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This article is written by Souradh C. Valson. This article covers the various aspects of the green channel route for Mergers and Acquisitions.


The Competition Commission of India (CCI) plays a crucial role in expanding and developing the scope of competition law in India. The green channel is a dynamic move taken by the CCI on the recommendation of the report by the Competition Law Review Committee by amending the Competition Commission of India (Procedure regarding the transaction of business relating to competition), Regulation 2011 (“Amended Combination Regulation”) on 13th August 2019. 

What is the green channel

The green channel allows the easy and automatic approval of certain types of combinations under the Competition Act, 2002. The object of the green channel is to:

  • Introduce and promote quick, easy, and transparent review of combination cases
  • Create a balance between assistance and implementation functions
  • Establish a culture of compliance and growth
  • Reduce the time, cost and facilitating the ease of doing businesses in India
  • Administer mergers and acquisitions to prevent any adverse impact on competition 

Procedure, form, and fee

The notifying party has to self assess whether the conditions for the green channel route are followed and furnish the following:

  • A notice in the manner provided in the revised form 1 under Section 6(2) of the Competition Act 2002 and Regulation 5(2) of the Competition Regulation
  • A declaration, under the 4th schedule, of the amended regulations in CCI, confirming that the proposed combination will not adversely affect the competition

This procedure extinguishes the statutory time limit of 210 days for the examination of the proposed combinations “ex-ante”(before the event) by CCI to check whether they have any effects on the relevant market competition before approval and facilitates the immediate implementation of the transaction without waiting for CCI approval. After receiving the notice, the CCI will usually acknowledge it on the same day, and this acknowledgment acts as a ‘deemed approval’ by CCI.

The parties can then finish the transaction with this ‘deemed approval’ It is important to note that the green channel filings require few declaration requirements, and other information like the size of the market, and the share of the competitor, is not required. The declaration under the 4th schedule should verify that:

  • The combination will not adversely affect the competition. 
  • The proposed combination is devoid of any horizontal, vertical, or complementary overlaps.
  • There is no misstatement or omission to mention any material particulars.

Regulation 11 of the Competition Commission of India (Procedure regarding the transaction of business relating to competition), Regulation 2011 applies to the green channel notification and prescribes filing fees of Rs. 20,00,000/- (Twenty Lakhs only). Additionally, the mandatory 30-day working period under the combination regulation is also not applicable for the transactions and combinations that avail the Green channel method for approval by CCI. 


The newly inserted Schedule III of the Amended Combination Regulation lays down guidelines for self-assessment to check the eligibility of transactions and combinations for green channel approval. The parties must resort to green channel approval only after ensuring that the applicants do not have any: 

  • Horizontal overlaps: The merging companies shouldn’t have been producing homogeneous, identical, and substitutable products. For example, the merging of two companies selling smartphones is a horizontal overlap. 
  • Vertical overlaps: The merging companies shouldn’t involve or belong in the different phases/stages of production. For example, the merger between a manufacturer producing electronic components and a retailer selling it is a vertical overlap.
  • Complimentary overlaps: The merging companies shouldn’t produce goods that supplement each other. For example, the merger between a company selling printers and a company selling printer ink is an example of a complementary overlap. The term complementary in Schedule III is ambiguous. There is no principle to define ‘complementary’. The CCI is yet to provide any guidelines.

The parties should check overlapping not only between the merging companies but also with any other organization that may directly or indirectly control/or holds the shares. The expression directly or indirectly controls/or hold shares includes the parties belonging to the entities that have:

  • A shareholding of 10% or more, directly or indirectly
  • An additional right or ability that is not available to other shareholders
  • The right to recommend an observer or director in another enterprise

Risk of using the green channel

As already mentioned, the parties need to self assess before availing the green channel route, so that CCI can give an acknowledgment or a deemed approval. The self-declaration filed with Form 1 provides when the acknowledgment is ab initio void. The ‘deemed approval’ or acknowledgment is ab Initio void if:

  • The CCI is subsequently of the opinion that the combination or transaction is not eligible for approval by green channel, or
  • The particulars provided with Form 1 is erroneous.

The CCI will not revoke the acknowledgment or deemed approval without giving an opportunity of hearing to the notifying parties. If the CCI revokes the approval, then the parties are liable for proceedings under Section 44 of the Act. Proceedings under Section 43A of the Act are applicable, if the parties have completed the transaction or combination.

Section 44 states that if the parties fail to furnish any information or produces false information to the CCI regarding the transaction or combination, then the guilty party is liable for a fine not below 50,00,000/- (Rupees Fifty lakhs only) and can extend up to Rs 1,00,00,000 ( Rupees one crore only. Section 43A states that if the parties complete the combination or transaction without the approval of the board, the guilty parties are liable for a fine, which may extend to assets of the transaction or 1% of the turnover, whichever is higher.

The parties should also furnish information about their management liaison, who interacts with the CCI and knows about their business management and structure. The Act does not clarify the procedure if the liaison is absent due to justified and valid reasons.

