[Siddharth Sharma and Aarushi Mittal are 4th year law students at National Law University Odisha, Cuttack]
More than six years ago, the Competition Commission of India (“CCI”) introduced the Green Channel route (“GCR”) for approval of combinations under the CCI (Procedure in regard to the transaction of business relating to combinations) Regulations, 2011 to enable automatic approval for combinations that did not involve any horizontal, vertical, or complementary overlaps. This route has significantly expedited the approval timeline for benign combinations, which were deemed approved by the CCI upon filing notice and its subsequent acknowledgement. The GCR mechanism was implemented to reduce approval timelines, thereby facilitating a greater ease of doing business. Though GCR provides a quick deemed approval, the CCI has remained vigilant in its scrutiny of GCR filings. The recent section 43A Order against CA Plume Investments for not furnishing information about certain vertical and complementary overlaps between its affiliates and the target serves as evidence to the CCI’s tight scrutiny.
At the same time, broader reforms have been introduced to reduce the overall time taken by the CCI to approve combinations. The Competition (Amendment) Act, 2023 reduced the review period from 210 days to 150 days and required the CCI to form a prima facie opinion within 30 days of receiving notice. These measures have helped streamline the merger review process and reduce approval timelines even for standard notices of proposed combinations made to the CCI under Form I.
These developments are positive and reflect greater efficiency from the CCI. Paradoxically, they have also lowered the appeal of GCR approvals. While they were once seen as a fast-track approval route, parties have little incentive to take the risk of self-certification and be subjected to strict post-filing scrutiny and penalties on incorrect filing, when conventional notices are also concluding quickly. The challenge lies in ensuring that GCR approvals serve their original purpose of giving a quick and certain approval route for combinations unlikely to cause appreciable adverse effect on competition (“AAEC”).
This post discusses how the CCI’s strict approach, combined with the expanded ambit of the term affiliate under the Competition (Criteria of Combinations) Rules, 2024 (“Criteria Rules”), has eroded the GCR’s appeal. It proposes a recalibrated framework, where eligibility for GCR filings is shifted from the zero competitive overlaps rule. Instead, GCR eligibility should be based on a hybrid approach, where the degree of control being acquired through a combination is also considered while determining GCR eligibility.
The CCI’s Order Against CA Plume Investments
On 26 June 2025, the CCI penalised CA Plume Investments and Bequest Inc. (collectively “Acquirers”) under sections 43A and 44 of the Competition Act, 2002 (“Act”). The Acquirers had filed a GCR notice for their proposed acquisition of 23.6% and 9.17% equity, respectively, in Quest Global Services Pvt. Ltd (“Target”), claiming that the transaction qualified for deemed approval under the GCR and did not result in any overlaps.
However, upon review of the proposed Combination, the CCI found potential competitive overlaps between the activities of some portfolio companies of the Acquirers and the Target, and thereby sought clarifications from the parties. The CCI noted that the customers of certain affiliates of the Acquirers and Target appeared to be the same. As a result, these products and services of the affiliates could be offered as a bundle. Despite the reasons and justifications provided by the parties, it was noted that the possibility of vertical overlaps could not be ruled out. Accordingly, a show-cause notice was issued to the parties as the proposed Combination did not meet the threshold criteria for clearance under the GCR.
In its Order, the CCI recorded the existence of certain vertical and complementary overlaps between the products and services of some of the portfolio entities of the Acquirers and Target. Considering that the Acquirers had admitted to the unintentional error in the recognition of these overlaps, and extended an unconditional apology for the same, the CCI imposed a penalty of four lakh rupees under section 43A and no penalty under section 44 of the Act. It further directed the acquirers to file a fresh notice under Regulation 8, providing complete information under the applicable form within 30 days of receipt of the present order.
Shift in Enforcement
Interestingly, a stark shift can be observed in the CCI’s enforcement of the GCR threshold criteria. In earlier orders, the CCI adopted an expansive approach while reviewing the combinations filed under this route. It even termed the nature of the overlaps between the parties as insignificant in one such GCR approval. This approach gave confidence to parties considering GCR and was in line with achieving its intended purpose of offering a quick, low-burden clearance route.
However, more recently, the CCI has adopted a stricter interpretation. It has applied the threshold criteria narrowly, with even small and tangential overlaps raising concerns and leading to penalties. In the Platinum Jasmine Order, the CCI observed that the GCR eligibility criteria are specific and objective and held that any horizontal, vertical, or complementary overlaps disqualify the combination from deemed approval. The CCI rejected justifications such as business discontinuation or the intra-group nature of overlaps as irrelevant for determining the eligibility. Consequently, a penalty of rupees five lakh under section 43A and rupees fifty lakh under section 44 was imposed on the Acquirers for failure to comply with the notification and for making materially false statements.
