On April 17, 2018, in the matter of CCI v. Thomas Cook (India) Limited, a division bench of SC passed its final decision by allowing the appeal filed by CCI against the order of the erstwhile Competition Appellate Tribunal (‘COMPAT’) and restored CCI’s order imposing penalty of ₹ 1 crore (US$ 0.15 million) on the ground of non-compliance with the provisions contained in Section 6(2) of the Competition Act, which requires advance notice of the proposal to enter into a combination before such combination takes effect.[1]In February 2014, Thomas Cook (India) Limited and Thomas Cook Insurance Services (India) Limited (collectively, ‘Thomas Cook’) entered into a part equity part merger deal with Sterling Holiday Resorts (India) Limited (‘Sterling’). This involved inter alia the purchase of 9.93% shares of Sterling on the Bombay Stock Exchange (‘Market Purchases’), as well as a composite scheme of demerger/amalgamation (‘Scheme’). Thomas Cook and Sterling notified only the Scheme which was the part of the multi-step transaction that qualified as a ‘combination’ under Section 5 of the Competition Act. Thomas Cook claimed that the remaining steps were all acquisitions of shares that could avail of the de minimis target based exemption[2] as Sterling did not have turnover in excess of ₹ 750 crore (approx. US$ 112 million). CCI approved the Scheme after noting that it was unlikely to raise any competition concerns in India, as the parties were not engaged in similar businesses. However, it held that the Market Purchases and the Scheme were inter-connected and inter-dependent on each other and formed part of a ‘composite combination’ which ought to have been notified and imposed a penalty of ₹ 1 crore (approx. US$ 0.15 million) under Section 43A of the Competition Act. COMPAT set aside CCI’s order on appeal and aggrieved by this, CCI preferred an appeal to SC against COMPAT’s decision.SC held that the Market Purchases in question were not independent and were intrinsically related to the Scheme. In coming to this finding, SC considered the following:(i)           Though the Market Purchases were not mentioned in the various transaction documents executed between the parties, the Scheme was prepared on the same day as the passing of the corresponding board resolutions and all other acquisitions were made on the same day.(ii)         If the Market Purchases were not part of the Scheme, they would not have been referred to in the notice filed with CCI, where it was mentioned that the parties have contemplated certain other transactions including substitution of equity shares, share purchase agreement, open offer and Market Purchases.(iii)       The Market Purchases were consummated before giving notice to CCI thereby suggesting that they would not have taken place in the absence of the Scheme.(iv)       The joint press release clearly indicated the share purchase agreement as an open offer and the board of directors of the parties authorized Market Purchases on the same day. Therefore, all the transactions form part of one viable business transaction.(v)         Market Purchases having been consummated almost after finalizing the composite combination clearly suggested that these purchases would not have taken place in the absence of the scheme and the other acquisitions.(vi)       SC held that while it is open for parties to structure their transactions in a particular way, the substance of the transactions would be more relevant to assess the effect on competition irrespective of whether such transactions are pursued through one or more steps. Structuring cannot be permitted in such a manner so as to avoid compliance with the provisions of the Competition Act. For ensuring compliance with the requirements of the Competition Act, it is open to consider whether the particular step was an individual transaction or part of the whole transaction.(vii)     Technical interpretation to isolate two different steps of transactions of a composite combination would be against the spirit and provisions of the Competition Act, therefore subsequent changes to Regulation 9(4) of the CCI (Procedure in Regard to the Transaction of Business Relating to Combinations) Regulations, 2011 do not take away from a substantive assessment of the Scheme.[3](viii)   Even on application of the ultimate objective test, SC held that the Market Purchases were connected to the scheme even if not expressly mentioned within the scheme forming part of the same transaction and as such, considering the substance of the transaction, subsequent change of law does not help the parties.(ix)        Lastly, SC held that an action may not be mala fide, however if there is a breach of the statutory provisions of civil law, a penalty is attracted simpliciter on its violation. There is no requirement of mens rea or an intentional breach under Section 43A of the Competition Act as an essential element for the levy of penalty.In light of the above, SC set aside the order of the COMPAT, and restored the penalty imposed by CCI on the parties.[1] Civil Appeal No. 13578 of 2015. [2] By way of Ministry of Corporate Affairs Notification No. S.O. 482 (E), acquisitions where the assets or turnover of the target enterprise were below ₹ 250 crore (approx. US$ 37 million) in India or ₹ 750 crore (approx. US$ 112 million) in India, respectively were exempt from the provisions of Section 6 of the Competition Act. [3] Regulation 9(4) of the Combination Regulations (prior to the amendment dated July 1, 2015), offered a facility allowing a single notice to be filed. This applied where the ultimate intended effect of a business transaction is achieved by way of a series of steps or smaller individual transactions, which are inter-connected or inter-dependent on each other, one or more of which may amount to a combination. In 2015, the Combinations Regulations were amended from “… a single notice, covering all transactions, may be filed …” to “… a single notice, covering all these transactions, shall be filed…”. Since 2016, the words “…or inter-dependent on each other” have also been omitted.