The Competition (Amendment) Act 2023 introduced a deal value threshold (DVT) for merger control notification in India — a structural reform to the CCI's jurisdiction that addresses the long-standing concern that high-value digital economy acquisitions escaped mandatory notification because the target company's asset turnover fell below the traditional size-of-transaction threshold. The CCI notified the revised Combination Regulations in 2024 to operationalise the DVT. With the first batch of notifications filed under the DVT framework now processed, a body of interpretive guidance is emerging that companies and their M&A advisers must incorporate into transaction structuring and filing assessment.
The Deal Value Threshold: What Triggers It
Under the amended Section 5 of the Competition Act 2002, a combination must be notified to the CCI if the value of the transaction — broadly defined to include all direct and indirect consideration, including contingent consideration, earnouts, non-compete payments, and licensing fees that form part of the commercial arrangement — exceeds Rs 2,000 crore, and the target has substantial business operations in India (the "local nexus" requirement). The DVT operates as a supplementary trigger alongside the existing asset/turnover-based thresholds. A transaction must be notified if it crosses either the DVT or the traditional size-of-transaction thresholds — not both.
The "value of the transaction" for DVT purposes is calculated at the time of execution of the binding agreement — not at closing. Subsequent adjustments to consideration — downward adjustments at closing, working capital adjustments, or milestone-based earnout payments — do not retroactively affect the notification assessment made at signing. However, where the parties structure the consideration to defer payment in a manner that reduces the upfront deal value below Rs 2,000 crore, CCI has indicated it will look through the structure to the total economic value of the arrangement.
The Local Nexus Requirement
The local nexus requirement is the key limiting condition on DVT notification. "Substantial business operations in India" is assessed on a qualitative basis — no absolute numeric threshold has been prescribed, which is an intentional choice by the legislature and the CCI. The first notifications processed under the DVT framework provide indicative guidance: targets with more than 10% of their global user base or customer base in India, or with more than Rs 500 crore in India-derived revenue in any of the three preceding financial years, have been assessed by the CCI as meeting the local nexus requirement without extensive inquiry.
For digital market transactions — acquisitions of apps, platforms, content businesses, and data-holding entities — the local nexus question is often straightforward because India represents a material share of any global digital product's user base. For B2B software or enterprise technology acquisitions, the local nexus analysis may be more contested. The CCI's assessment methodology for these cases is still developing, and early pre-notification consultation with the CCI is advisable for genuinely borderline cases.
Timeline and Assessment Framework
The standard CCI review period under the DVT framework follows the same timeline as traditional notifications: 30 working days for Phase I (green-channel or standard) and 210 working days (90 working days for investigation plus extensions) for Phase II. The CCI has confirmed that DVT notifications will be assessed under the same competitive effects framework as traditional notifications — no special standard applies. However, the substantive assessment of digital market acquisitions often involves more complex effects analysis: network effects, data accumulation advantages, ecosystem foreclosure, and kill-zone concerns about the acquisition of potential competitors in nascent markets.
The green-channel route — which allows transactions to be deemed approved upon filing where there are no horizontal overlaps, vertical relationships, or complementary business relationships — remains available for DVT notifications. Parties seeking green-channel treatment should ensure the pre-filing analysis is thorough; the CCI has recalled green-channel approvals where material horizontal overlaps were identified post-clearance.
Implications for PE and Venture Capital Transactions
Private equity and venture capital investments in high-value Indian digital companies now require DVT notification assessment regardless of the investor's own turnover and regardless of the target's India asset base. A growth-stage Indian fintech, edtech, or health-tech company with a large Indian user base and a deal value above Rs 2,000 crore will trigger the DVT even if the company has minimal tangible assets. PE and VC firms must integrate DVT assessment into their pre-signing checklist and build CCI approval timelines into deal planning. Failure to notify is a violation of the Competition Act and attracts penalties of up to 1% of total assets or turnover — on the acquirer — and void the combination.
Action Items for M&A and Investment Teams
- Integrate DVT assessment — deal value calculation plus local nexus analysis — into the pre-signing legal checklist for all transactions above Rs 1,500 crore.
- Map the target's India user base, revenue, and customer concentration to support or rebut local nexus at the earliest stage of due diligence.
- Build CCI approval milestones (estimated 30–60 working days for Phase I) into deal signing-to-closing timelines.
- For borderline local nexus cases, consider pre-notification consultation with the CCI to obtain early assessment comfort.
- Audit recent transactions above Rs 2,000 crore that were closed without DVT assessment and evaluate the filing exposure retrospectively.