The Ministry of Corporate Affairs (MCA), on Tuesday, extended the tenure of acting Competition Commission of India (CCI) Chairperson Sangeeta Verma till further orders. The CCI chairperson post has been vacant for three months, and sources told CNBC-TV18 that deals worth $1.3 billion have been pending approval for months due to a lack of quorum at the CCI.
"At least 20 combination deals are pending approval. One of these is a 900 million dollar deal, which has already been cleared by 8 other countries. Some of these deals are losing valuation and are nearing expiry", said a source requesting anonymity.
The government had appointed Verma as the acting chairperson of CCI in October 2022, for "three months or till the appointment of regular Chairperson or till any further orders," according to an official order. Verma's appointment was made following the resignation of the last full-time Chairperson, Ashok Kumar Gupta.
WHAT IS THE REQUIRED QUORUM AT CCI?
As per law, CCI must have a maximum of 7 members including the Chairperson and there must be a quorum of at least 3 members to decide on M&As, FDI proposals and Corporate Insolvency Resolution proposals. Since the retirement of AK Gupta, CCI has had only two members, with one doubling up as acting chairperson.
CCI has 210 working days to clear an M&A proposal and has in the past granted approvals in a 17-day period. The industry has now expressed serious concerns about the lack of approvals at the CCI. "The credibility of CCI is at stake, it has cleared combinations with prescribed timelines in the past. We are anxious about global transactions which have been cleared in multiple countries, but are stuck in India", said Samir R Gandhi, Partner at Axiom5 Chambers.
Avantika Kakkar, Competition Law Expert at Cyril Amarchand Mangaldas has written to the Ministry of Corporate Affairs suggesting an ordinance may be brought in to waive off the three-member quorum requirement.
"I have suggested an ordinance to the Ministry of Corporate Affairs. Legal Sanctity will come from the ordinance, this will give the ministry 3-6 months to make the necessary appointments. It will help non-contentious Mergers and Acquisitions to be cleared by a quorum of 2. Without the ordinance, we may see more litigation with the aggrieved side moving courts arguing that the quorum was not available as required in law", said Kakkar.
CCI is likely to write to the Ministry of Corporate Affairs seeking a waiver of the quorum requirement to clear deals with the existing two members. A view in this regard is also being taken from the Attorney General of India.
On 23rd January, the MCA invited applications to fill three member posts in CCI and asked that the applications be submitted within 45 days. Sources say, the process of filling up vacancies could take 4-5 months.