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Corporate Restructuring, Valuation and Insolvency · Regulation of Combinations

Penalty for Gun Jumping and Deal Value Threshold

Updated 11 October 2026 · Fact-checked

Gun jumping means completing a notifiable combination without notifying the CCI or before the waiting period ends. Section 43A lets the CCI impose a penalty up to 1% of the higher of total turnover, assets or deal value of the combination. The deal value threshold is the transaction value test in section 5(d).

Understand Penalties and Deal Value Threshold

A combination is a merger, amalgamation or acquisition that crosses the thresholds in section 5 of the Competition Act, 2002. If a combination is notifiable, you cannot simply close the deal. You must tell the Competition Commission of India (CCI) and wait for its approval or for the statutory time to pass.

Completing the deal early, or skipping the notice, is called gun jumping. The Act does not use this phrase. It deals with the conduct through section 6 (the duty to notify and the standstill) and section 43A (the penalty).

The Competition (Amendment) Act, 2023 added a new test in section 5, clause (d): the deal value threshold. It refers to the value of the transaction. So a deal can be notifiable even when the usual asset or turnover tests are not met. This helps catch deals in digital and other sectors where the target is young, has low turnover, but is valuable. Your paper may give you the exact monetary limits. If it does not, state the rule without inventing figures.

The changes took effect from 10 September 2024. Section 6(2) now says a person proposing a combination shall give notice. Earlier text allowed a notice at its option. Notice can be given after board approval of a merger or after executing the agreement or other document, but before consummation. The old 30-day limit for filing was removed.

The standstill is in section 6(2A). No combination comes into effect until 150 days pass from the notice, or until the CCI passes orders under section 31, whichever is earlier. Section 31(6) also deems approval if no order is passed within 150 days of the notice.

Key rules to remember

Penalty for non-notification or breach of standstill (section 43A)
Maximum penalty = 1% × higher of (total turnover, assets, or deal value under section 5(d)) of the combination
It is a ceiling: the penalty may extend to this amount. The CCI decides the actual figure. It applies to failure to give notice under section 6(2) or 6(4), contravention of section 6(2A), or failure to submit information in an inquiry under section 20(1).
Standstill period (section 6(2A))
No effect until the earlier of 150 days from notice or CCI orders under section 31
The period was earlier 210 days. It was cut to 150 days from 10 September 2024.
Deal value threshold
Section 5(d): combination also covered by the value of the transaction
It brings in deals with a high transaction value even where asset or turnover limits are not met. Quote the prescribed value only if the question supplies it.
Deemed approval (section 31(6))
No order within 150 days of notice under section 6(2) → combination deemed approved
Deemed approval also arises under the proviso to section 31(1) if no prima facie opinion is formed under section 29(1B).
Green channel (section 6(4) and 6(5))
Notice under 6(4) and CCI acknowledgement → deemed approved
If the CCI finds the criteria unmet or the information materially incorrect or incomplete, approval is void ab initio under section 6(6) after a hearing. A notice under section 6(2) may then be filed within 30 days of the order, and no section 43A action is taken till that period ends.
Penalty for non-compliance with directions (section 43)
Fine up to ₹1,00,000 per day of failure, subject to a maximum of ₹1,00,00,000
It applies where a person fails without reasonable cause to comply with directions of the CCI under section 36(2) and (4) or of the Director General under section 41(2).

How to solve Penalties and Deal Value Threshold questions

Use this order for any case question on penalty or the deal value threshold. Tie each step to the facts given.

  1. 1Identify the transaction: acquisition, acquiring of control, merger or amalgamation, and the parties.
  2. 2Check whether it is a combination under section 5, including the deal value limb in clause (d), and whether any exemption applies.
  3. 3Decide whether notice was needed under section 6(2), or the green channel under section 6(4), and whether it was filed.
  4. 4Check timing: was notice given after board approval or signing but before consummation, and did the deal close before 150 days or before CCI orders under section 31?
  5. 5Name the breach: failure to notify, breach of section 6(2A), or failure to give information under section 20(1).
  6. 6State the consequence under section 43A: a penalty up to 1% of the higher of turnover, assets or deal value. Compute the cap if numbers are given.
  7. 7Mention related risks, such as the CCI declaring the combination void under section 31, and advise on a corrective filing.
  8. 8Conclude in one clear line that answers what was asked.

Quickest way: Four-line gun jumping check

When to use it: Use it when the question is short and asks whether a penalty applies or how much it can be.

  1. Was the deal notifiable (assets, turnover or deal value)?
  2. Was notice given before closing? If not, section 43A applies.
  3. Did closing happen inside the 150-day standstill without approval? If yes, section 6(2A) is breached.
  4. Cap the penalty at 1% of the highest of turnover, assets or deal value, and say it is a maximum.

