Killer Acquisitions: India’s DVTs in the Digital Competition Era

Introduction : Suppose you’re a big global tech company. A small startup creates software that could undermine your entire business model in five years. They have very little revenue, even fewer employees, and offices based in a co-working space. The obvious solution is to acquire the startup before it matures into a serious competitive threat. The sparse financial statements and overall lack of assets of the startup would justify the deal flying under the radar of the competition regulators. This is what economists term a “killer acquisition”: when a dominant company acquires a small competitor with the primary intention of warding off competition.

In 2024, India tried to close this gap by introducing a structural change in its antitrust landscape, the Deal Value Threshold (DVT). Operationalized under Section 5(d) of the Competition Act, 2002, alongside the formal enforcement of the CCI (Combinations) Regulations, the DVT mandates that any transaction valued over ₹2,000 crore requires mandatory prior clearance from the CCI, provided that the company has substantial operations in India. This change represents a shift from the traditional asset-based to transaction-value merger control.

Understanding the Concept: What is Merger Control?

To understand this change, one must analyze the underlying mechanism. Merger control functions as a ‘gatekeeping’ mechanism within the CCI. Under Section 5 of the Competition Act, 2002, corporations intending to merge or acquire stakes in other companies are required to notify the CCI and refrain from completing the transaction until the CCI provides its approval. The objective is to ensure that these mergers and acquisitions do not cause an Appreciable Adverse Effect on Competition (AAEC) in the Indian market.

The Evolution: How India Regulated Deals Historically

For over two decades, India’s merger control was entirely asset and turnover centric. The law provided that, for a transaction to require CCI clearance, the parties to the proposed transaction had to meet certain thresholds for physical assets or annual turnover. Additionally, the government utilized the De Minimis (Small Target) Exemption, where a target company’s Indian assets were under ₹450 crore, or its turnover was under ₹1,250 crore, the deal was automatically exempt from notification. 

This system functioned effectively for brick-and-mortar industries in which the power to control the market was through plants and physical facilities, such as steel plants or cement factories; however, this system was failing in today's digital world, as the Value in the digital economy comes from non-physical factors such as network effects, algorithms, and active user bases.

A few years ago, when Facebook acquired WhatsApp, or Flipkart acquired Myntra, these were platforms with huge user valuations, but little in the way of turnover or physical assets. Consequently, these multi-billion-dollar deals bypassed regulatory scrutiny as they fell below the traditional de minimis physical thresholds, creating a historical blind spot.

The Shift: Deal Value Threshold (DVT)

To bridge this regulatory gap, a parallel track was created in the statutory provisions under Section 5(d) of the Act, called the Deal Value Threshold (DVT). As per this rule, if a transaction satisfies a strict twin-test, then it has to be notified to the CCI. 

First, under the Transaction Value Test, the overall value of the transaction, including cash payment, equity share swaps, stock options, deferred payments and future earn-outs, should be more than ₹2,000 crore (around USD 240 million). Second, as per the Local Nexus Test, the target enterprise needs to have Substantial Business Operations in India (SBOI)

The CCI specified that the SBOI criterion applies to digital platforms where 10% or more of their global active users, subscribers or Gross Merchandise Values are in India.

The Regulatory Tightrope: Balancing Market Control and Startup Exits

The Deal Value Threshold completely redefines the way India monitors corporate takeovers. As with any major policy change, it has the potential to have both positive and negative consequences, including providing clear benefits for fair competition, but also introducing a new challenge for businesses.

The positive side is that the DVT is effectively designed to prevent “killer acquisitions” that would harm market health. The CCI can now review high-value tech and pharma deals that used to slip through the cracks just because the startup being bought had no physical offices or revenue. In the first wave of enforcement through December 2025, applications filed under the DVT route accounted for about 12.36% of all combination notifications cleared by the CCI, proving the regulator is successfully casting a wider net. 

Further, the move will bring India at par with the top global regulators such as the US and Germany. The government has also reduced the deals approval process from 210 days to 150 days, to make up for the additional paperwork, while insisting that clean deals are cleared sooner.

The negative side is that working out the real cost of a deal is now a corporate nightmare. Modern tech deals are rarely paid out in simple cash, but rather with complicated stock exchanges, non-compete prices, and future bonuses based on performance. Companies are required by the CCI to estimate these future bonuses at their greatest value. If a company guesses wrong and closes the deal without notifying the regulator, it faces massive “gun-jumping” fines of up to 1% of its total global assets or turnover.

Finally, this extra red tape could hurt the startup ecosystem by slowing down investments. For many Indian entrepreneurs, the ultimate objective is to be acquired by a global giant. Forcing startups through antitrust reviews, charging high filing fees of up to ₹90 lakh for Form II long-form filings, and making them pause their business operations during the review makes Indian startups less attractive to foreign buyers. This additional friction can have a negative impact on the speed of Venture Capital investment into the country.

The Proactive Era: Responding to the Digital Competition Bill.

To prevent this gatekeeping from creating an endless administrative bottleneck, India’'s antitrust framework is actively evolving to align with the Digital Competition Bill, which was proposed in March 2024. Previously, the CCI took a reactive stance, with action taken against companies only after they had already abused their market dominance. The new bill shifts the paradigm entirely and provides a proactive, forward-looking mechanism to prevent unfair practices before they take root by targeting the Systemically Significant Digital Enterprises (SSDEs) based on user and financial metrics. 

