THE DEAL VALUE THRESHOLD TWO YEARS ON: INTERROGATING INDIA’S MERGER CONTROL OVERREACH

1. Introduction

India has maintained its merger-control system since its establishment by using party size as the main measurement which assesses their asset and turnover values. The system fails to identify acquisitions of companies which have strategic value because their current financial status does not reflect their full competitive strength. Digital markets showed the issue most clearly because their innovation system required more than just balance-sheet measurement to evaluate data and network effects and user base growth. The Competition Law Review Committee recommended that the merger-control system should gain power to assess transactions through their deal-value measurement.[1]

The Competition (Amendment) Act 2023 translated that policy concern into section 5(d) of the Competition Act 2002, creating the Deal Value Threshold (DVT). The rules require notification of a transaction which has value above ₹2,000 crore and the target maintains substantial business operations throughout India.[2] The Competition Commission of India (Combinations) Regulations 2024 established this test through its implementation, which included detailed regulations for determining transaction value and recognizing major Indian business activities.[3]

The central question for India now requires an answer because two years of the regime’s operations have proved the country needed a system to detect “killer acquisitions” which was the initial purpose of the regime. The selected system needs testing to determine its abilityto differentiate between two types of business deals which present different levels of competitive danger and which depend solely on their future revenue potential and their intellectual property value and their user acquisition rate. The high value of a deal provides valuable information to assess its impact on market competition although it does not serve as proof for demonstrating substantial competitive harm.

This article therefore examines whether the DVT has struck an appropriate balance between closing the digital-economy enforcement gap and preserving proportionality in merger review. The DVT exists as a concept which can be defended yet its general evaluation process together with its relationship to the substantial-business-operations test causes no less than three times more notifications than needed for essential review. The resulting compliance burden may be particularly significant for private-equity, venture-capital and technology transactions which create a need for market participants to obtain better safe harbours and exclusion rules throughout India.

2. Background

The Deal Value Threshold (DVT) system which India adopted originated from a complete assessment of the asset-and-turnover system that had ruled business valuation up until that moment. The Competition Law Review Committee (CLRC) which the government established in September 2018 completed its investigation before delivering its findings in July 2019. The organization discovered an unrecognized weakness within India’s merger control system which permitted businesses with minimal assets and revenue to purchase companies that possessed significant market power in digital sectors. The Committee therefore recommended introducing an additional notification criterion based on transaction value.[4]

The legislative response developed through the Competition (Amendment) Bill 2022, which proposed a transaction-value threshold alongside the existing financial thresholds. The proposal was ultimately enacted through the Competition (Amendment) Act 2023. The acquisition of an enterprise through merger or amalgamation becomes a combination which exists when the transaction value exceeds ₹2,000 crore and the acquired enterprise meets Indian business operation requirements defined by regulations.[5] This represented a significant conceptual shift because jurisdiction now depended on the economic value of a transaction instead of the financial size of involved parties.

The DVT was established as a functioning system through the Competition Commission of India (Combinations) Regulations 2024 which define both the process to evaluate transaction value and the requirements that determine substantial business operations (SBO) in India.[6] The regulatory framework started to function in September 2024 when the 2023 amendments received complete implementation. The CCI now has authority to oversee transactions which do not meet standard asset and turnover requirements but still fulfill DVT and SBO standards.

The DVT serves as a new measurement method which operates independently of existing threshold systems. The system functions as an extra legal entry point because the lawmakers established it to manage new economic trends that emerge in digital and innovation-based markets while keeping current regulations intact.[7] The resulting structure therefore creates a layered notification regime which enables transactions to reach notifiable status through three different methods which include traditional financial thresholds and the DVT and other statutory routes. The expansion creates an essential proportionality question which needs to be addressed. The mechanism needs to maintain its focus on particular strategic acquisitions which must be essential to operational activities in order to prevent transaction value from becoming a competitive harm assessment.