Similarly, in another Order last year, the CCI, upon examination, found seemingly minor supply chain relationships sufficient to constitute vertical/complementary overlaps, despite claims that the activity was ad hoc and de minimis. Here, a penalty of rupees ten lakh was imposed on the Acquirers under section 43A, along with the GCR notice being declared void ab initio. This strict application of the objective overlap criteria, without regard to the commercial magnitude or exceptional circumstances, showcases the CCI’s zero-tolerance approach towards non-compliance with the letter of the law.
Parties are now compelled to undertake comprehensive and precise self-assessments before availing the GCR, and can no longer rely on post-notice clarifications or leniency. This rigidity will considerably impact the usage of GCR, as the possibility of penalties for failing to meet the threshold criteria, along with the need to re-file under the appropriate routes, discourages parties from utilising the GCR. Consequently, this undermines the very purpose of GCR as a fast-track clearance route.
Impact of the Competition (Criteria of Combinations) Rules, 2024
In September 2024, the government notified the Criteria Rules with the objective of outlining those combinations that can access GCR for approval. These rules have made access to GCR narrower by introducing a more expansive definition of what constitutes an affiliate under Rule 3(2)(b). The term affiliate now includes (i) 10% or more shareholding or voting rights; (ii) representation on the board of directors as a director or observer; and (iii) parties with the right or ability to access commercially sensitive information of an enterprise. The parties must demonstrate zero horizontal, vertical, and complementary overlaps. The overlap assessment must be conducted for all their “group entities and their affiliates”.
This narrow approach undermines the essence of the GCR. The Criteria Rules have tightened the eligibility to access GCR approval, even for combinations unlikely to have any AAEC. This heightened compliance requirement, together with CCI’s clear intent to strictly scrutinize GCR filings and impose penalties for any inaccuracies, makes this route difficult to navigate.
Way Forward: A Control-Based Regime
There is a pressing need to reconsider the present GCR framework to preserve and improve its utility. An enhanced framework may help preserve the appeal for GCR approvals without compromising on enforcement. For a revised framework, this post suggests that the key criteria for GCR eligibility should be shifted from zero overlaps to minimal control being conferred via a combination. This shift will ground GCR eligibility in the actual degree of competitive influence gained through a combination.
In the proposed regime, combinations where one party acquires substantial control over the other should be rendered ineligible for GCR approval. For combinations where material influence is not acquired, or the material influence is weak (indicated by minority in shareholding and voting, and limited ancillary rights), a minimal overlap should not disqualify the acquirer from obtaining GCR approval. The eligibility can be determined by assessing the type of overlap present.
For horizontal overlaps, the combination must not lead to a combined market share of more than 5% when no control is acquired, and 2% when the control acquired is low. In India’s merger control framework, minimal combined market shares to the tune of 5% are usually considered insignificant and unlikely to cause AAEC.
For vertical and complementary overlaps, reliance on market share alone will prove insufficient. Here, the Schedule III attestation must be expanded to include qualitative declarations of any access to critical resources, customer groups, or networks that it can leverage against competitors. Any concealment of information herein must be met with a gun-jumping penalty to incentivize accurate disclosures.
Mature merger control regimes recognise that small overlaps are unlikely to harm competition, and are thus eligible for fast-track approval. For instance, the European Commission’s Simplified Procedure Notice (equivalent to the GCR) is available to combinations having horizontal overlaps below 20% and vertical overlaps below 30%. Against this international benchmark, the 5% horizontal overlap threshold proposed herein is not a radical step, but rather a conservative starting point, reflecting the CCI’s cautious approach compared to the European Commission’s more liberal overlap thresholds.
The suggested approach will enhance the GCR’s utility by broadening its scope. The proposed framework will change the GCR’s eligibility from the current blunt “zero-overlap” rule to a more nuanced criterion based on the degree of control acquired. This shift would expand the GCR’s scope to include combinations that do not pose any real competitive threat. It would cover combinations like minority acquisitions and passive portfolio investments unlikely to cause AAEC, which may unnecessarily be pushed down the longer approval route under the current regime.
Conclusion
To revitalise the GCR and achieve its intended goals, the CCI needs to be clearer and perhaps more tolerant regarding minimal overlaps in GCR filings, particularly when little or no control is being acquired. However, implementing this approach will require a change to the CCI’s wide interpretation of the term “control”, an issue that merits a separate discussion. Ultimately, maximising the GCR’s utility is essential in the CCI’s quest to foster a business-friendly competition regime.
– Siddharth Sharma & Aarushi Mittal