Competition panel's nod a must for mergers

The Competition Commission of India (CCI) has notified the regulations on big-ticket mergers and acquisitions (M&As).

The new norms aimed at restricting anticompetitive practices, will come into effect from 1 June 2011. The M&As that commenced before 1 June 2011 with definitive action have been kept outside the competition watchdog's purview. The notified Sections 5 and 6 of the Competition Act will enable the CCI probe any combination that is likely to have an appreciable adverse effect on competition in the relevant market. However, CCI will have to take decisions within 180 calendar days of the proposal.

However, M&As taking place outside India with insignificant local nexus and effect on markets in India will not come under the purview of CCI. Nevertheless, in the case of two competitive Intellectual Property Rights holders merging abroad, the deal may come under the purview of the CCI.

Transactions such as acquisition of shares up to 15 per cent solely as investment, voting rights or stock splits, bonus issues, stock-in- trade, raw material, stores and spares, have been exempted from the ambit of these sections. In interconnected transactions, the parties may file a single notice covering all the small transactions.

MoEF gives power to states to clear projects in naxal area

The MoEF has given power to the state governments to clear projects upto five ha of forestland for critical public utility infrastructure projects in a bid to expedite development projects in 60 Naxal-affected districts.

The present threshold limit for such diversion is two ha. The limit is being increased to five ha for constructing schools, dispensaries/hospitals, electrical and telecommunication lines, drinking water, rainwater harvesting structures, minor irrigation canal, non-conventional sources of energy and vocational training centre. The state governments also can also clear projects for building power sub-stations, rural roads communication posts, police stations and underground laying of optical fibre cables, telephone lines and drinking water supply lines.

National Steel Policy draft by December

The draft National Steel Policy (NSP) is likely to be ready by December 2011. The proposed policy is expected focus on regulatory hurdles, taxation issues and infrastructure bottlenecks.

Once the draft is ready, an inter-ministerial panel will discuss the proposed changes and then the final report is be sent to the Union Government for approval. The committee will look into the reports of the task force set up by the Union Ministry of Steel - on issues relating to environment, raw material, economical and infrastructure - before drawing up the final draft.

Relief likely for CIL in coal supply pacts

The Union Ministry of Coal (MoC) is likely to revise the National Coal Distribution Policy (NCDP), which will relieve CIL from ensuring coal supply in the country.

The revision in the NCDP is likely to give freedom to CIL from the 'responsibility' of meeting the demand of coal in the country and 'compulsorily' issue letter of assurances (LoA) for due conversion into fuel supply agreements (FSA). In addition, it might free the company from the legal responsibility of ensuring the end-use of the coal sold through FSAs.

According to sources, considering the slow growth in domestic production - primarily due to environmental concerns - CIL has already developed a stockpile of over 100 million tonne worth of LoAs granted to the power sector. The LoAs were offered against linkages granted by the Ministry. CIL has clarified to the MoC that it can honour only 41 million tonne worth of LoAs issued to the power sector for 12 GW capacity expansions during 2011-12.

This is over and above the existing supply pacts worth 306 million tonne towards 65 GW capacity. The issuance of large number of LoAs, bulk of which cannot be honoured in the near future, is creating a situation where CIL may be dragged to court for non-compliance of NCDP.