Green Channel

By Shreya Kapoor

• Definition

Green channel is an automatic route/system for approval of certain combinations which do not present any horizontal, vertical or complementary overlaps or linkages between the business activities of the parties (including their respective group entities and affiliates). It is often dubbed as a ‘fast track mechanism’ because a valid green channel filing means that the transaction is deemed to be automatically approved by the Competition Commission of India (“CCI”) on the date of filing. Hence, parties are free to give effect to the combination, i.e., consummate the transaction, immediately upon filing of the notice and receipt of the acknowledgement from the CCI without waiting for a separate approval or completion of standstill period.¹

Legal provision:The mechanism operates under Sections 6(4)² and 6(5)³ of the Competition Act, 2002 ("Competition Act"), read with the Competition (Criteria of Combination) Rules, 2024⁴ ("Green Channel Rules") and the CCI (Combinations) Regulations, 2024⁵ ("Combination Regulations 2024"). Upon filing of a notice under Section 6(4) and receipt of acknowledgement from the CCI, the combination is deemed approved under Section 31(1) of the Competition Act⁶. No further order from the CCI is required for consummation.

Procedurally, eligible parties must file a notice in Form I (the same form used for the standard short-form notification) accompanied by a declaration in the format prescribed under Schedule III of the Combination Regulations 2024,⁷ affirming compliance with the eligibility criteria.

• Commentary

1. Eligibility Criteria

The Green Channel facility is elective, not mandatory. To be eligible for the green channel exemption, the parties to a combination including their respective group entities and affiliates must not:

1. produce or provide similar or identical or substitutable product or service (horizontal overlap);or

2. be engaged in any activity relating to production, supply, distribution, storage, sale and service or trade in product or provision of services which are at different stage or level of production (vertical overlap) or complementary to each other (complementary overlap).

Thus, overlap assessment must be done at the parties’ group and affiliate level⁸. The criteria mentioned above are exhaustive in nature and a single instance of overlap at any level of the parties' structure disqualifies the transaction from the green channel.

2. Rationale

The rationale for the green channel lies in regulatory efficiency. Since the combinations eligible for green channel are unlikely to cause an appreciable adverse effect on competition (because there are no vertical, horizontal or complementary linkages), it is inefficient to subject such transactions to the full review cycle. Further, the fact that green channel transactions do not have to wait for the statutory standstill time period is advantageous for the parties and for the market.

3. Background

Evolution of the provision:

• Green channel was introduced into the Indian merger control framework by the CCI through an amendment to Regulation 5A of the CCI (Procedure in regard to the transaction of business relating to combinations) Regulations, 2011 in 2019.⁹ The said mechanism was grounded in regulatory policy rather than primary legislation and functioned as an administrative facilitation measure.

• Subsequently, the Competition (Amendment) Act, 2023 came into effect which formally codified the green channel mechanism within the primary statute by amending Sections 6(4) and 6(5) of the Competition Act. Thereafter, the Green Channel Rules were issued on 9 September 2024 to operationalize Sections 6(4) and 6(5) of the Competition Act.

• This legislative codification of green channel was significant because it elevated the mechanism from a regulatory instrument to a statutory right, conferring greater certainty and predictability on parties.

4. Consequences

Principle operates on good faith basis: Green channel is a trust-based, self-declaration route where parties themselves declare that they do not have any overlaps in terms of the Green Channel Rules. Since the mechanism rests on the principle of good faith, parties availing the green channel bear the entire burden of self-assessment and are expected to apply a strict and conservative interpretation of the eligibility criteria across all group and affiliate structures.

Notwithstanding the deemed approval that attaches upon filing, a green channel clearance is not absolute and may be rendered void ab initio in the following circumstances under Section 6(6) of the Competition Act¹⁰:

1. the CCI finds, within the period prescribed under Section 20(1) of the Competition Act, that the combination does not fulfil the requirements specified under Section 6(4); or

2. the information or declarations furnished by the parties are found to be materially incorrect or incomplete.

Where the approval is voided, the CCI may pass such orders as it deems fit. If the transaction has already been fully or partially consummated at the time of invalidation, penal consequences under Section 43A (penalty for gun-jumping)¹¹, Section 44 (penalty for making false statements)¹², and/or Section 45 (penalty for omission to furnish material information)¹³ of the Competition Act may follow.

Protective grace period applies under Competition (Amendment) Act, 2023: Section 43A of the Competition Act states that where a notice under Section 6(6) has been found to be void ab initio, a fresh notice under Section 6(2)¹⁴ may be given within 30 days of the order of the CCI. During such period, no action under Section 43A for gun-jumping shall be taken. This grace period was not available under the pre-2023 framework.

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1. Section 6(2A) of the Competition Act, 2002 prescribes a mandatory suspensory period of either (i) 150 days or (ii) passing of an order by the CCI approving the combination, whichever is earlier, before the parties can consummate the combination. Consummating a combination in violation of Section 6(2A) constitutes gun-jumping and is subject to a penalty. The green channel is essentially an exception to this rule.↩︎

2. Competition Act 2002, s 6(4).↩︎

3. Competition Act 2002, s 6(5).↩︎

4. Competition (Criteria of Combination) Rules 2024.↩︎

5. CCI (Combinations) Regulations 2024.↩︎

6. Competition Act 2002 , s 31(1).↩︎

7. CCI (Combinations) Regulations 2024, sch 3.↩︎

8. An enterprise qualifies as an "affiliate" for this purpose if it: (i) holds 10% or more of the shareholding or voting rights of another enterprise; (ii) has the right or ability to appoint a representative as a director or observer on the board; or (iii) has the right or ability to access commercially sensitive information of another enterprise.↩︎

9. The Competition Commission of India (Procedure in regard to the transaction of business relating to combinations) Amendment Regulations, 2019 vide CCI Notification F.No. CCI/CD/Amend/Comb. Regl./2019 (13^th August 2019).↩︎

10. Competition Act 2002, s 6(6)↩︎

11. Competition Act 2002, s 43A.↩︎

12. Competition Act 2002, s 44.↩︎

13. Competition Act 2002, s 45↩︎

14. Competition Act 2002, s 6(2).↩︎