Competition Law in India: The 2023 Deal-Value Threshold, Digital Markets, and the New Merger Control Landscape

India's competition law framework has been transformed by the Competition (Amendment) Act, 2023 (2023 Amendment), which received Presidential assent on 11 April 2023 and has since been brought progressively into force. The 2023 Amendment represents the most substantial revision to the Competition Act, 2002 (the Act) since the Act's original enactment, introducing a deal-value threshold for merger notification, a settlement and commitment mechanism for anti-competitive conduct proceedings, and enhanced investigatory powers for the Competition Commission of India (CCI). This blog examines the principal reforms introduced by the 2023 Amendment, evaluates their interaction with the digital economy and the technology sector specifically, and situates India's reformed competition framework within the global regulatory context shaped by the EU Digital Markets Act, the UK Competition and Markets Authority's digital markets regime, and the US Federal Trade Commission's enforcement posture under the Hart-Scott-Rodino framework. This blog contends that the 2023 Amendment positions India as a materially more assertive competition jurisdiction and that parties to transactions involving Indian-nexus digital businesses must treat CCI merger control as a first-order due diligence and transaction planning concern.

The Pre-Amendment Framework: A Structural Gap for Technology Transactions

The Competition Act, 2002 established a mandatory pre-notification regime for combinations – mergers, amalgamations, and acquisitions – meeting prescribed financial thresholds. Under the pre-amendment framework, the notification obligation was triggered when the combined assets of the parties exceeded Rs. 2,000 crore in India (or USD 1 billion globally with Rs. 500 crore Indian assets), or when their combined turnover exceeded Rs. 6,000 crore in India (or USD 3 billion globally with Rs. 1,500 crore Indian turnover).¹ These thresholds, calibrated to traditional industrial and services businesses, systematically excluded high-value acquisitions of early-stage technology companies whose asset base and Indian revenues were modest relative to their strategic value and market influence.

The structural gap was well-documented. Several significant acquisitions by global technology platforms of Indian digital businesses proceeded without CCI notification under the pre-amendment framework, despite the competitive significance of the acquired entity's user base, data assets, and market position. The 2023 Amendment addressed this gap directly by introducing a deal-value threshold of Rs. 2,000 crore (approximately USD 240 million at current rates) for transactions with "substantial business operations in India."² The deal-value threshold captures any consideration paid or payable, including deferred consideration, earnouts, and contingent payments, and applies to acquisitions of stakes below the traditional asset and turnover thresholds.

The Deal-Value Threshold: Scope, Calculation, and the "Substantial Business Operations" Test

The deal-value threshold is the most consequential structural innovation of the 2023 Amendment for technology and venture capital transactions. A combination where the value of the transaction – defined broadly to include the aggregate value of consideration paid, the value of assets acquired, and any contingent or deferred payment – exceeds Rs. 2,000 crore requires mandatory CCI notification if the target company has "substantial business operations in India" at the time of the transaction.

The "substantial business operations" test has been elaborated by the CCI through the Competition Commission of India (Procedure in Regard to the Transaction of Business Relating to Combinations) Amendment Regulations, 2023. The test is met where the target, in the two financial years preceding the transaction, had: (i) users in India exceeding two million in respect of a digital business, or (ii) gross merchandise value or turnover in India at a specified level. The regulations introduce a quantitative floor for the digital user count test, reflecting the regulator's understanding that in digital markets, user scale is a meaningful proxy for economic presence and competitive relevance even where direct revenue is limited.

The practical implications for transaction counsel are significant. Advisers must assess the deal-value threshold at term sheet stage, not post-signing. The calculation of "value of the transaction" includes consideration in any form – equity, debt, asset transfers, licensing arrangements, and non-compete payments – and the CCI has indicated in its guidance that it will look through transaction structures designed to disaggregate the total consideration across multiple instruments. The notification obligation is a pre-closing condition, and the CCI's prescribed review periods (30 working days for Phase I; extendable for Phase II) must be factored into transaction timelines.

Digital Markets Enforcement: AAEC Analysis in the Platform Economy

The substantive test for anti-competitive combinations under the Competition Act is whether the combination causes or is likely to cause an appreciable adverse effect on competition (AAEC) in India. The AAEC analysis draws on a set of factors prescribed in Section 20(4) of the Act, including the level of combination in the relevant market, the likelihood of foreclosing competition, the extent of barriers to entry, and the degree of countervailing power of buyers.

For digital platform transactions, the AAEC analysis presents distinctive challenges. Platform markets are characterised by network effects (the value of the platform to each user increases as the number of users grows), multi-sided market structures (the platform intermediates between distinct user groups whose interests may diverge), and data-driven competitive advantages (the accumulation of user data creates feedback loops that entrench incumbency). The CCI has grappled with these characteristics in its assessments of several technology sector combination notifications, most notably in its review of the acquisition of Future Coupons by Amazon, the Jio Platforms transaction, and the WhatsApp Pay regulatory inquiry.

This blog contends that the CCI's AAEC analysis in digital platform transactions requires a departure from the conventional market-share-centred framework of product and geographic market definition. This Note argues that the CCI ought to adopt, and appears to be moving toward, a framework that evaluates competition for the market (the risk that a dominant platform forecloses future entry and innovation) in addition to competition in the market (contemporaneous price and output effects), consistent with the approach developed in the EU by the European Commission in its Google Shopping, Google AdSense, and Amazon Marketplace decisions.

