A blog by Centre for Competition law & Policy, NLU Jodhpur


Nandini Modi


The CCI has the authority to identify if the particular combination in India causes any appreciable adverse effect on competition (‘AAEC’) in the relevant market under Competition Commission of India (Procedure in regard to the transaction of Business relating to Combinations) Regulations, 2011 (“Regulation”) and the Competition Act, 2002 (‘Act’).[1] Parties to any proposed combination i.e. merger, amalgamation or an acquisition under sections 5 and 6 of the Act have to notify the CCI about their transaction if it exceeds the jurisdiction threshold limit with respect to the turnover or asset provided in the Act.[2]


The jurisdictional threshold limits have always been used by the CCI as an effective tool to check if any potential combination will have a damaging effect on the competitive forces of the market. However, with the emergence of digital economy, the competition regulators across the world have debated whether the monetary thresholds sufficiently cover all kinds of transactions or whether there is an evident “enforcement gap”. [3] A lot of global transactions between powerful tech giants have escaped the review of the competition authorities. For instance, Flipkart’s acquisition of Myntra, Snapdeal’s acquisition of Freecharge, Ola-TaxiForSure, Facebook and Jio etc. This is because these transactions do not entail a high turnover or a substantial value of assets and provide free services or extremely low/almost negligible cost services which does not generate huge revenues. There is no clarity in such transactions with respect to their impact on the competitive dynamics since they are usually data driven. These companies might have a low turnover in the beginning but still have significant valuation due to their resources such as technical know-hows, innovation, ability to create financial instability or a monopoly for the incumbents. [4]

The Facebook acquisition of Jio includes an agreement where Jio Mart can conduct e-commerce on WhatsApp which is owned by Facebook. The network power in the hands of these two major giants is unprecedented. Jio has the highest number of subscribers and revenue share plus 400 million users of WhatsApp only in India. This union would create a two sided market where users are both the data source and products sold to advertisers. When more users will join to benefit from the network effects, it creates an irreversible feedback loop in which the platforms will constantly reap benefits from the data creating barriers to entry in the market because no other competitor will be able to match the network effects and their big data creating an absolute monopoly. Therefore, the concerned regulators want to devise a way to bring such transactions under their scrutiny.[5]


The Austrian and German competition regulators introduced the concept of deal value/transaction value threshold (‘DVT’) to capture such transactions. DVT’s primary focus lies on the fact “whether the value of the transactions exceeds a certain pre-decided threshold and if they have a considerable presence in the local territories of that country.” Now, even though the companies have a low turnover, owing to their deal size the authorities can exercise jurisdiction over the matter. Hence, the Competition Law Review Committee also recommended the introduction of DVT in their 2019 Report. Subsequently, the Draft Competition Amendment Bill, 2020 was proposed to implement the same. [6]


While acknowledging the benefits of DVT, its simultaneous imposition of risks also needs to be acknowledged.  There is no cogent/empirically tested evidence on the enforcement gap, in light of which any implementation of supplementary threshold might result in unnecessary burden on the administration or be out of proportion. For instance, the Facebook-WhatsApp merger which is used to argue for the enforcement of DVT, was eventually cleared by the EU without any detailed review or modifications. [AA3] [NM(4] [7]It was just fined a hefty sum because of giving incorrect information with respect to its intention to match accounts of its users of Facebook with WhatsApp. Moreover, in German and Austrian merger law regime, there is a pre-requirement to notify the acquisition of control/significant competitive influence unlike India. The DVT report without such additional filings could create adverse results and worsen the risk of false positives. [8]

The valuation of the target company differs between acquirers making the DVT subjective. It cannot accurately measure the significance of a transaction on competition. A potential start-up can be acquired at a low value, but the post-merger value of the combined entity could disrupt the market. Determining the real value of any transaction includes the analysis of multiple factors such as fluctuation of share prices between the period of announcement of transaction and its completion, varied valuation methods, purchase price in different sectors, deferred consideration, coming up with a local nexus test to establish competition impact in India making it a challenging process. For instance, Facebook-WhatsApp transaction’s initial offer was 19 billion USD but by the time of its completion, the price had increased to 22 billion USD because of the rise in share value of Facebook. Hence, The present DVT can be vague and thus reduce the legal certainty and efficiency of merger review. Lack in clarity in procedural steps of the DVT could result in redundant reviewing of numerous false positive cases, burdening the authorities with multiplicity of cases. The International Competition Network (‘ICN’) requires the merger thresholds for notification to be precise, clear, and comprehensible based on objectively quantifiable standards. The CLRC does ratify the ICN recommendations but does not specify on how to implement the same in the new framework.[9]

The CLRC’s Report also fails to address data privacy concerns. Though, CCI has held that it is out of its ambit, privacy protection is a form of non-price competition, especially in industries that provide free services. For instance, when two horizontal competitors compete on data privacy as a product quality then their combination could reduce the quality. Bundeskartellamt and European authorities appear to be of this view but, US regulators state that when there is no consumer harm in terms of price, Clayton Act will not attract scrutiny for the same and if firms are forced to share data, it can detriment innovation.[10]

