Regulation 4 - Value of transaction and substantial business operations in India - CCI (Combinations) Regulations, 2024

4. Value of transaction and substantial business operations in India. (1) The value of transaction for the purpose of clause (d) of section 5 of the Act shall include every valuable consideration, whether direct or indirect, immediate or deferred, cash or otherwise, including but not limited to the consideration, (a) for any covenant, undertaking, obligations or restrictions imposed on seller or any other person, if such consideration is agreed separately; (b) for all inter-connected steps and transactions, as provided in sub-regulation (4) and (5) of regulation 9 of these regulations; (c) payable during two years from the date on which the transaction would come into effect for arrangement(s) entered into as a part of the transaction or incidental thereto including but not limited to technology assistance, licensing of intellectual property rights, usage rights of any product, service or facility, supply of raw materials or finished goods, branding and marketing; (d) for call option and shares to be acquired thereof assuming full exercise of such option; (e) payable, as per best estimates, based on the future outcome specified under the transaction documents. Explanation . ─For the purpose of this sub-regulation, (a) the value of future payments shall not be discounted to present value; (b) the rate of conversion of foreign currency into Indian Rupees shall be average spot rate for last six months quoted by the Reserve Bank of India from the relevant date; (c) value of transaction shall include consideration for any acquisition by one of the parties or its group entity in the enterprise being acquired or merged or amalgamated in the transaction, anytime during the period of two years before the relevant date; (d) in case of implementation of an open offer under the regulations issued by Securities and Exchange Board of India or any other law for the time being in force, the person required to give notice shall assume full subscription to the offer for the purpose of computation of value of transaction; (e) the value of transaction does not include transaction costs such as fees payable for legal advice, to investment banks, to regulators, to statutory authorities, etc.; (f) In case of merger or amalgamation or where true and complete value of the transaction is not recorded in transaction documents, the value of that transaction or component thereof shall be the same as considered by the board of directors or any other approving authority of the person obligated to file notice under these regulations; (g) if value of transaction cannot be established with reasonable certainty, by the board of directors or any other approving authority of the person obligated to file notice under these regulations, the value of the transaction may be considered as exceeding the amount specified in clause (d) of section 5 of the Act; (h) the best estimate shall be the estimate of the board of directors or any other approving authority of the person obligated to file notice under these regulations recorded by it in its approval. If the estimate is not recorded by the board of directors or any other approving authority of the person obligated to file notice in its approval, the maximum payable amount shall be considered as the best estimate. (2) For the purpose of proviso to clause (d) of section 5 of the Act, the enterprise referred therein shall be deemed to have substantial business operations in India, if: (a) for digital services provided, the number of its business users or end users in India is 10% or more of its total global number of such users; or (b) its gross merchandise value for the period of twelve months preceding the relevant date in India is: (i) 10% or more of its total global gross merchandise value, and (ii) more than rupees five hundred crores; or (c) its turnover during the preceding financial year in India is: (i) 10% or more of its total global turnover derived from all the products and services, and (ii) more than rupees five hundred crores. Explanation 1.─ Sub-clause (ii) of clause (b) and sub-clause (ii) of clause (c) of this sub-regulation shall not apply to digital services. Explanation 2.─ For the purpose of this sub-regulation, (a) gross merchandise value means cash, receivables, or other consideration either for or facilitating, sale of goods and/ or provision of services, by an enterprise, on its own or as an agent or otherwise; (b) where a portion of an enterprise or division or business is being acquired, taken control of, merged or amalgamated, the number of its business users or end users, gross merchandise value or turnover, as may be applicable, of the said portion or division or business attributable to it, shall be relevant business users or end users, gross merchandise value or turnover; (c) proportion of business users or end users, shall be computed on the basis of average number of such users, for three hundred and sixty five days preceding the relevant date; (d) Digital service means the provision of a service or one or more pieces of digital content, or any other activity by means of an internet whether for consideration or otherwise to the end user or business user, as the case may be; (e) Business user means any natural or legal person supplying or providing goods or services, including through the use of digital services; (f) End user means any natural or legal person using digital services other than as a business user, for informational or transactional purpose.