3. DVT Mechanics

The Deal Value Threshold (DVT) serves as an extra jurisdictional entry point which operates through section 5(d) of the Competition Act 2002. A transaction requires notification when its value reaches ₹2,000 crore and the company being acquired or controlled or merged or amalgamated conducts substantial business operations in India.[8] The mechanism requires two cumulative requirements which include a valuation threshold and an Indian-operations test. The two requirements established for the system do not create jurisdictional authority by their individual existence.

The initial part addresses the worth of the business deal. The Competition Commission of India (Combinations) Regulations 2024 adopt a deliberately broad approach to valuation. The transaction value extends beyond the main payment that will be made at the time of closing. The value of the transaction includes both share consideration and voting rights and asset control and all related transaction amounts. The framework requires parties to assess future payments which have definite value estimation potential.[9] The design of this approach prevents parties from using multiple instruments and stages to create artificial considerations which keep their total value below the legal threshold.

The SBO test serves as the second element of the examination process. Regulation 4 establishes specific indicators to determine which business operations in India qualify as substantial operations. The regulation establishes particular criteria to identify digital businesses and technology-driven companies which operate in India.[10] The existence of physical space and standard income from India operations restricts a target but their Indian user base and commercial presence in India remain substantial. The SBO test establishes an economic connection through its requirements which create a necessary link between transactions and Indian economic activities that complement the transaction-value standard.

In no way does the DVT replace the traditional thresholds under sections 5(a), (b) and (c), where their respective assets and turnovers are visible to the parties and their following subsequent groups.[11] A transaction becomes notifiable through conventional thresholds when its transaction value exceeds ₹2,000 crore. The DVT declares a transaction involving a small target as notifiable when its valuation reaches the legal limit and the SBO condition gets fulfilled.

The architectural design produces multiple overlapping jurisdictional paths which replace the need for a complete unified testing procedure. The valuation process in technology transactions and venture capital investments and private equity acquisitions reaches its highest point when companies exceed their present revenue and asset value. The transaction becomes subject to merger control assessment because the organization expects its future growth to occur through its existing intellectual property and data assets and network effects.

The DVT thus represents a deliberate movement from a purely balance-sheet-based model towards an economically broader conception of merger jurisdiction. The system achieves its purpose only when its valuation methods together with SBO standards successfully detect significant market impacts from transactions while they maintain their regular investment operations.

4. Critical Analysis

The DVT exists as an accurate assessment because traditional methods of measuring turnover and asset thresholds fall short in detecting the acquisition of emerging competitors who operate within digital marketplaces. The system design creates proportionality issues because transaction value does not accurately measure the importance of competitive activities. India is not the first jurisdiction to confront this problem. Germany and Austria introduced transaction-value thresholds in 2017 while the European Union has maintained its primary reliance on turnover-based jurisdictional criteria.[12]

Germany’s system needs a transaction value greater than €400 million which must be combined with significant domestic operations by the target company while using revenue-based standards to determine eligibility.[13] Austria established a new transaction value threshold which requires businesses to achieve domestic operational activities and maintain specific revenue requirements at €200 million.[14] The European Commission, by contrast, has not adopted a general transaction-value threshold under the EU Merger Regulation. The assessment found that turnover thresholds with referral mechanisms succeeded in identifying major transactions because the transaction-value method would raise operational expenses since purchase price does not indicate actual competitive damage.[15] The contrast provides valuable lessons about the two cases. India has implemented the widest form of the concept through its requirement which brings a transaction under merger control when its value reaches ₹2,000 crore and it is combined with SBO which applies to the case because the target has received the standard de minimis exemption.[16]

The Indian framework uses a broad definition to define transaction value. The definition allows for the inclusion of direct and indirect considerations which can be immediate or deferred together with interconnected transactions and call options and contingent payments and specific arrangements that involve intellectual property and technology assistance and other related obligations.[17] This breadth is understandable from an anti-avoidance perspective, but it may produce difficult valuation exercises where the commercial value of future obligations is uncertain. The issue becomes most challenging for technology transactions because their total value includes both earn-outs and milestone payments and option arrangements and future business commitments.