The main purpose of the merger control is not only to check for concentration in markets but also maintain the competition to improve consumer welfare.  Hence, it is important to ensure that it does not become deterrent to market efficiency. It could be detrimental to investments and innovation in India because the digital markets are still emerging and DVT might lead to a delayed approval by the CCI before a start-up can actually receive its investments or disincentivise the investors completely and lose its competitive edge due to the complex procedures for CCI’s approval, compliance costs. It might adversely impact ease of doing business. Indian start-ups are still at their nascent stage unlike Germany or South Korea. These companies are usually associated with cash burns because of their lack of experience and depend on external investment from more established market players to survive. CLRC had ignored the aspect of Indian start-ups while accounting for international competition jurisprudence. Further, DVT cannot address the AAEC created by Amazon’s acquisition by way of its strategy to build a private brand and force out small businesses as its competitor by undercutting businesses and gain higher profits.[11] The CCI in the Flipkart combination had noted that “Recognizing the growth potential as well as the efficiencies and consumer benefits that such markets can provide, any intervention in such markets needs to be carefully crafted lest it stifles innovation.” Therefore, over-legislating can create a chilling effect on competition.[12]


The DVT is not particularly convincing of an effective merger control regime with respect to the digital economy. The Indian competition authorities are advised to examine and adopt other alternative measures to effectually capture data driven transactions. The Competition and Markets Authority (‘CMA’) of the UK, introduced the relatively objective ‘share of supply test’ which allows the CMA to review transactions where the share of supply between parties exceed 25% and this transaction further results in a gain or strengthening of that share.[13] This test would remain objective even in significantly volatile markets, enabling self-assessment within Green Channel Approval route.

 Another alternative would be the ‘balance of harms’ approach which replaces the balance of probabilities test. In this approach, the possibility of harm and anticompetitive effects of a merger are looked at and where the scale of harm is higher, the transactions are blocked.[14]  For example, in the Facebook’s acquisition of Instagram, a balance of harms approach would account for the potential harm of losing a powerful competitor to Facebook, the foregone benefits such as the advertisement costs being passed on to the consumers, greater need for privacy protection. Such factors would be considered into the competition authorities’ decision to a much greater extent than under the DVT increasing the chances to review the merger and block it.[15]Also, a ‘user based threshold’ could be helpful because digital enterprises’ main focus is to establish a significant user base. Though, the user base gets converted into an increased valuation of the digital enterprise, the same would not take place in complicated combination deals or in a volatile economic market.[16]


The incorporation of these approaches in the Indian enforcement policy would confer CCI a power to review transactions that fall below the required thresholds. Further, the CCI could set up expert panels to clarify an appropriate approach to digital transactions and to elaborate further on the theories and their incorporation in the policies. These approaches would better facilitate the CCI in capturing anticompetitive data driven transactions.[17]With the growing digital economy, Indian competition law jurisprudence needs to strike a sufficient balance between the strict regulations to assess competition dampening transactions and still manage to promote efficiency, innovation, and total welfare in the economy. The alternatives suggested in the paper promote this goal making CCI better equipped to handle the complex challenges posed by the digital economy.

[1] The Competition Commission of India (Procedure in regard to the transaction of business relating to combinations) Regulations, 2011, No. 3 of 2011 (India).

[2] The Competition Act, 2002, No. 12, Acts of Parliament, 2003 (India).

[3] Introduction of alternative merger control thresholds – is it the way forward?, AZB & Partners (November 30, 2018),

[4] Id.

[5] Akhil Bhardwaj, If Data is the new oil, Indian Competition Law Needs an Urgent Update, The Wire (June 25, 2020),

[6] Introduction of alternative merger control thresholds – is it the way forward?, AZB & Partners (November 30, 2018),

[7] Id.

[8] Supra note 7.

[9] Surbhi Lahoti, Deal-Value Threshold: Filling an Enforcement Gap or Overburdening the Enforcers?, Jurist (May 7, 2020),

[10] Akhil Bhardwaj, If Data is the new oil, Indian Competition Law Needs an Urgent Update, The Wire (June 25, 2020),

[11] Shubham Jain, Merger Control Regime and Transaction Threshold in the Digital Economy, The Law Review Anthology (June 12, 2020),

[12] Introduction of alternative merger control thresholds – is it the way forward?, AZB & Partners (November 30, 2018),

[13] Shubham Jain, Merger Control Regime and Transaction Threshold in the Digital Economy, The Law Review Anthology (June 12, 2020),

[14] Report of the Digital Competition Expert Panel, Unlocking digital competition, (Mar. 2019),

[15] Id.

[16] Jain, supra note 16.

[17] Manasvin Andra, Digital Markets: Need for a New Approach to Merger Regulation, (May 23, 2021),

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