PayU-Bill Desk Deal & the Competition Commission of India: Everything You Need to Know!

“In August 2021 in a press release by Prosus N.V. (“Prosus”) it was announced that Prosus, which owns the payment gateway PayU, has on a debt-free and cash-free basis, agreed to purchase IndiaIdeas.com Limited (“Billdesk”), subject to a normalised level of working capital at closing; for an all-cash purchase consideration of INR 345 million, or USD $4.7 billion, payable at closing.

The Competition Act, 2002 (“Act”) is an Act that inter alia provides for the establishment of a commission i.e., the CCI, to promote and sustain competition in markets, to protect the interests of consumers and to ensure freedom of trade carried on by other participants in markets, in India, and for matters connected therewith or incidental thereto.

As per the said Act, the CCI must be notified to, and obtain the approval before, any form of (domestic and international) acquisitions, mergers or amalgamations can be completed, but post execution of documents, that exceed the jurisdictional thresholds and do not benefit from any exemption and may affect the competition in the market and economy in India.

In an acquisition, the acquirer must file the notification. In a merger or amalgamation, it is the joint responsibility of all the parties to file the notification.

Please note that the Act has extraterritorial application, meaning the CCI’s jurisdiction extends to transactions that occur outside of India. The implication is that even if the purchases, sellers, or target entities are situated outside of India, combinations involving enterprises with assets or turnover in India that exceed the prescribed thresholds set out in the Act will be scrutinised by the CCI.

As per the Act, post execution of the agreement of a transaction, the parties cannot implement any part of the said agreement as, the transactions/deals (proposed to the effect the Indian market) are subject to review by the CCI must not be closed/consummated until an approval/clearance by CCI is provided; or, a review period of 210 calendar days from the date of notification passes, whichever is earlier.

Transactions that are not causing an appreciable adverse effect on competition (“AAEC”) are approved by the CCI is Phase I. However, if the CCI forms a prima facie opinion that the merger or acquisition is likely to cause an AAEC within the relevant market in India, the CCI can extend its review period until the full 210 calendar day statutory period (the Phase II review period) for an in-depth investigation. Before a Phase II investigation formally commences.

Prior to commencing the Phase II investigation, the CCI will issue a show cause notice to allow the parties to submit replies stating why the inquiry should not proceed. If the CCI is not convinced by the reasons provided by the parties, it will issue a formal order commencing the Phase II investigation wherein CCI may request for further details and documents.

Please note that as the proposed combination of two complimentary businesses of the bigger players in the FinTech sector is pending approval by the CCI, whilst the combined entity with significant competitive benefits will have the potential to catalyse the FinTech industry, it is pertinent to point out that the CCI can pass an order that

• provides an approval from closing/consummating the transaction as proposed;
• disapprove the transaction in its entirety; or
• provides a conditional approval, with suggested modifications to the transaction.

thereby changing the details of transactions to ensure that there is no cause of an AAEC in the Indian market.