders approve? did creditors get notice?). This paper documents a case where the NCLT went much further, it rejected a merger scheme despite procedural compliance, reasoning that the scheme was designed to benefit a small group of promoters and facilitate tax avoidance. The tribunal examined the companies financial statements, consulted tax and corporate affairs authorities, and concluded that the merger was artificial (lacking genuine business purpose) and contrary to public interest. What makes this research important is that it shows NCLT evolving from a procedural referee into a substantive guardian of fairness and public interest. For companies planning mergers, this means you can't simply get shareholder approval and regulatory checkmarks you now need a credible business justification and evidence that the merger serves broader interests, not just promoter gain.

• NLIU Bhopal (Centre for Business, Competition and Law): "Law and Economics Analysis of the Combination Regime Under Competition Act 2002"

Author- Manas Agrawal and Ritu Bhatia

This work applies economic reasoning to evaluate whether India's competition merger control regime actually works. The authors use frameworks like the Coase Theorem and economic models of transaction costs to ask: Does the CCI's role in reviewing mergers create net benefits, or does the bureaucratic burden outweigh the competition protection? Their critical finding: the CCI approves about 97-98% of notified combinations with minimal conditions. Only 2.6% of cases result in modifications imposed by CCI (like divestitures or behavioral commitments). This raises a provocative question: If CCI rarely negotiates substantive remedies, is the notification and review process worth the time and cost parties spend on compliance? The authors suggest that efficient regulation should achieve a balance—if too few deals are challenged, the cost of the review process isn't justified; if too many are challenged, innovation and growth might be stifled. They argue that CCI should more actively use its powers to negotiate mutually beneficial remedies that address competitive concerns while allowing pro-competitive mergers to proceed.

• International Journal of Legal Research (IJLR): "Role of Competition Commission of India in Regulation of Combinations - An Analytical Study" (2025)

Authors– Harshita & DR. Arvind P. Bhanu

This comprehensive analytical study synthesizes 15+ years of CCI merger control practice (2008-2025) into a coherent framework. Rather than studying individual cases in isolation, the authors identify patterns and trends across the entire dataset of notified combinations. Key findings:

(1) CCI's early approach (2008-2012) was relatively permissive

(2) the middle period (2013-2018) saw increased economic sophistication in merger reviews

(3) recent years (2019-2025) reflect stricter enforcement, particularly in digital markets.

This work is valuable because it provides a roadmap: based on CCI's historical patterns, parties can predict how CCI will likely approach their specific deal. For policymakers, it documents institutional learning, the CCI is maturing from an initial learning phase to a more sophisticated regulator, adopting international best practices (economic analysis, digital market scrutiny) while adapting to India's specific context.

• Daksh India: "Pulling Back the Curtain: Examining the NCLT Through Data" (June 2025)

Author- Smitta Mutt

The research documents that merger schemes frequently face backlogs—sometimes taking 18-24 months to secure NCLT approval. The root cause analysis is revealing: understaffing relative to case volume, inconsistent practices across NCLT's 8+ benches, inadequate IT systems for case tracking.This is crucial context for investors and practitioners wondering why Indian M&A timelines are longer and more unpredictable than international benchmarks. It's not because Indian law is more complex, it's because the institution tasked with approving mergers lacks adequate capacity. The research calls for specific institutional reforms hiring additional tribunal members, providing better case management systems, establishing uniform procedures across benches. This work exemplifies data-driven justice reform thinking, identifying problems through empirical analysis and proposing evidence-based solutions.

• Daksh India: "Testing the Waters: Pre-Implementation Evaluation of 2024 CCI Combination Regulations" (July 2025)

Author- Ritima Singh

This research examines a critical governance challenge- When regulators introduce major reforms (like CCI's 2024 combination rules introducing the Deal Value Threshold and simplified procedures), do they assess the institutional consequences? Daksh's analysis found that the 2024 CCI reforms, while well-intentioned, were not accompanied by systematic institutional impact assessment. Questions arise:

Will expanding CCI's jurisdiction (via the Deal Value Threshold) increase caseload beyond CCI's capacity? Will simplified procedures actually deliver faster approvals, or will they create new bottlenecks? Has NCLAT (which handles CCI appeals) been consulted? Do courts understand the new framework?

The research argues that regulatory reform without institutional preparedness is risky you can make rules smarter, but if institutions can't implement them effectively, the benefits don't materialize. This work illustrates a broader point about Indian regulatory modernization, legislative intent is not enough, implementation infrastructure is critical.

• Daksh India: "The State of Tribunals Report in India, 2025"

This Report provides hard data on Indian tribunals as functionality, case pendency (average time from filing to disposal), disposal rates, adjournment patterns, decision quality metrics. For NCLT, the data reveals significant variation across benches—some dispose of merger schemes in 12-15 months, others in 24+ months. The report recommends standardized operational procedures, minimum performance standards (e.g., decisions should be delivered within 3 months of final hearing), and accountability mechanisms. This research is crucial for understanding that institutional performance is measurable and improvable, tribunals are not acts of nature but human systems that can be engineered for better outcomes.

