Competition Commission of India warns companies of sanctions for incomplete provision of information in merger filings

India’s Competition Commission (CCI) has found that Japanese Bank Sumitomo Mitsui infringed Indian merger control regulations by not disclosing assets it holds in India, but decided not to impose a penalty.

Sumitomo Mitsui acquired 2.77 per cent of Reliance Capital in 2014 in a deal reported to be worth 3.71 billion rupees (EUR53 million).

The transaction required clearance from the CCI, which found that Sumitomo had failed to inform it of its interest in Ambit Investment Advisors which competes with Reliance Capital.

Following a hearing on 16 July, the CCI has decided not to impose a fine.  The reasons why the facts and circumstances in this case did not in the CCI’s view justify imposing a fine are not clear.  However, the CCI used the opportunity to send a strong message to companies that it was their responsibility to provide full disclosure.  It therefore cannot be expected that the CCI will be as lenient in future cases of failure to supply complete and accurate information in merger proceedings.

The CCI can impose penalties of 5 to 10 million rupees (EUR 72,000 to EUR 144,000) or require the filing to be re-submitted where it finds that the supporting information is incomplete or misleading. 

In contrast, under the EU Merger Regulation the European Commission can impose fines of up to 1 per cent of worldwide group turnover for a number of procedural infringements including providing incorrect or misleading information in a merger filing or a response to a request for information or failing to supply information within the period fixed by the Commission.  The failure to supply full information can result in an extension of the time period in which the Commission must reach a decision on whether to open proceedings, or can result in rejection of the notification.  The Commission may also revoke a merger clearance decision if the decision is based on incorrect information for which one of the undertakings is responsible or where it has been obtained by deceit.

For merging companies the significance of providing full information as part of the merger filing process goes beyond the risk of financial penalties and delays.  They will want to be satisfied that the clearance is final and cannot later be reopened because the authority believes that the factual basis on which it took its decision was incorrect.