Effects of the green channel

The green channel initiative completed its one year on August 15, 2020. The CCI declared that it approves one in every five transactions and combinations that come for the green channel approval. As of now, the CCI has approved 14 transactions and combinations under the green channel route. Here is a breakdown of the number of transactions approved since its inception:

  • During October- November 2019, the CCI approved five combinations out of the total 25 notices received.
  • During January-March 2020, five out of 23 got the approval.
  • During April-June 2020, four notices got the approval from CCI.

Given below is a list of the important combination that was approved by the CCI:

  • The first acquisition under the new method was on 3-10-2019; the acquisition of the Essar Mutual Fund by Sachin Bansal Group.
  • The acquisition of the IDBI MF Trustee Company Ltd (IMTL) and  IDBI Asset Management Ltd (IAML) by Muthoot Finance Ltd (MFL).
  • Adani Electricity Mumbai Service(AEMSL) and Adani Electricity Mumbai Ltd (AEML) by Qatar Holding LLC (QH).
  • Acquisition by the Adani Group for the controlling stake in Mumbai airport from GVK Airport developers.

Application and implication

Assessing the applicability, practical application, and scope of the green channel route by an amendment in the Combination Regulation is important for the mergers and acquisitions in India. Fifteen percent of all the combinations and transactions approved by the CCI to date could have used the green channel route for acknowledging the combination.

The following example will clarify the relevance of the green channel route and the transactions that can take advantage of the green channel route. Basically, if a Chinese textile company without any prior investments in India wanted to acquire an Indian textile company without any prior connection with it, the Chinese company can avail of the green channel route. There are two major concerns while adopting the green channel method such as:

  • Gun jumping: It is the act of requesting the purchase of new stock before its approval by the Securities and Exchange Commission for IPO (Initial Public Offering), the punishment for which is under section 44 of the Act.
  • Misstatement: As already discussed, it refers to providing false information, and its punishment is under section 43A of the Act.

If the CCI rules that the transaction was outside the ambit of the green channel route, there is a possible risk of damage to the reputation. 

Critical analysis

The guidance notes specify a maximum limit of 10% of the shareholding. Although there is such a limit, holding even a one percent share falls with the meaning of overlapping. In recent times, the meaning of overlapping has expanded, and therefore, it is difficult to find and file the necessary documents addressing this concern. One may say that the concern of the CCI  to prevent anti-competitive is more important than the burden of the parties concerning filing.

However, the CCI scrutinizes when there is an issue of control, which will not arise even if a party/entity holds a 10% share. Only in the cases of a minority shareholding will the question of appointing a director or observer arise. Even in that case, there are no real issues concerning control because control under the Competition Act,2002, is the controlling of management and affairs of a company. 

The right to appoint an observer or a director doesn’t encompass the right to manage and control the affairs. The concern of competition doesn’t arise in this situation. Involving a party without any actual control but with the right to appoint observers in a merger makes the process complicated. The guidelines also mention publishing additional information such as:

  • The detailed contents of all the order passed by the CCI in that specific sector or industry,
  • Detailed information about all the rights arising from the combination but limited not only to commercial advantage and veto rights,
  • Details about all the potential overlaps,
  • Past five years’ of details about the industry/sector in which the combination happens.

Although the CCI gives an opportunity of hearing, if the parties violate the condition, the approval is ab Initio void. The penalties under section 43A and 44 are stringent. Due to these penal consequences and the abovementioned factors, the parties adopting the green channel route carry a heavy burden so, the parties often resort to the ordinary methods.

IBC and the green channel

It is common for a competitor to acquire an insolvent competitor firm as a part of the CIRP (Corporate Insolvency Resolution Process). Acquisitions of an insolvent firm are not different from a normal acquisition. 

Although no provision bars IBC guided acquisitions from receiving the benefits of the green channel route, in almost all cases, the acquisition is made by the competitor firm, so there is an extremely high probability for the existence of overlapping. Furthermore, this sheds light on why none of the 17 IBC guided acquisitions didn’t enjoy the benefits of the green channel route.

Although the Competition Law Review Committee recommended the use of the green channel route for IBC-guided acquisitions, it failed to find a way to the legislation. The benefits of incorporating this route are two-fold. Firstly, since the CCI approves/acknowledges the combination at the time of filing, the question of CCI exceeding the statutory time won’t arise.   Secondly, in the event of numerous filing, the CCI can give deemed approval to all the filings, and then the CoC could choose the appropriate party.

Way forward

The CCI has introduced a new walk-in consultation procedure from 10 A.M to 12 P.M on all weekdays by a guidance note to prevent overloading of cases that are availing the pre-filing consultation (PFC). With this system in place, the CCI can give consultation on whether the combination or transaction is eligible for the green channel method and thereby restricts its power to negate the deemed approval for not meeting the necessary standards. 

Given the fact that the green channel route is a relatively new introduction, with further amendments, the CCI will introduce better tools to differentiate this from the ordinary mergers and acquisitions like introducing “complementary activities” The subsequent amendment will also discuss the enforceability of materiality thresholds of parties having existing non controlling investments.


The introduction of the green channel is a welcomed change and will reduce the hardships of normal filing, making M&A more efficient by reducing timelines, thereby improving the ease of doing business in India. It also makes sure that CCI is only concerned about anti-competitive combinations. However, the lacunas in the law make the normal procedure desirable.


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