A tech platform is deemed to be an SSDE if it has a global market cap of USD 75 billion or an Indian turnover of not less than ₹4,000 crore and at least 1 crore (10 million) end-users or 10,000 Indian end-users across the country. These platforms are immediately restricted in their capabilities, i.e they are not allowed to “self-prefer” their own services, and they are not allowed to cross-pool user data without explicit consent. In the case of infringement of these behavioral norms, a civil penalty with a high ceiling of 10% of their worldwide turnover could be imposed. 

Though the bill is still in the pre-legislative consultation and review stage and has not yet been officially introduced in the Indian Parliament, it will eventually oversee the actions of these dominant platforms, while the DVT oversees who enters the market through acquisitions under merger control.

Judicial Check-Posts: The latest Supreme Court judgement

While the CCI has gained immense power through these twin frameworks, the judiciary stepped in to establish legal boundaries for corporate transactions. 

On May 27, 2026, the Supreme Court of India delivered a landmark judgment in Amazon.com NV Investment Holdings LLC v. Competition Commission of India by putting an end to a combination penalty of ₹202 crore, the largest in the country’s history. The controversy came to light when the CCI, under Section 31(1), had approved Amazon’s investment in the retail group Future Coupons in November 2019 and subsequently suspended the same approval in December 2021. Consequently, it imposed a massive fine on the e-commerce giant for allegedly concealing its true strategic intent in the matter involving Future Retail. 

This judgement by the Supreme Court will forever change the contours of Indian merger control by reversing the CCI’s growing jurisdiction. The court said that the gun jumping punishment clause, or Section 43A, is a severe penalty clause that can only be invoked if the company has failed to notify the CCI of the deal before it is done. A mere disagreement over how the deal's future narrative or “strategic purpose” was labelled cannot be a failure to notify or willful fraud under Sections 44 and 45. 

Most importantly, the bench decided that the single year limitation period provided in Section 20(1) of the Competition Act is a strict jurisdictional limitation and the CCI has no power to place a validly approved transaction in “abeyance”. It cannot keep an already closed deal open indefinitely. 

This decision directly addresses concerns about killer acquisitions and post-deal uncertainty. The worst-case scenario in an established firm’s combination with a start-up is a backpedal by regulators after approval. The Supreme Court reduced this risk significantly by ruling that the CCI cannot, without justification, suspend a deal it has already approved under the guise of an ongoing information inquiry. This ensures that any acquisition made after the statutory 1-year window closes is legally safe from retroactive intervention.

Closing the gaps: The nascent competitor doctrine 

Even with these digital guidelines and judicial safeguards, a systemic blind spot remains.  The DVT ₹2,000 crore ceiling is a blunt threshold; few experts argue that it is miscalibrated for the unique realities of the Indian startup ecosystem. The majority of “killer acquisitions” occurring within the ecosystem happen well below this threshold, and with little turnover they would effectively pass the Digital Competition Bills and DVT's gatekeeping mechanism.

To plug this gap, antitrust experts are now suggesting a “Nascent Competitor Doctrine”. This would enable the CCI to consider a merger, based on the qualitative potential of disruption it could cause and not just a strict financial value, thus adapting to the evolving digital markets.

Conclusion

Ultimately, India’s antitrust framework is trying to adapt to the reality of modern business. By introducing the Deal Value Threshold (DVT) alongside discussions around the new Digital Competition Bill, the government is moving forward to establish boundaries and regulate the “killer acquisitions” before they dominate and wrongly monopolize a market. The Supreme Court's decision in Amazon v. CCI reminds us that there are strict legal timelines and boundaries to adhere to, and that the CCI can't change the rules after a deal is struck. 

Moving forward, the real challenge will be finding a balance by closing loopholes for smaller, sub-threshold transactions without making it too difficult for young startups to find buyers and secure investments.

Author: Sadgamaya Kudapa in case of any queries please contact/write back to us via email to content@khuranaandkhurana.com or at  Khurana & Khurana, Advocates and IP Attorney

References

1. The Competition Act, 2002, § 5(d) (as amended by the Competition (Amendment) Act, 2023).

2. The Competition Act, 2002, § 20(1) [Proviso] (as amended by the Competition (Amendment) Act, 2023). (Deals with the 1-year jurisdictional limitation period for combination inquiries) 

3. The Competition Act, 2002, § 31(1). (Deals with the finality of unconditional approval orders passed by the Commission)

4. The Competition Act, 2002, § 44 (as amended by the Competition (Amendment) Act, 2023). (Deals with penalties for making false statements or omitting material information in combination filings)

5. The Competition Act, 2002, § 45. (Deals with penalties in relation to the furnishing of false information or document suppression)

6. Ministry of Corporate Affairs, Government of India, Report of the Competition Law Review Committee (July 2019).

7. Ministry of Corporate Affairs, Government of India, Report of the Committee on Digital Competition Law (CDCL) and the Draft Digital Competition Bill (March 2024).

8. Competition Commission of India, Competition Commission of India (Combinations) Regulations, 2024.

9. Competition Commission of India, Frequently Asked Questions (FAQs) on Merger Control and Combination Filings: Deal Value Thresholds (DVT) (2024).

10. Amazon.com NV Investment Holdings LLC v. Competition Commission of India, Civil Appeal, Supreme Court of India (Decided on May 27, 2026).