Mahadev Krishnan and Nitin Pradhan
Introduction
In sports, a false start occurs when a runner jumps the gun (i.e., starts before the whistle) and is penalized accordingly. This principle is easy to understand: nobody should gain an unfair advantage by jumping the gun. The same logic applies in the realm of competition law. Gun jumping is the situation in which parties to a transaction combine elements of their deal (e.g., transferring control, exchanging sensitive information, or pooling operations) prior to receiving approval from the competition regulator. It compromises the regulator’s ability to evaluate possible harms and may result in irreversible consequences in the market. Thus, enforcing the standstill obligation under merger control is crucial for maintaining the integrity of market competition. This pre coordination undermines regulatory oversight and can distort competition before a transaction is even approved.
The law in India addresses this concept under the Sections 6(2), 6(2A) and 43A of the Competition Act, 2002 (Act). According to Section 6(2), notifications must be made to the Competition Commission of India (CCI) before consummating combinations that meet the thresholds. This section establishes a standstill obligation, prohibiting parties from effecting the combination until approval is obtained or 210 days have passed. Section 43A empowers the CCI to impose penalties for non-compliance.
Since the 2023 Amendment Act, the importance of gun jumping has been heightened with a new Deal Value Threshold (DVT), alongside strengthened requirements to monitor early coordination and informal integration The wave of enforcement actions since 2023, with the CCI taking a hardline stance in cases like Axis Bank – Citi and other investment driven deals, has underscored the Commission’s emphasis on procedural compliance alongside substantive merger review.
In this blog, the authors first critically examine how the contours of gun jumping enforcement have evolved in India, based on recent decisions. Lastly, it discusses the emerging jurisprudence, its practical impact on investors and merging parties, and how the new regime aligns with international best practices, such as those in the European Union (EU) and the United States.
EARLY ENFORCEMENT AND EVOLVING STANDARDS: FROM SYMBOLISM TO SUBSTANCE
The initial application of gun jumping provisions in India’s merger control regime was characterized by prudence rather than punishment. While the Act’s legal provisions required parties to maintain a standstill until CCI approval, gaps in the enforcement mechanism led to varied outcomes and weakened deterrence.
This is reflected in Baxalta/Shire, where the CCI adopted a formalistic approach. Although the merger had evident implications for the Indian market, the Commission held that internal corporate decisions outside India did not constitute a violation. This decision reflected a narrow view of compliance, allowing corporations to evade regulatory oversight on technical grounds. Form trumped substance, undermining the integrity of the merger review process.
This change began to emerge with the Ultratech Cement/Jaiprakash Associates deal. In this transaction, the CCI went beyond paperwork and penalized Ultratech for acquiring assets without formal approval. This marked a watershed moment, as the regulator shifted focus to economic reality over procedural appearances, signalling a more sophisticated and aggressive enforcement philosophy grounded in the standstill requirements of Section 6(2).
Nevertheless, deterrence remained limited. Fines were often token and disproportionate to the scale of the transactions. Regulatory ambiguity encouraged parties to undertake premature actions, viewing potential fines as a mere cost of business rather than a serious legal violation. These early enforcement challenges highlighted the need for more precise statutory tools and explicit guidelines. This gap was addressed in 2023 through amendments that granted the CCI greater authority to handle standstill violations.
THE 2023 AMENDMENT: A TURNING POINT
The Competition (Amendment) Act, 2023, marked a milestone in India’s merger control regime by tightening the concept of gun jumping and enhancing regulatory oversight. One key addition is Section 6(2A), which reinforces the standstill obligation by expressly prohibiting parties to a notifiable combination from giving effect to any part of the transaction until CCI approval or the passage of 210 days. This provision aligns with Section 43A, enabling the CCI to penalize breaches of the standstill clause even in the absence of actual anti-competitive harm, emphasizing procedural strict liability.
Another major change is the introduction of the DVT, which allows the CCI to scrutinize transactions valued at INR 2,000 crore or more, irrespective of whether the target meets traditional asset or turnover thresholds. This is particularly relevant in digital and new age markets, where targets may have low revenues but high strategic value.
