This article has been written by Pushkaraj Ghorpade pursuing the Certificate Course in Competition Law, Practice And Enforcement from LawSikho.


The Zomato-UberEats deal in the year 2020 raised significant questions pertaining to Anti-Competitive Law in the Indian Regime. The deal comes within the ambit of Combination and needs to be ideally scrutinized under the Competition Act, 2002. However, it escaped the scrutiny by way of availing the “de minimis’ threshold exception. Through this article, the author has made an attempt to bring forward several important aspects of the deal that are related to the scope of anti-competitive practices under the Indian Law, the issues between Zomato and CCI, the stand taken by CCI, and the way forward for the non-notifiable transactions.

The Indian Competition Act, 2002, deals with anti-competitive practices in India. The Zomato-UberEats deal attracts the application of Section 5(a). By virtue of this section, the deal should have been ideally scrutinized by CCI, however, by way of using “de minimis” threshold exemption, the deal very conveniently escaped the scrutiny by CCI under the Act. Under the Competition Act, 2002, Section 29 governs the “procedure” for investigation of such Combinations and combinations can be regulated provided they cause an AAEC (Appreciable Adverse Effect) in the market or lead to any abuse in the dominant position in the market.

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Horizontal agreements, by virtue of Section 3(3) of the Competition Act, 2002, are under a presumption that there exists an AAEC, which is not so the case with Vertical Agreements. Thereby, the horizontal agreements are under strict rules and regulations.

The Act also provides for Regulation of Combinations, which prescribes that all the transactions that qualify as a “Combination” need to be notified to the CCI and further it is provided that any Combination shall not be given effect until it has been approved by the Commission or until 210 days have already passed from the date of such notification to the CCI or whichever date is earlier.

The Central Government has the power to put certain transactions under the cap of exemptions from such scrutiny and regulation under the provisions of the Act. Such exemptions have been listed by the CCI under Schedule I of the Combination Regulations, 2011 and also mentioned in Section 54 of the Act, 2002.

The thresholds have been incorporated in the merger regime of India in order to prevent an over-controlling merger regime in India. This prevents the merger regime from becoming extremely tedious and tiring. The idea of scrutinizing the Combinations limits itself to only such transactions which carry in itself the potential to cause adverse effects on the market. But the thresholds have been put to several criticisms in the past as well. One major reason for such criticism has been the difference in the quantification of the assets and the annual turnover of various and diverse industries. The Zomato-Uber deal, in particular, paved the way for initiating dialogue as to under what circumstances such non-notifiable transactions can be brought under the scrutiny of CCI for ensuring there are no Anti-Competitive practices in the country depriving them of fair competition and fair prices.

Major issues between Zomato and CCI

The major issue revolves around the question of non-notifiability of the merger between Zomato-Uber Eats on the grounds that it fell within the ambit of exemption and it needed no notification under Section 5 or 6 of the Act. A clear-cut observation shows that in actuality the Zomato-Uber deal was non-notifiable and satisfied the de minimis exemption threshold.

Zomato’s arguments

In its Draft Red Herring prospectus, Zomato has claimed that CCI by its letter in February 2020, has affirmed that the deal between Zomato-UberEats was non-notifiable and did not require the mandatory notification under the provisions of the Competition Act, 2002. Further, it is highlighted by the prospectus that a show cause notice was issued by the CCI in December 2020 to review the deal, which raised many questions on the powers of CCI to review a combination that at the onset did not qualify according to the requisite threshold.

CCI’s arguments

CCI in its show-cause notice to Zomato has asked for an explanation regarding non-notification. Further, CCI has alleged that the Zomato-Uber Eats merger has significantly violated Section 43A of the Act which deals with mergers that are not filed by the Combination Party before the CCI even though they have crossed the de minimis threshold limit. CCI has also placed its reliance on the Draft Bill of 2020, which is yet to be approved, in order to scrutinize a non-notifiable transaction. This bill consists of several provisions that directly address the issues pertaining to the Zomato-UberEats deal. Furthermore, under Section 31 of the Act, the CCI has the power to determine whether such a combination will have any adverse effect in the market and it is only the commission’s power in determining if there is an adverse effect on the market or not.

Gun-jumping and legal analysis

On the onset, it is clear that, by virtue of probing the deal under Section 43-A, there are major allegations of “Gun-jumping” which have been put forth by the CCI. Gun -Jumping, simply refers to a situation whereby the parties execute a combination without seeking mandatory approval under the Act. This calls for a penalty.

In SCM Solitifert Ltd. And Anr. v. CCI the Supreme Court outlined the legislative intent behind Gun-Jumping saying that under Section 6 of the Competition Act, it is mandatory for every combination to notify the CCI before entering into one. The intention is to ensure that such a combination shall not have “Appreciable Adverse Effect” on the market and it was held by the court that in case any combination resorts to seeking such approval after the combination has been executed, it would defeat the whole purpose of prohibiting Gun-Jumping.

