Corporate Restructuring, Valuation and Insolvency · Regulation of Combinations

Meaning of Combination under the Competition Act

Updated 11 October 2026 · Fact-checked

Under Section 5 of the Competition Act, 2002, a **combination** is an acquisition of control, shares, voting rights or assets, an acquisition of control by a person who already controls a similar enterprise, or a merger or amalgamation, that crosses the asset or turnover limits in Section 5, or the deal value limit of ₹2,000 crore in clause (d).

Understand Meaning of Combination under Competition Act

The Act does not ban mergers. It asks which deals are big enough for the Competition Commission of India (CCI) to look at. A deal that is big enough is called a combination. Only combinations are tested for harm to competition.

Section 5 names three types of deal: an acquisition of one or more enterprises (clause a), acquiring of control by a person who already controls another enterprise making similar, identical or substitutable goods or services (clause b), and a merger or amalgamation (clause c). A deal is a combination only if it also crosses the size limits.

Size is tested on assets or turnover, in two ways. The first is the parties' own size (or the merged entity's size). The second is the size of the group the target would belong to after the deal. Each test has an India-only limit and a worldwide limit. Assets and turnover are alternatives: crossing either one is enough.

Since 10 September 2024, clause (d) adds a deal value threshold. A deal is also a combination if the value of the transaction exceeds ₹2,000 crore. The target must have substantial business operations in India, as specified by regulations. Value of transaction includes every valuable consideration, direct, indirect or deferred.

Clause (e) is a carve-out. If the Indian assets or turnover of the target are not more than the value prescribed, the deal is not a combination under Section 5, even if the other limits are crossed. The Explanation defines control, group, turnover, value of transaction and value of assets. Always use these definitions in your answer.

Key rules to remember

Parties test (acquisition, clause a(i)): India: assets > ₹1,000 crore OR turnover > ₹3,000 crore. Worldwide: assets > US$500 million (at least ₹500 crore in India) OR turnover > US$1,500 million (at least ₹1,500 crore in India); Applies to the acquirer and the target taken together. The same limits apply to clause (b)(i) and to the merged or new entity in clause (c)(i).
Group test (clause a(ii), b(ii), c(ii)): India: assets > ₹4,000 crore OR turnover > ₹12,000 crore. Worldwide: assets > US$2 billion (at least ₹500 crore in India) OR turnover > US$6 billion (at least ₹1,500 crore in India); Applies to the group the target or merged entity would belong to after the deal.
Deal value threshold (clause d): Value of transaction > ₹2,000 crore, and the target has substantial business operations in India as specified by regulations; Value includes direct, indirect and deferred consideration.
Small target exemption (clause e): Not a combination if the target's Indian assets or turnover are not more than the prescribed value; It overrides clauses (a), (b) and (c). The Act leaves the figure to be prescribed, so do not quote a number from the Act.
Group: Two or more enterprises where one can exercise 26% or more voting rights, or appoint more than 50% of the board, or control management or affairs of the other; Per the Explanation. The percentage may be raised by prescription.
Control: Ability to exercise material influence, in any manner, over management, affairs or strategic commercial decisions; Material influence is a lower standard than majority control.

How to solve Meaning of Combination under Competition Act questions

Use this order for any problem asking whether a deal is a combination.

1Identify the type of deal: acquisition of shares, voting rights, control or assets; acquiring of control by an existing competitor-owner; or merger or amalgamation.
2List the figures for the right entities: acquirer plus target for acquisitions, the merged entity for mergers, and the group after the deal.
3Check that you use only Indian figures for the India limits. Exclude intra-group sales, indirect taxes, trade discounts and revenue from customers outside India when computing turnover in India.
4Apply the parties test (or merged entity test): is either assets or turnover above the India limit, or the worldwide limit with the minimum India figure?
5Apply the group test with the higher limits in the same way.
6Check the deal value threshold: is the transaction value above ₹2,000 crore with substantial Indian operations in the target?
7Check the small target exemption in clause (e).
8Conclude clearly: combination or not, and state that only a combination is examined under Section 20 for appreciable adverse effect on competition.

Quickest way: Three-gate screen

When to use it: Use when a numerical case gives many figures and time is short.

Gate 1: Is it an acquisition, acquiring of control or merger? If not, stop.
Gate 2: Does any one limit hold: parties, group or deal value above ₹2,000 crore? One is enough.
Gate 3: Is the target so small in India that clause (e) exempts it? If yes, not a combination.
Write the answer with the limit, the figure and the comparison in one line each.

