Published On: 7th October 2026
Authored By: Pranav Raj
Gitarattan International Business School, GGSIPU
ABSTRACT
The old way India handled merger control was predominantly dependent on thresholds for assets and turnover which created a real gap for regulators when high value digital companies were bought even if they had very little revenue or physical assets. To fix this the Competition Amendment Act 2023 introduced the Deal Value Threshold or DVT. This brings any deal over 2000 crore into the jurisdiction of the Competition Commission of India provided that the company being bought has substantial business operations in India! This piece looks at how the DVT changes the whole scenario of merger control by moving away from old school financial sizes and focusing instead on the value of the transaction along with user numbers and digital footprints and overall strategic importance. It goes through the legal setup found in the Competition Act 2002 and the Combinations Regulations from 2024 plus the guidance the CCI gave out later regarding how to actually apply these rules. There is special focus here on things like the total transaction value and buying targets via secondary markets and payments based on future performance known as contingent consideration as well as deciding what counts as having substantial business operations in India. One could argue that although the DVT shuts down a big loophole made worse by those digital killer acquisitions it also makes the compliance process much more dependent on judgment. Will it actually work? That depends on whether the CCI and the courts can build predictable and steady principles for dealing with these complicated digital deals in the end.
INTRODUCTION
The way merger control worked in India for a vast amount of time relied on the old method of checking if a deal was significant by looking at turnover and assets. These financial limits were what decided if an acquisition or merger was a notifiable combination under section 5 of the Competition Act 2002.[1] That model however became more and more disconnected from the economic side of how digital markets actually operate. Technology driven companies can reach valuations that are huge even if the money they make right now or the assets, they own are modest when you compare them. The real importance for competition might be found instead in the user bases and the data they have collected plus network effects and intellectual property and the possibility of having market power in the future. This means that buying digital firms which are small but have strategic value could easily miss the notification limits that are usual. This is why we see a regulatory problem known as killer acquisitions. These deals basically fly under the radar since the numbers just do not look big enough yet.[2]
The Competition (Amendment) Act 2023 tried to fix this gap by bringing in a Deal Value Threshold or DVT as another way to handle merger notifications. Under section 5(d) a transaction that involves getting control or shares and voting rights or assets or even a merger and amalgamation becomes a combination if the value is more than ₹2,000 crore as long as the enterprise being acquired or combined has substantial business operations in India.[3] This reform is a conceptual shift that is enormous. The regulatory question is no longer just about what a target owns or what it earns right now but also asks what the market is actually willing to pay for it.
But then again, the significance of the DVT is not just because it was introduced in the law. The CCI (Combinations) Regulations 2024 and some other explanatory material from the CCI have given the practical architecture for figuring out transaction value and what counts as substantial business operations in India.[4] This emerging framework brings up a broader question. Has India actually solved the merger control gap of the digital era, or has it just replaced a mechanical financial test with a more complex exercise of regulatory judgment? This article looks at that transition and what the DVT means for transactions in the digital economy.
LEGAL ANALYSIS
(a) Why the Old Test Failed: From Balance Sheets to “Killer Acquisitions”
The old way of handling merger control under the Competition Act 2002 was based mostly on the turnover and assets of the companies involved.[5] This worked fine for administration, but those signs are not a great fit for digital markets because a target company might have very little revenue or physical assets yet still hold huge competitive importance thanks to things like data and intellectual property or tech and user networks plus innovation potential. For this reason, the value of a digital start up usually reflects where it is expected to go competitively rather than how it is doing financially right now.
This basically led to a structural blind spot. An established giant could buy a fast growing start up before that smaller firm made enough money to hit the legal limit which meant they could wipe out a future rival without ever needing a mandatory merger review. But is this just an Indian problem? No! Competition bosses in the US and the European Union have had similar debates about whether limits based on turnover actually catch the purchase of firms that are rich in data or innovation. The European Commission saw this firsthand with the Illumina Grail case which showed exactly how hard it is to check transactions that are strategically important but fall under the usual limits.[6] Even though the Court of Justice eventually shot down the Commissions try to claim power through a wide reading of Article 22 of the EU Merger Regulation the whole fight proved a bigger point that economic value and competitive weight are not always shown in today’s turnover.p[7]
Indias DVT fixes this exact gap by introducing transaction value as its own separate doorway into merger control.
