Navigating AI-related Combinations in India

The article ‘Navigating AI-related combinations in India’ discusses how the Indian merger control framework is likely to treat combinations relating to AI entities, drawing insights from the orders of CCI in technology and data-driven markets. The reason AI is expected to disrupt all industries is not only based on its potential but also on its intensive use of large datasets, computational infrastructure, skilled manpower, and network effects, making AI combinations novel in terms of competition policy challenges that are being addressed. 

This article points out how traditional asset/turnover based thresholds allowed several high-value, asset-light technology transactions to escape scrutiny. This gap has now been addressed through the introduction of the deal value threshold (“DVT”) under the Competition (Amendment) Act, 2023. The DVT captures transactions exceeding INR 2,000 crore where the target has substantial business operations in India, with the “value of transaction” defined expansively to include indirect consideration, non-compete fees, IPR licensing, interconnected commercial arrangements, etc. As a result, AI firms, often characterised by high valuation but limited current revenues, are far more likely to trigger notification requirements. 

The article explains that the CCI’s substantive assessment of AI-related mergers will mirror concerns seen in digital markets, including horizontal overlaps, vertical integration, entry barriers, and foreclosure risks arising from control over critical inputs such as data and cloud infrastructure. It further examines portfolio and spillover effects, bundling, access to data, and risks of self-preferencing, illustrating how these issues have been addressed through behavioural remedies in past cases. Minority acquisitions, common ownership, IPR transfers, and non-compete clauses may also attract scrutiny where they confer material influence or strategic control, even in the absence of outright control. 

To conclude, the article summarises that while the CCI maintains a pro-competitive and flexible enforcement approach, AI-related combinations will require careful deal structuring, early regulatory assessment, and tailored behavioural commitments to balance innovation with competition concerns in this rapidly evolving sector. 

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