The Settlement and Commitment Mechanism: A New Enforcement Architecture

The 2023 Amendment introduces, for the first time in Indian competition law, a formal settlement and commitment mechanism for proceedings under Sections 3 and 4 of the Act (anti-competitive agreements and abuse of dominance) and for combination inquiries under Sections 43A and 44.³ Parties facing CCI investigation may now offer either commitments to modify or cease the impugned conduct (at any stage of the inquiry) or settlements proposing monetary payment in lieu of continued proceedings (at the stage following the Director General's investigation).

The mechanism mirrors analogous instruments in the EU competition framework – the European Commission's commitment decisions under Article 9 of Regulation 1/2003 and the settlement procedure in cartel proceedings under Regulation 773/2004 – and the UK Competition and Markets Authority's commitment and settlement tools. Its introduction resolves a long-standing structural limitation of the Competition Act: that the CCI's binary enforcement pathway (investigate and, if infringement found, impose penalty) created incentives for parties to contest proceedings to conclusion rather than engage constructively, lengthening investigation timelines and delaying market remediation.

For in-house competition counsel and external advisers, the settlement and commitment mechanism requires a recalibration of litigation strategy. Commitment proposals, which must be offered before the Director General completes the investigation, are binding and enforceable; a commitment that is not performed exposes the party to the penalties applicable to the underlying infringement. The CCI has published regulations on the procedure and criteria for commitment and settlement under the 2023 Amendment, and practitioners should evaluate the mechanism on a case-by-case basis, weighing the procedural cost of investigation completion against the terms and enforceability of any settlement or commitment arrangement.

Global Comparisons: EU Digital Markets Act, UK CMA, and the US HSR Framework

The 2023 Amendment positions India within an international trend of competition law reform directed at digital markets and high-value technology transactions.

The EU Digital Markets Act (DMA), which entered into force on 1 November 2022 and became applicable to designated "gatekeepers" in March 2024, establishes ex ante behavioural obligations for large digital platforms without requiring a case-by-case finding of anti-competitive conduct.⁴ Designated gatekeepers must comply with a list of per se prohibited practices (including self-preferencing, default settings that entrench incumbency, and mandatory bundling) and mandatory interoperability requirements. The DMA represents a fundamental shift from the ex post enforcement model of merger control and abuse of dominance law to a proactive regulatory architecture for systemically important digital intermediaries.

India has not yet enacted equivalent ex ante digital markets legislation, but the CCI's investigation into anti-competitive practices by online intermediaries – including its market study on the e-commerce sector (2020) and its investigation into Google's Android policies, culminating in a penalty of Rs. 1,337.76 crore in October 2022 – demonstrates that the CCI is willing to apply existing abuse of dominance tools to digital platform conduct. The 2023 Amendment's deal-value threshold provides the CCI with prospective oversight over the acquisition pathway through which dominant digital platforms have historically maintained market power.

In the United Kingdom, the Digital Markets, Competition and Consumers Act 2024 has established a new Strategic Market Status (SMS) regime administered by the CMA, imposing bespoke behavioural requirements on firms with strategic market status and empowering the CMA to impose conduct requirements and pro-competitive interventions on a designated firm basis. In the United States, the Hart-Scott-Rodino (HSR) Act amendments, effective February 2024, have expanded the information requirements for pre-merger notifications, with particular emphasis on transactions involving technology and pharmaceutical sectors.

Conclusion

India's 2023 competition law reforms establish a significantly more demanding merger control environment for technology transactions, digital market acquisitions, and high-value deals involving Indian-nexus businesses. This blog has argued that the deal-value threshold is the single most consequential reform for venture capital and private equity practitioners, that the AAEC analysis for digital platform combinations requires a framework attentive to competition for the market as well as competition in the market, and that the settlement and commitment mechanism creates new strategic options – and corresponding responsibilities – for parties facing CCI inquiry. Practitioners advising on India-nexus transactions would benefit from treating CCI merger control analysis as an integral part of transaction due diligence and term sheet structuring, rather than as a post-signing regulatory formality.

Endnotes

¹ Competition Act 2002 (India), s 5 (as it stood prior to the Competition (Amendment) Act 2023).

² Competition (Amendment) Act 2023 (India), s 6(1A) (deal-value threshold of Rs 2,000 crore).

³ Competition (Amendment) Act 2023 (India), ss 48A–48B (settlement and commitment mechanism).

⁴ Regulation (EU) 2022/1925 of the European Parliament and of the Council of 14 September 2022 on contestable and fair markets in the digital sector (Digital Markets Act) [2022] OJ L265/1.

⁵ Competition Commission of India, 'Market Study on E-commerce in India' (January 2020).

⁶ Competition Commission of India, In re: Abuse of Dominant Position by Google LLC, Case No 39 of 2018, Order dated 20 October 2022.

⁷ Competition Commission of India (Procedure in Regard to the Transaction of Business Relating to Combinations) Amendment Regulations 2023 (India).

⁸ Digital Markets, Competition and Consumers Act 2024 (UK), Pt 1 (Strategic Market Status regime).

⁹ Hart-Scott-Rodino Antitrust Improvements Act of 1976 (US), 15 USC § 18a (as amended by Final Rule effective 6 February 2024).

¹⁰ Council Regulation (EC) 1/2003 on the implementation of the rules on competition laid down in Arts 81 and 82 of the Treaty [2003] OJ L1/1, art 9 (commitment decisions).