(b) What the DVT Changed: From Financial Size to Strategic Value
Section 5(d) was introduced by the Competition (Amendment) Act 2023 which basically says a transaction needs to be notified once the value exceeds 2000 crore provided that the business involved in the merger or acquisition has substantial business operations in India.[8] Also the DVT does not replace the existing thresholds for assets and turnover but works alongside them! This results in a dual architecture where enterprises that are economically substantial are caught by conventional thresholds while the DVT is there to capture deals where the price indicates strategic significance even if the target balance sheet does not show it.[9]
That is why the phrase substantial business operations in India has become central to the whole scenario. Specific quantitative indicators are provided by the 2024 Combination Regulations, and these include tests for gross merchandise value and turnover plus user-based criteria for those who provide digital services.[10] This is a big deal because it allows the CCI to look beyond the assets and revenues of the target to understand the actual economic footprint of the business in India. In digital markets users can therefore become a more meaningful indicator of competitive relevance than just having physical assets.
The DVT essentially stands as a conceptual recalibration regarding how mergers are controlled. The question is not just how large is the target today? But instead it is what is the acquirer paying for and why might that value matter to competition in India? This way of thinking is especially relevant when the payment reflects things like proprietary data or technology and intellectual property or network effects and expected future growth. Even the CCI in its own description of the amendment recognizes that the DVT is an additional notification criterion designed to address transactions that might otherwise escape thresholds based on assets and turnover.[11]
(c) The 2026 Guidance Layer: Greater Certainty or Relocated Ambiguity?
The real practical importance of the DVT is found in the way that transaction parties calculate and apply it. The term value of transaction as used in the statute is broad on purpose and it extends to consideration that is direct or indirect and also immediate or deferred.[12] For this reason the 2024 Regulations require parties to think about elements that go beyond the headline purchase price including certain future or contingent payments. This makes the DVT materially different from just a simple 2,000 crore price tag.
Also the more recent FAQs and explanatory material from the CCI provide an interpretive layer that is important for deal teams because it consolidates how the notification framework should be approached.[13] This is especially relevant for transactions that involve staged acquisitions or market purchases or arrangements that contain contingent consideration. The practical consequence is that parties cannot necessarily determine if they have notification obligations just by looking at the initial share purchase consideration. The wider economic substance of the transaction might have to be assessed.
This approach is defensible from an enforcement perspective, but it also shifts the burden of compliance from simple calculation to legal judgment. Yes, it can do the treatment of penalty related exposure or indemnities, or contingent liabilities and other contractual payments materially affect transaction value. Also determining exactly when the obligation to notify arises becomes critical since the Indian regime is based on prior notification which makes procedural timing an important part of transaction planning.[14]
Most importantly that said the guidance cannot completely get rid of the uncertainty that is inherent in the phrase substantial business operations in India. Quantitative safe harbours provide boundaries that are useful but digital businesses frequently operate through dispersed user bases and remote infrastructure and cross border platforms. Whether an enterprise has a presence in India that is sufficiently substantial may therefore remain dependent predominantly upon the particular facts of the transaction. The DVT has consequently solved one problem while creating another one that is more sophisticated. It closes the numerical loophole that let targets which were strategically valuable but financially small escape scrutiny, but the price is a regime where Indian economic presence and commercial substance and valuation must be assessed together. The real test of the reform will therefore be whether CCI practice gradually converts these broad standards into principles that are predictable without letting flexibility turn into uncertainty.
SUPPORTING AUTHORITY
The legal basis for how mergers are controlled in India now comes from section 5 of the Competition Act 2002 which describes what counts as a combination based on specific limits. In terms of how things evolved the Competition Amendment Act 2023 brought about an enormous change when section 5(d) was introduced. Through this addition the deal value threshold known as DVT came into being specifically for those transactions exceeding 2000 crore rupees where the entity involved maintains business operations in India that are deemed substantial.[15] Further section 6(2) ensures that notification happens first and foremost because firms need to inform the CCI before any deal reaches completion.[16]
A huge amount of the actual guidance resides within the Competition Commission of India Combinations Regulations 2024. One can see how section 5(d) functions in practice by looking closely at Regulation 4. To ensure a broad reach the phrase value of transaction was worded intentionally wide and covers things such as payments made directly or indirectly plus deferred sums and call options or money tied to future events.[17] Also, Regulation 4(2) exists to clarify what constitutes substantial business operations in India by relying on specific numerical data. For those providing digital services it means Indian users must make up at least 10 percent of the total global users. As for other businesses the criteria focus on Indian turnover or GMV assuming they hit both the 500-crore mark and the 10 percent requirement.[18] Such details are critical as they transform a vague conceptual legal idea into something measurable.