• International Journal of Legal Research (IJLR): "A Legal Analysis of Mergers & Acquisitions in India" (2024)

Author- Sanna Rajput & Dr. Nisha Sain

This legal analysis examines the intersection of competition law (CCI review under Competition Act) and corporate law (NCLT approval under Companies Act), identifying tensions in how different regulatory bodies assess the same transaction. For instance, what if CCI approves a deal as pro-competitive, but NCLT rejects it as contrary to public interest? Or vice versa? The paper argues for clearer boundary-drawing and formal coordination mechanisms (inter-agency meetings, information sharing protocols) to prevent conflicting approvals. This work is important because it highlights a structural challenge in India's regulatory approach: by spreading M&A oversight across multiple institutions, India achieves comprehensive stakeholder protection but at the cost of coordination complexity.

• India Corporate Law: "NCLAT on Public Interest in Amalgamation Scheme" (2018)

Author- Jai Bajpai

This case comment analyzes the landmark Wiki Kids Limited decision, where NCLAT (National Company Law Appellate Tribunal) clarified that NCLT must examine merger schemes not just for procedural compliance but for alignment with public interest. The case involved a merger between Avantel Limited (where the promoters held common shareholdings) and Wiki Kids Limited, structured so that the scheme primarily benefited the common promoters and offered little to other shareholders. The tribunal rejected the scheme on public interest grounds, establishing that profit-maximization for a narrow group is not sufficient justification for a merger. This judgment fundamentally altered NCLT practice: what had been a procedural check became a substantive inquiry. The paper is important because it documents judicial creation of accountability standards, even when statutes are silent, courts and tribunals can establish norms through case law.

• SSRN: "Streamlining Public M&A in India: Why NCLT's Role Remains Indispensable" (2025)

Authors- Nakshatra Gujrati and Vishesh Bhardwaj

This recent working paper critiques proposals to streamline merger approvals by allowing sectoral regulators (SEBI, CCI, RBI) to replace NCLT approval. While the intent is accelerating approvals, the authors argue that NCLT's judicial scrutiny serves a distinct function: ensuring fairness to all shareholders (not just majority), protecting creditors, scrutinizing public interest implications, and ensuring tax compliance. Removing NCLT could accelerate approvals but risks eroding stakeholder protections. The paper exemplifies a tension in regulatory modernization: speed vs. fairness. The authors argue that the answer is not to bypass NCLT but to strengthen its capacity, then optimize sequencing.

• IJLR: "Public Interest or Political Interest: A Critical Analysis of Public Interest Mergers in India" (2025)

Author- Akanksha Tiwari

This recent critical analysis examines the "public interest" test applied by NCLT in merger schemes, questioning whether the concept is clearly defined and whether NCLT applies it consistently. Recent cases show NCLT examining merger schemes not just for procedural compliance but for real purpose and public benefit. However, "public interest" is undefined in the Companies Act, leading to potential inconsistency.

• International Journal of Novel Research and Development (IJNRD): "Regulation of Combinations Under the Competition Act, 2002" (2024)

Author- Gurpreet Kaur

This technical analysis walks through CCI's combination regulations: definition, thresholds, notification procedures, substantive assessment criteria. The paper reviews how CCI applies its AAEC (Appreciable Adverse Effect on Competition) test across sectors and identifies emerging patterns (digital market scrutiny, vertical integration concerns). For practitioners, this provides a technical roadmap for evaluating notifiability and predicting CCI scrutiny.

• Nishith Desai Associates: "Mergers & Acquisitions in India" (2023)

This comprehensive practitioner guide is a standard reference. It documents that M&A in India reached USD 107 billion in 2022 (USD 60 billion was the HDFC-HDFC Bank merger alone), driven by 20+ strategic transactions. The guide walks through regulatory procedures (company law, competition law, SEBI requirements), procedural requirements (NCLT approvals, RoC filings), and practical compliance.

• ASLP: "Insight into Mergers & Acquisitions: Legal Perspective" (2025)

Author- Richa and ASLP team

This article synthesizes the entire M&A legal framework across company law, competition law, securities law, tax law, and FDI law. It emphasizes that India's regulatory approach balances business growth with stakeholder protection but creates coordination complexity. The article notes that regulatory overlap between CCI, NCLT, SEBI, and RBI is a defining feature of Indian M&A governance, a source of both comprehensive protection and procedural friction.

Challenges

• CCI’s combination orders are published and searchable, but the interface is basic, there is no filter, and commercially sensitive information (e.g., deal values, detailed market data) is often redacted, making systematic quantitative analysis difficult.​
• NCLT case information for merger schemes is fragmented across benches, not consolidated on a single searchable platform, and older orders or cause lists are inconsistently digitised, so even basic questions (how many merger schemes per year, average time-to-sanction) require manual scraping or through RTI .​

References

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Page created 2026-08-21  ·  Last updated 2026-08-27