Competition Law
Hotline
July 31, 2025
CCI Sees ‘Red’ in ‘Green’ Channel Filings
The Green Channel mechanism
envisages a deemed approval route for certain
combinations, but must be utilised with due
caution to all the prerequisites In this article, we
discuss the penalty levied by CCI for improper
application of the Green Channel route and oversight
/ error in disclosure of overlaps in the relevant
markets
Background
On June 26, 2025, the Competition Commission
of India (“CCI”) issued
a penalty order1 that adds to the evolving
jurisprudence on India’s Green Channel mechanism2.
Introduced in 2019, the Green Channel is a fast-track
approval route for combinations that, based on the
parties’ own assessment, do not involve any
horizontal, vertical, or complementary overlaps
and therefore raise no competition concerns.
Once notified under this route, the transaction
is deemed approved upon filing. However, this mechanism
operates entirely on self-certification, placing
the onus on parties to undertake rigorous due diligence
and ensure complete and accurate disclosure. The
Commission’s latest order serves as a reminder
that even in the context of deemed approvals, failure
to meet these standards can attract regulatory scrutiny
and penalties.
In this penalty order, the CCI imposed a monetary
penalty on the Acquirers for omitting relevant overlaps,
reaffirming that the Green Channel is not a free
pass but a responsibility-laden privilege.
The Transaction Framework
The proposed transaction involved two acquirer
entities, one a Mauritius-based investment vehicle
(“Acquirer I”), indirectly
controlled by funds managed by the affiliates of
its ultimate parent entity (the “Acquirer
Group”) along with a Cayman-based
holding entity of the Target’s co-founder
(“Acquirer II”) (collectively,
the “Acquirers”) proposed
to acquire equity stake of 23.6% (twenty three point
six percent) and 9.17% (nine point one seven percent),
respectively, in a Singapore-based engineering and
research & development (“ER&D”)
company (“Target”)
(the “Proposed Combination”).
The Target’s primary business is the provision
of engineering services, design and development
of aircrafts, engines, automotive cars, gas turbines,
X-ray machines etc. The business of the Target was
further divided into the following categories, (a)
embedded and software engineering; (b) mechanical
engineering; (c) silicon engineering; (d) digital
engineering; and (e) operations and supply management.
The Acquirer Group is a Delaware registered global
asset manager primarily engaged in (i) global private
equity, (ii) global credit and (iii) investment
solutions with wide-ranging investments in aerospace,
defence, retail, financial services, technology
and business services, with more than 60 (sixty)
portfolio investments in India and one Indian subsidiary
as well. On the other hand, Acquirer II does not
have any business activities, and its sole purpose
is to hold shares of the Target. By virtue of such
holding, Acquirer II holds indirect economic interest
in six Indian subsidiaries of the Target.
The investment was notified to the CCI via the
Green Channel route, on the basis that there were
no horizontal, vertical or complementary overlaps
between the Acquirer Group and the Target. The Target
had a significant presence in aerospace, automotive,
and electronics design services. Meanwhile, the
Acquirer Group held investments in companies engaged
in overlapping areas of industrial design and engineering
services, both in India and abroad.
Red Flags and Regulatory
Scrutiny
Following receipt of the Green Channel notice,
the CCI initiated a suo motu review of
the Proposed Combination. Its concerns stemmed from
the possibility of competitive overlaps between
the Target’s activities and those of certain
portfolio companies of the Acquirer Group, particularly
in the ER&D space. In the course of its review,
the CCI identified prima facie indicators of horizontal
overlaps, such as the provision of similar engineering
solutions in the automotive and aerospace sectors
and also flagged complementary overlaps, including
the provision of ancillary technology services and
cross-utilization of customer platforms between
entities in the Acquirer Group and the Target. These
findings suggested that the Proposed Combination
might not have qualified for the Green Channel route
in the first place.
The CCI then issued a detailed information request
to the notifying parties, seeking clarity on the
extent and nature of their business activities and
whether these gave rise to overlaps. In response,
the Acquirers acknowledged that while they had initially
concluded that no overlaps existed, a subsequent
review revealed the presence of vertical and complementary
overlaps with the Target. These overlaps, they submitted,
had been omitted inadvertently and were not significant
enough to impact competition. This admission was
crucial and led the CCI to issue a formal show-cause
notice under Sections 43A3 and 444
of the Competition Act, 2002 (the “Act”).
The notice asked the Acquirers to demonstrate why
the Green Channel notice should not be declared
void ab initio due to the ineligibility
of the Proposed Combination for the deemed approval
route, and why a penalty should not be levied for
furnishing information that was either incomplete
or incorrect.