The SBO test partially mitigates this concern. Digital services can establish significant operational capacity through their Indian user base while other businesses can establish eligibility through their Indian gross merchandise value and turnover.[18] The DVT test requires that an acquisition must have substantial economic ties to India which prevents foreign acquisitions from activating the DVT test. The test requires digital businesses to establish nexus through user participation which stays active even during non-revenue periods.

The CCI’s operational history since its implementation provides vital real-world evidence which counters academic theoretical objections. The DVT became operational in September 2024, and publicly available merger-control reporting indicates that twelve transactions were notified solely on the basis of the DVT during the first year of operation.[19] This statement does not prove that authorities have excessively enforced their laws. The evidence shows that only a few cases exist which demonstrates the ₹2,000 crore threshold does not require all technology and investment activities to submit reports. The two processes need to be divided between their initial notification phase and their later actual implementation phase. The jurisdictional threshold function serves to determine which transactions need regulatory examination without proving those transactions violate competition rules.

The compliance requirements maintain their essential importance. The notification procedure becomes mandatory for all transactions which fall under DVT regulations because the target entity possesses minimal assets and earnings and the transaction will not create significant competition harm. The statutory de minimis exemption does not shield such transactions once the DVT conditions are satisfied.[20] The private equity and venture capital investment sector faces significant challenges because of this issue. A high-growth start-up can achieve a company value above ₹2,000 crore despite its current financial position of low revenues and high losses and lack of market presence. The valuation of the company exists because investors believe it will succeed in the future instead of showing an existing market position.

The primary vulnerability of the DVT operational system exists in its essential component which shows that price and competitive value actual relationship. The high valuation of a business may show its intellectual property and data assets and network effects and expected future growth, but it may also result from speculative market expectations and technological uncertainty and fierce competition in the market for investment. The use of valuation as a territorial indicator leads to two dangerous outcomes which include incorrect identification of cases and expensive defensive submissions.

The absence of a broad early-stage safe harbour system makes the present situation more concerning. The combination framework includes categories which do not require notification but the de minimis exemption still applies to traditional thresholds. These two mechanisms fail to provide complete solutions for high-value, low-revenue investments which the DVT system exclusively targets.[21] The control over a transaction’s value and control rights to future benefits needs analysis because these elements together with their connected rights create challenges in assessing the minority investment which exists solely for investment needs.

India should proceed to maintain the DVT as a specific jurisdictional safety net which requires protection while establishing detailed rules to define official passive investments and low-risk early-stage financing and activities that do not create significant market competition. The system needs this calibration because it allows tracking of “killer acquisitions” while stopping regular investment checks from turning into common merger control procedures.

5. Case Studies

Your training data extends until the month of October in the year 2023. The CCI’s first experience with DVT demonstrates its value for determining if the new threshold operates as a specific compliance mechanism or creates extra compliance requirements. The acquisition of Del Monte Foods Private Limited (DMFPL) by Agro Tech Foods Limited (ATFL) approved on 21 January 2025 stands as one of the first example transactions. The transaction involved acquisition of the entire shareholding of DMFPL, with consideration discharged partly through preferential allotment of ATFL shares.[22] The CCI treated the transaction as one of the early DVT notifications involving solely non-cash consideration, demonstrating the breadth of the statutory concept of transaction value.[23]

The assessment found no substantial competitive problems through its evaluation of the case. The companies involved shared horizontal market presence in packaged foods snacks and ready-to-eat products and pasta products and sauce products and spread products and dip products and edible oils while establishing multiple vertical business ties. The CCI determined that the combined market shares of the two parties showed no substantial market impact which led to its assessment that the deal would produce no significant harm to competition.[24] The case demonstrates an essential difference between jurisdictional capture and substantive competitive harm because a transaction can meet DVT requirements while showing minimal competition issues.

The second category includes financial transactions which create an obligation between financial investors and the financial market. The CCI’s January 2025 penalty against Goldman Sachs entities for acquiring optionally convertible debentures in Biocon Biologics demonstrates the compliance challenges which private-equity investors face.[25] The proceeding focused on gun-jumping violations but showed that investment structures with minority ownership rights and conversion rights and information rights require extensive examination under the new merger-control regulations. The assessment of control and transaction value and exemptions become challenging because sophisticated investment instruments create difficulties in determining these elements.

