Regulatory Framework Under the Competition Act, 2002

• The Competition Act, 2002, governs anti-competitive practices, abuse of dominance, and combinations (mergers and acquisitions) in India.
  
• Joint ventures that qualify as “combinations” are subject to review by the Competition Commission of India (CCI).
  
• The objective is to ensure that the JV does not harm competition in the relevant market.
  
• The Act applies to both domestic and cross-border joint ventures if they meet the prescribed thresholds.
  
• Compliance with this Act is mandatory before or after forming a JV, depending on the transaction structure.
  

Merger Control and Thresholds

• A JV may be considered a “combination” if it involves significant asset or turnover thresholds.
  
• As per the Act, parties must notify the CCI if their combined assets or turnover exceed the specified limits.
  
• Notification must be submitted using Form I or Form II, based on the complexity of the transaction.
  
• CCI approval is required before consummation of the transaction if it meets the criteria.
  
• Failure to notify can attract penalties up to 1% of the total turnover or assets involved.
  

Assessment of Anti-Competitive Effects

• CCI examines whether the JV leads to an appreciable adverse effect on competition (AAEC).
  
• It considers market concentration, entry barriers, consumer welfare, and potential foreclosure.
  
• JVs formed purely for collaboration without structural integration may still face scrutiny.
  
• Agreements that restrict pricing, production, or market allocation are prohibited under Section 3.
  
• Parties must demonstrate that the JV promotes efficiency and does not stifle competition.
  

Exemptions and Safe Harbors

• JVs with low market share or operating in non-sensitive sectors may fall under safe harbor provisions.
  
• Purely contractual or project-specific collaborations not amount to a combination may not need notification.
  
• JVs formed for research, innovation, or export purposes with limited market power may be exempt.
  
• CCI may provide informal guidance in cases of doubt over notification obligations.
  
• However, blanket exemptions do not apply, and facts must be assessed case by case.
  

Ongoing Compliance and Monitoring

• Post-approval, the JV must operate in compliance with competition norms.
  
• Any cartel-like behavior or abuse of dominance by the JV is punishable under the Act.
  
• The CCI has the power to investigate and impose penalties, including structural remedies.
  
• JV partners must avoid restrictive clauses in agreements that reduce market freedom.
  
• Periodic legal audits and training help ensure competition law compliance.