Common mistakes in Meaning of Combination under Competition Act

Requiring both assets and turnover to cross the limit.
Students read the limits as cumulative.
Fix: The Act says assets OR turnover. One is enough within each test.
Using worldwide figures for the India limit.
The case gives global numbers and students use them directly.
Fix: Use India figures for the India limit. Worldwide figures need the minimum India component (₹500 crore assets or ₹1,500 crore turnover).
Ignoring the group test.
Students stop after the parties test fails.
Fix: Always run the higher group limits too. A deal can fail one test and pass the other.
Forgetting the deal value threshold and the small target exemption.
These came by the 2023 amendment, effective 10 September 2024, and older notes omit them.
Fix: Check clause (d) and clause (e) in every answer.
Treating control as majority shareholding only.
Company law uses other tests for control.
Fix: Here control means ability to exercise material influence over management, affairs or strategic commercial decisions.
Counting only the target's own turnover for a part acquisition.
Students use the whole enterprise figure.
Fix: When a division or business is acquired, use the assets, turnover or transaction value attributable to that portion.

Worked examples

Example 1

Alpha Ltd acquires control of Beta Ltd. Alpha and Beta together have assets in India of ₹700 crore and turnover in India of ₹3,400 crore. Is it a combination under Section 5(a)(i)(A)? Assume the deal value is below ₹2,000 crore and Beta's Indian figures are above the prescribed exemption value.

Show the solution

The deal is an acquisition of control, so clause (a) applies.
Parties test, India: assets above ₹1,000 crore OR turnover above ₹3,000 crore.
Assets: ₹700 crore is not above ₹1,000 crore.
Turnover: ₹3,400 crore is above ₹3,000 crore.
Either limit is enough, so the test is met.
Deal value is below ₹2,000 crore, so clause (d) is not needed. Clause (e) does not exempt it on the stated assumption.

Answer: Yes. The combined India turnover of ₹3,400 crore exceeds ₹3,000 crore, so the acquisition is a combination.

Example 2

Gamma Ltd and Delta Ltd merge. The merged entity has assets in India of ₹900 crore and turnover in India of ₹2,500 crore. The group it joins has assets in India of ₹3,800 crore and turnover in India of ₹11,000 crore. The merger consideration is ₹1,500 crore. Is it a combination?

Show the solution

A merger falls under clause (c).
Merged entity test, India: assets ₹900 crore is not above ₹1,000 crore; turnover ₹2,500 crore is not above ₹3,000 crore. Not met.
Group test, India: assets ₹3,800 crore is not above ₹4,000 crore; turnover ₹11,000 crore is not above ₹12,000 crore. Not met.
No worldwide figures are given, so the worldwide limits cannot be shown to be crossed.
Deal value: ₹1,500 crore is not above ₹2,000 crore, so clause (d) is not met.

Answer: No. On the facts given, no Section 5 limit is crossed, so the merger is not a combination and need not be examined for appreciable adverse effect on competition.

Exam tips

Write the section and clause with each limit, for example Section 5(c)(i)(A). It shows exactness.
Show a small comparison for each test: figure, limit, result. Examiners give marks for the method.
Mention the deal value threshold and the clause (e) exemption even in theory questions on the meaning of combination.
Quote the Explanation definitions of control, group and turnover when the facts hinge on them.
End with the legal consequence: a combination is assessed by the CCI under Section 20 for appreciable adverse effect on competition in India.

Practice questions from Regulation of Combinations

Meaning of Combination under Competition Act in other exams

The same ground in other exams, if you are preparing for more than one or want another angle on it.

Meaning of Combination under Competition Act: frequently asked questions

What is a combination under the Competition Act, 2002?

It is an acquisition, acquiring of control, or merger or amalgamation that crosses the asset, turnover or deal value limits in Section 5. Deals below the limits are not combinations.

Do I need to meet both the asset and the turnover limit?

No. The limits are alternatives. Crossing either the asset limit or the turnover limit in a given test is enough.

What is the deal value threshold?

Under Section 5(d), a deal is a combination if the value of the transaction exceeds ₹2,000 crore and the target has substantial business operations in India as specified by regulations. Value includes direct, indirect and deferred consideration.

Can a deal above the limits still not be a combination?

Yes. Under clause (e), if the target's Indian assets or turnover are not more than the prescribed value, the deal is not a combination.

What happens once a deal is a combination?

The CCI can inquire under Section 20 whether it has caused or is likely to cause an appreciable adverse effect on competition in India.