The DVT enforcement record demonstrates that the DVT has not led to significant enforcement actions. During 2025, industry estimates indicated approximately 40 DVT filings, while the CCI continued to clear combinations predominantly without remedies.[26] The current pattern shows no evidence of systematic enforcement because it demonstrates how enforcement authority has grown to include previously non-reporting transactions which now require notification despite showing minimal competitive danger during later evaluations.

The case studies consequently support a measured conclusion: the DVT is successfully closing jurisdictional gaps, but its effectiveness should be judged not merely by the number of transactions captured, but by whether the additional filings generate identifiable competition-law benefits proportionate to their compliance costs.

6. Recommendations

The DVT should be preserved for use but needs measurement adjustment to maintain proper merger control which matches actual competitive threats. India needs to implement a specific de minimis exemption which will apply to DVT transactions. The current legal de minimis exemption which depends on a target’s Indian assets or turnover does not apply when DVT triggers the need for notification.[27] The rule establishes an essential imbalance because a target possessing Indian assets worth ₹450 crore or less and Indian revenue below ₹1,250 crore must still report its transactions when they exceed ₹2,000 crore.[28] A supplementary exemption will exclude all transactions which involve actual small target entities until demonstrable proof emerges through major Indian users and market competition duplication.

The CCI needs to establish a safe harbour according to its second requirement which applies to both early-stage financing and minority investment activities. Venture-capital and private-equity transactions frequently involve valuations which rely on their expected future growth instead of their current market capabilities. The law presumes that investments which do not grant control or board membership or significant power to investors but meet specific conditions for passive investing will not require notification. The current framework of the system already identifies specific investment acquisitions which companies make for their regular business operations as activities that do not need notification.[29] The application of this principle to DVT-triggered transactions will create greater certainty while maintaining CCI authority to evaluate important acquisition deals.

The valuation process for contingent and future consideration needs to establish better guidelines which can provide more precise direction. Regulation 4 permits inclusion of best estimates of contingent future payments and payments associated with arrangements such as intellectual-property licensing technology assistance and marketing.[30] The process of calculating transaction values encounters difficulties because future events create uncertain payment conditions which need to be prevented through necessary provisions. The CCI should publish valuation guidance establishing objective principles for discounting, estimating and excluding genuinely speculative consideration.

The SBO test needs regular assessment during its implementation. User-based criteria are particularly valuable for digital markets. However, a user threshold based on quantitative data will identify businesses which have minimal economic impact from their Indian customers. A qualitative assessment of monetisation, market position and competitive relevance could supplement the numerical test. The CCI needs to release DVT notifications data which includes anonymised information about clearance timelines, substantive concerns and remedies.

The public should gain access to more information because it enables policymakers to assess whether the system properly identifies transactions that need intervention or whether it merely increases notification costs. The DVT should remain unchanged while its existing powers transform into a precise instrument which catches high-risk acquisitions but allows regular investment activities to continue without added regulatory burdens.

7. Conclusion

The operational implementation of India’s Deal Value Threshold which started two years ago has not produced evidence that supports either its complete abandonment or its unrestricted expansion. The DVT addresses a genuine structural weakness in traditional merger control by bringing high-value acquisitions of businesses with limited assets or turnover within the CCI’s jurisdiction. The combination of substantial-business-operations test with the transaction ensures that it has an important connection to India.[31]

The framework still has an existing issue because it allows excessive inclusion of elements. The use of transaction value as a measurement for competitive damage results in an inaccurate assessment because it does not account for market conditions that exist in venture-capital and private-equity and technology markets which base their valuations on expected growth and innovation and their non-physical assets. The wide scope of Regulation 4 makes it more likely that organizations will face increased notification requirements because they have to report about their future complex payment methods and all potential upcoming payments.[32]

The suitable policy response requires the method of calibration to be implemented instead of retreating from existing policies. India needs to maintain its DVT system while establishing stronger protection measures for three specific types of investments and actual business funding and business transactions that involve organizations with minimal market influence. The predictability of DVT information will become more reliable through improved valuation guidance and the establishment of clear procedures for DVT enforcement activities.

