Oil, gas PSU mergers exempt from CCI approval, says Corporate Affairs ministry
Merger and acquisition deals involving public sector oil and gas companies have been exempted from seeking the Competition Commission approval, says a notification.
The corporate affairs ministry’s decision to exempt such deals from the ambit of the Competition Commission of India (CCI) comes against the backdrop of the proposed consolidation and stake purchases among state-owned oil and gas companies.
In July, the Cabinet Committee on Economic Affairs (CCEA) approved sale of the government’s 51.11 percent stake in oil refiner HPCL to the country’s largest oil producer ONGC. The ministry has said all cases of combinations involving the central public sector enterprises (CPSEs) operating in oil and gas sectors under the Petroleum Act, 1934, have been exempted from the CCI approval requirement for five years.
The exemption will also be applicable to their “wholly- or partly-owned subsidiaries operating in the oil and gas sectors, from the application of the provisions of sections 5 and 6 of the (Competition) Act, for a period of five years”, the notification issued on November 22 said. Sections 5 and 6 pertain to combinations.
Under the norms, combinations or deals beyond a certain threshold compulsorily require approval from the CCI. Earlier this year, the ministry exempted mergers of nationalised banks from seeking CCI’s approval.
About the latest notification, law firm Chandhiok & Associates said the exemption comes right before the government’s implementation of policy to merge major oil public sector undertakings.
“The policy of immunising state owned enterprises from competition law has often been criticised as one which leads to inherent market distortions and inefficiencies.
“This policy is also likely to hinder harmonisation of Indian competition law with set international practices recommending competitive neutrality between private and public sector,” it said in a note.
The CCI keeps a tab on anti-competitive ways across sectors to ensure fair practices are followed.