These amendments signify a decisive shift from form based to substance-based enforcement, foregrounding compliance, deterrence, and early regulatory oversight. In doing so, India’s merger control framework increasingly aligns with international regimes such as the EU Merger Regulation and the US Hart Scott Rodino Act, both of which impose strict standstill obligations prior to clearance. In essence, even where a deal is commercially agreed, firms must refrain from acting as though the merger has already taken effect. A recent illustration from the United States, the Federal Trade Commission imposed a record gun-jumping penalty on oil companies that coordinated pricing, customer relationships, and operational decisions during the statutory waiting period prior to closing an acquisition. The violation arose not from the transaction itself, but from the exercise of control over the target’s day-to-day business before approval, demonstrating how premature conduct can distort market competition even in advance of consummation.
EXPANDING THE SCOPE OF GUN-JUMPING
In recent years, the CCI and judiciary have adopted a broader, more nuanced definition of gun jumping, extending beyond physical integration to include a wider range of pre-merger activities. A series of post 2023 decisions illustrates this shift in enforcement priorities, focusing on procedural adherence while distinguishing it from substantive competitive harm.
In Axis Bank / CSC e Governance, the CCI imposed a INR 40 lakh fine for non-notification of a strategic investment agreement. Notably, the penalty was levied without evidence of competitive harm, underscoring that the notification duty under Section 6(2) is absolute and procedural. Even administrative oversights in premature implementation can trigger penalties, clarifying that gun jumping violations are distinct from substantive anti-competitive effects assessed under merger reviews.
In Tata Power, the CCI applied its new penalty guidelines, emphasizing proportionality and context. Although a violation was found, the fine was moderated based on the acquirer’s cooperation and absence of mala fide intent. This reflects an evolving enforcement approach that is firm on principles but flexible in application, rooted in Section 43A’s penalty framework.
Collectively, these cases demonstrate that India’s merger control regime is entering a phase of integrated enforcement. Gun jumping now encompasses not just early integration but also data sharing, restrictive covenants, and pre clearance operational coordination while maintaining a clear line that procedural breaches can be penalized independently of any market harm.
COMPLIANCE AND POLICY IMPLICATIONS
The evolving landscape demands sharper compliance from deal makers, requiring early consideration of legal aspects in transaction planning. Antitrust due diligence is no longer an afterthought; it is a core risk management function. Parties must integrate merger control requirements into transaction structuring, including timelines for commitments.
In practice, this involves implementing clean team protocols for limited information exchange, restricting sharing to non-strategic data, and using conditionality clauses to ring fence pre clearance behaviour. Restrictive covenants should be drafted carefully to avoid implying premature integration or de facto control, which could trigger gun jumping concerns. For instance, in time sensitive deals like those under the Insolvency and Bankruptcy Code (IBC), parties might seek CCI guidance on interim measures, such as appointing independent monitors to oversee operations during the standstill period.
On the policy front, a major gap still remains: there is very little clarity on what companies are allowed to do during the standstill period. Unlike the EU, which provides detailed guidance on clean teams and interim conduct, or the US, where regulators explain what amounts to improper pre-merger coordination, Indian businesses are left to interpret the boundaries themselves. This uncertainty becomes particularly problematic in time-sensitive situations, such as insolvency resolutions or fast-track acquisitions, where delays can threaten the viability of a deal. Clear CCI guidelines, illustrating permissible interim actions like non-binding planning discussions without operational control, would help businesses comply while preserving regulatory objectives.
CONCLUSION
The direction of recent jurisprudence and legislative change is a clear shift away from a formalist towards a substance-based ideology in Indian competition law. The 2023 Amendment operationalizes this by penalizing procedural non-compliance, elevating the importance of timely merger notifications. Through increasingly interventionist decisions, the CCI is not only sanctioning violations but also reinforcing regulatory priorities around deterrence, foresight, and institutional credibility.
However, this strengthened enforcement poses a challenge: how can parties navigate the grey areas between permissible behaviour and prohibited gun jumping? In the absence of clearly defined safe harbour rules or detailed interpretive guidance comparable to that available in the EU or the United States, companies operate under heightened regulatory uncertainty, which may discourage otherwise efficient and pro-competitive transactions. Therefore, while the objective of fostering compliance is both necessary and laudable, its long-term effectiveness will depend on corresponding advances in doctrinal clarity and administrative transparency, ensuring that robust enforcement is matched by predictable and principled regulatory guidance.
Mahadev Krishnan and Nitin Pradhan are 4th Year BBA. LL.B students at National Law University, Odisha, and Army Law School, Pune respectively.
NUALS Law Journal 