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CS Professional · Corporate Restructuring, Valuation and Insolvency · Regulation of Combinations

Zenith Foods Ltd signed a share purchase agreement to acquire a rival, a transaction that required notice to the Competition Commission under section 6(2) of the Competition Act, 2002. It closed the deal without giving any notice. Under section 43A, what is the maximum penalty the Commission may impose?

The Commission may impose a penalty extending to one per cent of the total turnover or assets or the deal value, whichever is higher, of the combination. It is a ceiling, not a fixed sum, and it is based on the combination rather than only the acquirer.

  1. AOne per cent of the total turnover or assets or the value of transaction, whichever is higher, of the combinationCorrect
  2. BOne per cent of the total turnover of the acquirer only
  3. CTen per cent of the average turnover of the last three years
  4. DA fixed penalty of rupees one crore

Explanation

Section 43A allows a penalty which may extend to one per cent of the total turnover or assets or the value of transaction referred to in section 5(d), whichever is higher, of the combination. It is not limited to the acquirer's turnover and it is not a fixed sum. The ten per cent option is the cap used for other contraventions and does not apply here.

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