Acquirers’ Defence
and Mitigating Arguments
In response to the show-cause notice, the Acquirers
put forth a detailed defence, which revolved around
the assertion that the initial Green Channel filing
was made based on an extensive internal and external
due diligence process, which did not identify any
material overlaps. Upon receiving the CCI’s
notice and conducting a second review, the Acquirers
discovered that certain recent acquisitions by the
Target had not been fully integrated at the time
of filing, and the overlaps were not apparent. They
further contended that the overlaps identified were
not significant in scope or value as the activities
of the Target are not required or necessary for
the core business activities of the Acquirers and
the overlaps do not raise any appreciable adverse
effect on competition in the relevant markets. The
Acquirers subsequently admitted the inadvertent
error in disclosing the overlaps to the Commission,
which occurred as a result of non-integration of
systems and operations data for certain new portfolio
acquisitions of the Target, tendering an unconditional
apology to CCI for the oversight.
Emphasis was laid on the fact that the Acquirers
acted in a bona fide manner and voluntarily
disclosed the inadvertent omissions as soon as they
came to light. Given that the investment was a minority,
non-controlling interest, they argued that the potential
for competitive harm was limited. The Acquirers
also drew attention to the Competition (Amendment)
Act, 20235, and the newly introduced
Competition (Criteria for Exemption of Combinations)
Rules, 20246, which allow for the re-filing
of invalid Green Channel notices within a period
of 30 (thirty) days.
Commission’s Findings
and Legal Reasoning
The Commission took note of the Acquirers’
admission of the overlaps and held that the Proposed
Combination failed to meet the threshold criteria
under Regulation 5A of the erstwhile Competition
Commission of India (Procedure in regard to the
transaction of Business relating to Combinations)
Regulations, 20117 (“2011
Combination Regulations”). As per
the Green Channel framework, parties are required
to certify the absence of any horizontal, vertical
or complementary overlaps. The Acquirers’
failure to disclose the overlaps, irrespective of
their materiality, meant that the deemed approval
granted under the Green Channel was invalid.
Section 43A and Section 44 of the Act are triggered
automatically when a defective Green Channel notice
is filed. The CCI rejected the argument that the
Competition (Amendment) Act, 2023 and the Competition
(Criteria of Combinations) Rules, 2024 provided
a basis to excuse the lapses, noting that the Proposed
Combination had been notified under the 2011 Combination
Regulations and hence would be assessed under the
law under which such filing had been made8.
Considering the mitigation of penalty as a result
of the inadvertent error, the conduct of the Acquirers
and the unconditional apology by the Acquirers,
the CCI imposed a penalty of INR 4,00,000 (Indian
Rupees Four Lakh) (approx. USD 4,651) for violation
of Sections 6(2) and 43A of the Act, while choosing
not to impose any penalty under Section 44 of the
Act. The Commission also directed the Acquirers
to file a fresh notice providing complete information
within 30 (thirty) days of the receipt of such notice.
Looking Ahead
While the introduction of the re-filing mechanism
under the Competition (Amendment) Act, 2023 and
the Competition (Criteria of Combinations) Rules,
2024 does offer a safeguard for genuine errors,
its prospective application means that past transactions
remain vulnerable to scrutiny. Going forward, parties
must carefully evaluate whether a Proposed Combination
truly qualifies for Green Channel treatment. In
conclusion, the June 2025 penalty order reinforces
the criticality of robust competition analysis and
accurate self-certification in Green Channel filings.
Authors
Gurkeerat Singh, Member, M&A and Private Equity
Palomita Sharma, Member, M&A and Private Equity
Nishchal Joshipura, Co-Lead, M&A and Private Equity
You can direct your queries or comments
to the relevant member.
1Available at
https://www.cci.gov.in/combination/order/details/order/1603/0/orders-section43a_44.
2Section 6(4) of the Act.
3Section 43A of the Act prescribes
a penalty of up to 1% of the total turnover or assets
of such a combination, whichever is higher.
4Section 44 of the Act grants the
CCI power to impose penalty upon parties giving
notice to a combination, for failure / omission
to disclose material facts.
5Available at
https://www.cci.gov.in/images/legalframeworkact/en/the-competition-amendment-act-20231681363446.pdf.
6Available at
https://www.cci.gov.in/combination/legal-framwork/notifications/details/23/0.
7Available at
https://www.cci.gov.in/combination/legal-framwork/regulations/details/1/0.
8Proviso to Regulation 33 of the Competition
Commission of India (Combinations) Regulations,
2024.
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