However, the exceptions or the exemptions paint a different picture. By virtue of Section 6, only such combinations can be brought within the scrutiny or require mandatory notification, which has the potential to adversely affect the competition.

Heavy reliance has been placed on the Draft Bill for regulating the Zomato deal, which in fact has yet to be approved by the Parliament. Hence in doing so, CCI has definitely jumped off the fence of jurisdiction and exercised powers beyond the virtue of the Act.

How can CCI’s interference be justified in the Zomato-Ubereats deal?

Since the deal falls within the exemption threshold and passed the test of “non-notifiability”, only on the grounds of wide powers as a potential under the Draft Bill 2020 cannot suffice in exercising the powers beyond the existing Act of 2002.

However, there is a provision under the 2002 Act, which in itself provides wide powers of review and scrutiny. Under Section 20(1) of the Act, and its proviso, the CCI has been conferred with wide powers of review after one year from such a combination if it comes to the knowledge of CCI that such a combination has caused or can cause adverse effect on the competition in the market. Herein, the CCI, Suo moto can investigate the combination and its effect.

It sets out a contrasting provision to the principle of “non-notifiability” in case the combination does not meet the threshold limit set from time to time through various regulations and notifications.

The intention behind this section is straight up to keep a check on such transactions which carry in them the potential to become anti-competitive and hamper the market and free competition. Taking the argument in its true spirits that CCI might have jumped up the jurisdiction and there is a lot of bureaucratic burden with respect to CCI taking up certain combinations within its scrutiny even when they do not meet the threshold. Still, the true legislative intent was to promote free competition in the market without giving free way to any anti-competitive practices.

Changing paradigm of mergers across the globe

The world contours with respect to the Mergers or Combinations that have been changing and no country is far behind the changing patterns. Across the globe, there has been an attempt to challenge the competition authorities to lay down certain legislations which would allow the scrutinization of even those transactions which are off the thresholds. Under US law, Sherman Antitrust Act, 1890 condemns any such merger or combination or contract or a conspiracy that can disrupt the market or lead to monopolization etc. But this act is also vague and too much dependent on the judicial interpretation. In North Securities Co V.  United States the court held that any merger or combination between such firms which fall under direct competition with each other shall be treated as one responsible for “restraint in trade” and would be considered to be in violation of the Sherman Act. Through various developments, there was an enactment of Hart-Scott-Rodino Antitrust Improvements Act, 1975 which laid down an important reform making it mandatory for the parties entering into a merger or any combination to first notify it to the U.S Justice Department and Federal Trade Commission(FTC) before completing such transactions. This can lead to an implication that even when the transactions fall within the non-notifiable category, they can be called for antitrust investigation under US Law.  Similarly in the European Union, there has been a development of a mandatory notification system based on the threshold limit. The European Commission has the power to review such a transaction if it is observed under the UK antitrust regime that it is notifiable under the national competition law of at least 3 member states.

When the changing paradigm is read in the context of Indian law, it can be conveniently laid down that there is lack of any legislation pertaining to the non-notifiable transactions. However, such transactions have not completely hoodwinked the CCI. As per the Competition law Review Committee Report, 2019, CCI has extensively discussed the digital markets and scope of such transactions in the ever-evolving market whereby the companies have a low turnover or less threshold to easily escape the CCIs scrutiny to ensure a fair and competitive market. This report has made several suggestions one of which involves, DVT i.e. Deal Value Thresholds. As per which the Draft Bill of 2020 has been drafted, thereby allowing wide powers to the Central Government in consultation with the CCI to prescribe such thresholds or criteria other than the ones mentioned under Section 5. This means that any transaction can be made to be a combination for the purpose of scrutiny under the law. However, the truth remains that, the CCI without the approved law does not have the power to access the non-notifiable combinations by exercising such residuary powers under the Act.


While a Free market is essential to the growth of the economy, fair competition is equally important. Such fairness needs to ensure that enterprises do not resort to power play and hold the competition of the market all towards themselves. It is also clear that such nascent mergers and combinations find a way to dodge the CCI scrutiny only due to reasons that the anti-competitive laws are not enough to deal with them. It is the need of the hour that as per changing times the legislation adopts the changing laws and for that, the Draft Bill of 2020 which broadens the scope of including non-notifiable transactions must be implemented on a priority basis. Further, it is highly appreciated that provisions like DVT have already made their way in the draft bill and need to get some teeth through implementation. The issue of Zomato-Ubereats was a revolutionary and eye-opening one to understand how loopholes can give way to anti-competitive practices and allows the enterprises to escape the radar of institutions like CCI. With the world advancing towards fair practices by allowing the non-notifiable transactions to also be reviewed, it is pertinent for India to adopt such a law so that it maintains the dignity of the Competition Act, aimed at promoting fair competition and curbing anti-competitive practices.

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