Another useful layer for anyone trying to understand this is the 2026 FAQs on Combinations released by the CCI. Within these FAQs it is made plain that the DVT serves as a standalone trigger for notification and they go into depth about what comprises the transaction value.[19] There is also mention of acquiring shares in listed companies via the secondary market alongside explanations on when investment exemptions might apply. [20] Even though the FAQs aren’t a substitute for the law or judicial precedents they provide a window into how the Commission views the DVT framework right now.
Moreover, the expanding collection of case law from the CCI remains essential for sorting out the procedures surrounding control and transactions that are linked. This means the DVT essentially depends on three distinct levels of authority.[21] Jurisdiction is established by the Act while the 2024 Regulations provide the testing mechanisms and the 2026 guide gives the practical sense of it all. But will future court reviews and CCI orders eventually turn these admin guides into predictable rules for digital deals? That remains to be seen.
CONCLUSION
The way India has adopted the Deal Value Threshold is a significant recalibration of merger control for the digital economy changing the whole scenario. For a long time, the traditional assets and turnover framework was based on the idea that the current financial size of an enterprise is a reasonable proxy for how much it matters competitively. But that assumption is becoming untenable these days where the main sources of value are actually things like data and technology and intellectual property and user networks plus the growth they expect in the future. That is why the DVT fills this structural gap by letting the CCI look at transactions where the economic value is more than 2,000 crores even if the target company does not meet the usual financial thresholds.
On the other hand, this reform does not make merger control any simpler! It basically replaces a mechanical inquiry with an assessment that is more sophisticated regarding transaction value and whether there are substantial business operations in India. While the 2024 Combination Regulations give some quantitative indicators and the CCI FAQs provide practical guidance on how the DVT works there are still problems. Questions about contingent consideration and interconnected transactions and exactly what counts as an Indian user or business base show that there is still a vast amount of room for interpretation based on specific facts.
The next phase of this DVT regime in India will be shaped less by the law and more by the practice of the CCI and judicial scrutiny. The first few substantive decisions the Commission makes on transactions triggered by the DVT will be very important for deciding how substantial business operations in India is interpreted and how the value of a transaction is calculated when digital acquisitions get complex. It is most likely that future litigation will test these boundaries further.
In the end the DVT is more than just another notification threshold. It signals that India is moving toward a philosophy of merger control where strategic and competitive value can matter just as much as historical financial size. Since digital markets keep blurring the line between current market power and future potential the experience of India might offer an important model for other places trying to make sure merger control does not just become a regulatory map of yesterday’s economy.
REFERENCES
[1] Competition Act 2002, s 5, as amended by the Competition (Amendment) Act 2023.
[2] OECD, Start-ups, Killer Acquisitions and Merger Control (OECD Competition Policy Roundtable Background Note, 2020); see also Competition Commission of India, Competition (Amendment) Act 2023.
[3] Competition Act 2002, s 5(d), inserted by the Competition (Amendment) Act 2023.
[4] Competition Commission of India, Competition Commission of India (Combinations) Regulations, 2024, regs 4(1)–(2), notified on 9 September 2024 and effective from 10 September 2024.
[5] Competition Act 2002, s 5(a)–(c). The CCI describes the traditional thresholds as being based on the assets and turnover of the enterprises and the relevant group.
[6] See generally OECD, Start-ups, Killer Acquisitions and Merger Control (OECD 2020); European Commission, Guidelines on the Assessment of Non-Horizontal Mergers and the Commission’s practice concerning transactions involving innovative targets.
[7] Illumina Inc v European Commission, Case C-611/22 P, EU:C:2024:677.
[8] Competition Act 2002, s 5(d), inserted by the Competition (Amendment) Act 2023.
[9] Competition Commission of India, Competition (Amendment) Act 2023: Salient Features (CCI 2023).
[10] Competition Commission of India (Combinations) Regulations 2024, reg 4.
[11] Competition Commission of India, Competition (Amendment) Act 2023: Salient Features (CCI 2023).
[12] Competition Act 2002, s 5(d).
[13] Competition Commission of India, FAQs on Combinations (2026).
[14] Competition Act 2002, ss 6(2) and 6(2A), as amended by the Competition (Amendment) Act 2023.
[15] Competition Act 2002, s 5(d), inserted by the Competition (Amendment) Act 2023.
[16] Competition Act 2002, s 6(2).
[17] Competition Commission of India (Combinations) Regulations 2024, reg 4(1).
[18] ibid reg 4(2).
[19] Competition Commission of India, FAQs on Combinations (2026) Qs 33–35.
[20] Competition Commission of India, FAQs on Combinations (2026) Qs 50–52.
[21] See, eg, Competition Commission of India, FAQs on Combinations (2026).