Common mistakes in Penalties and Deal Value Threshold

  • Stating the penalty as a fixed 1% of turnover.

    Students remember the percentage and drop the words about maximum and about assets or deal value.

    Fix: Write that it may extend to 1% of the higher of total turnover, assets or deal value of the combination.

  • Using the old 210-day standstill or the 30-day filing window.

    Older notes and books still carry the pre-2024 position.

    Fix: Use 150 days under section 6(2A). Notice is due before consummation, after board approval or signing. There is no 30-day cap.

  • Saying the deal value threshold replaces the asset and turnover tests.

    It is described as a new test, so students assume it is the only one.

    Fix: Say it is an additional limb in section 5(d). A deal is caught if any applicable test is met.

  • Treating section 43 and section 43A as the same penalty.

    Both numbers look alike and both deal with penalties.

    Fix: Section 43A covers combination notice and standstill breaches. Section 43 is the per-day fine of up to ₹1 lakh, capped at ₹1 crore, for ignoring CCI or DG directions.

  • Forgetting the green channel and the void ab initio consequence.

    Students study only the normal filing route.

    Fix: Add that a section 6(4) notice acknowledged by the CCI is deemed approval, but it is void ab initio if the criteria are not met or information is materially incorrect or incomplete.

  • Ignoring the loan covenant carve-out in section 6(9).

    It sits at the end of the section and is easy to skip.

    Fix: Note that section 6 does not apply to share subscription or financing by a public financial institution, foreign portfolio investor, bank or Category I AIF under a covenant of a loan or investment agreement.

Worked examples

Example 1

Alpha Ltd signs an agreement to acquire Beta Pvt Ltd, a notifiable combination. Alpha completes the acquisition 40 days later without giving notice to the CCI. The combination's total turnover is ₹800 crore, assets are ₹1,200 crore, and the transaction value under section 5(d) is ₹1,500 crore. Advise on the penalty exposure.

Show the solution
  1. The deal is notifiable and notice was required under section 6(2) before consummation, after executing the agreement.
  2. Alpha failed to notify and also closed within 150 days without CCI orders, breaching section 6(2A).
  3. Section 43A allows a penalty up to 1% of the higher of turnover, assets or deal value.
  4. The highest figure is the deal value of ₹1,500 crore.
  5. 1% of ₹1,500 crore = ₹15 crore.

Answer: The CCI may impose a penalty up to ₹15 crore under section 43A. It is a maximum, and the CCI may also examine the combination under section 31.

Example 2

Gamma Ltd files a section 6(4) notice for a combination and the CCI acknowledges it. Later the CCI finds the information given was materially incorrect. Explain the position and what Gamma should do.

Show the solution
  1. Under section 6(5), on filing and acknowledgement the combination is deemed approved under section 31(1).
  2. Under section 6(6), if within the period in section 20(1) the CCI finds the requirements unmet or information materially incorrect or incomplete, the approval is void ab initio.
  3. The CCI must first give the parties an opportunity of being heard.
  4. Under the proviso to section 43A, Gamma may give a section 6(2) notice within 30 days of the CCI's order, and no section 43A action is taken until that period expires.
  5. If Gamma does not file within that period, it risks a section 43A penalty.

Answer: The deemed approval becomes void after a hearing. Gamma should file a fresh section 6(2) notice within 30 days of the CCI's order to avoid action under section 43A.

Exam tips

  • Write section numbers beside each point: 6(2), 6(2A), 43A, 5(d), 31(6). Markers look for them.
  • Always call the 1% figure a maximum and name all three bases: turnover, assets and deal value.
  • In case questions, check timing facts first: date of board approval or signing, date of notice and date of closing.
  • Use the 150-day period and the post-September 2024 text. Mention the old 210 days only to contrast.
  • End with practical advice: file now, seek approval, and avoid completing steps until the standstill ends.

Practice questions from Regulation of Combinations

Penalties and Deal Value Threshold: frequently asked questions

What is the penalty for gun jumping under the Competition Act?

Section 43A allows a penalty up to 1% of the higher of total turnover, assets or deal value of the combination. It applies where notice is not given or the standstill under section 6(2A) is breached. The CCI fixes the actual amount.

What is the deal value threshold in the Competition Amendment Act 2023?

It is an extra test in section 5, clause (d), based on the value of the transaction. It catches deals where asset or turnover limits are not met but the deal is valuable. This matters for digital and similar businesses.

Is there still a 30-day deadline to file notice with the CCI?

No. Since 10 September 2024, notice is given after board approval or signing but before consummation. The 30-day window was removed. The only 30-day period in the text is the one to file a section 6(2) notice after a green channel notice is held void.

How long is the standstill period for a combination?

Under section 6(2A), a combination cannot take effect until 150 days pass from the notice or the CCI passes orders under section 31, whichever is earlier. Earlier, the period was 210 days.