The system requires effective merger control which needs more than closing jurisdictional gaps. The system demands that regulatory actions must match the actual competitive threats which exist in the market. The DVT serves as a crucial asset for protecting against dangerous acquisitions in digital markets and innovation-based industries but its future effectiveness depends on the ability to identify essential transactions while the system avoids unnecessary investment-related procedures.

References

[1] Competition Law Review Committee, Report of the Competition Law Review Committee (2019); Competition Commission of India, ‘Competition and Regulation in India 2019’ (2019).

[2] Competition (Amendment) Act 2023, s 3, inserting Competition Act 2002, s 5(d).

[3] Competition Commission of India (Combinations) Regulations 2024, reg 4.

[4] Competition Law Review Committee, Report of the Competition Law Review Committee (Ministry of Corporate Affairs 2019).

[5] Competition Act 2002, s 5(d), as inserted by Competition (Amendment) Act 2023, s 3.

[6] Competition Commission of India (Combinations) Regulations 2024, regs 4 and 5.

[7] Competition Commission of India, ‘Deal Value Threshold Criteria for Merger Review’ Fair Play (October 2024).

[8] Competition Act 2002, s 5(d), as inserted by Competition (Amendment) Act 2023, s 3.

[9] Competition Commission of India (Combinations) Regulations 2024, reg 4.

[10] ibid, reg 5.

[11] Competition Act 2002, s 5(a)–(c).

[12] Competition Commission of India, Competition and Regulation in India 2019 (2019); OECD, ‘The Elements of the Transaction Value Threshold’ (2020) DAF/COMP/WD (2020)20.

[13] Gesetz gegen Wettbewerbsbeschränkungen (GWB) § 35(1a).

[14] Kartellgesetz 2005 (Austria) § 9(4).

[15] European Commission, Evaluation of Procedural and Jurisdictional Aspects of EU Merger Control (SWD (2021) 67 final)

[16] Competition Act 2002, s 5(d); Competition Commission of India (Combinations) Regulations 2024, reg 4.

[17] Competition Commission of India (Combinations) Regulations 2024, reg 4(1).

[18] ibid, reg 4(2).

[19] India: Merger Control 2025, Chambers and Partners (2025).

[20] Competition Commission of India, ‘Fair Competition: FAQs on Competition Law’ (2026).

[21] Competition Commission of India (Combinations) Regulations 2024, sch I.

[22] Competition Commission of India, Agro Tech Foods Limited/Del Monte Foods Private Limited, Combination Registration No C-2024/12/1214, order dated 21 January 2025.

[23] Competition Commission of India (Combinations) Regulations 2024, reg 4; IndusLaw, ‘The Sentinel: Quarterly News Bulletin in Competition Law’ (March 2025).

[24] Agro Tech Foods Limited/Del Monte Foods Private Limited (n 1).

[25] Competition Commission of India, Goldman Sachs (India) Alternative Investment Management Private Limited and Goldman Sachs AIF Scheme-1, Combination Registration No M&A/10/2020/01/CD, order dated 14 January 2025.

[26] Kluwer Competition Law Blog, ‘Main Developments in Competition Law and Policy 2025 – India’ (2026).

[27] Competition Act 2002, s 5(d); Competition Commission of India, ‘Competition (Amendment) Act 2023: Salient Features’ (2023).

[28] Competition Commission of India, ‘Fair Competition’ (2026) 12.

[29] Competition Commission of India (Combinations) Regulations 2024, sch I; Competition Commission of India, ‘Filing of Combination Notice: Introduction’ (2024).

[30] Competition Commission of India (Combinations) Regulations 2024, reg 4(1).

[31] Competition Act 2002, s 5(d); Competition Commission of India (Combinations) Regulations 2024, reg 4(2).

[32] Competition Commission of India (Combinations) Regulations 2024, reg 4(1).