Chapter-IV. Amalgamation of Companies in UK, USA & India-A Comparative Study.

Transcription

1 Chapter-IV Amalgamation of Companies in UK, USA & India-A Comparative Study. Introduction Time is evident of various economic activities that have grown over a period of time which has led to various forms of business organization initially as the transactions were limited the business used to be one man show as simultaneously with time organization like partnerships have take place. With the passage of time and faster growth of corporate business, the companies started to explore and exploit various means of business activities and merger and acquisition were one of such alternatives to achieve those goals. No doubt merger and acquisitions spark ongoing controversy in economic circle, reason being billion dollar deed not only involves great deal of money, but also many financial / economic issues. Because of this merger and acquisition enforcement is probably the most widely known area of antitrust. The so called Chicago School of Antitrust has provided the intellectual rationale for considerable loosening of antitrust law. 1 LAW RELATING TO MERGER IN DEVELOPED NATIONS If we look into history, we will find that mergers were very frequent in the United Kingdom, United States of America and in European countries with time, again and again law have been enacted in these countries to control and regulate mergers. 1 Verma, J.C. Corporate Mergers Acquisition and Takeovers, 2002, Pg

2 The Indian law regarding mergers has been borrowed from the British System for historical reasons and linkages. Provisions made in the Indian companies Act, 1956 relating to merger and acquisition have been borrowed from the United Kingdom companies Act, In order to keep proper check on the malpractices which encounters in the business enterprises (merger and acquisition), the United Kingdom City Code was evolved to discipline the corporate enterprises which go in voluntarily or were forced into business combinations side by side provisions dealing with merger and acquisition have been made in the Monopolies and Restrictive Trade practices Act, 1948 ; the prevention of Fraud (Investment) Act, 1956 ; the fair Trading Act, 1973 ; the Financial Services Act, 1986, etc. To ensure that business combinations do not lead t negation of public interest. 2 LAW RELATING TO MERGER AND ACQUISITION IN THE UNITED KINGDOM (U.K.) In the United Kingdom, mergers and takeovers are governed by a self regulatory code of conduct, which has been amended from time to time, to keep pace with the new developments. The overriding principles of the code has been to ensure fair and equal treatment of all shareholders, and to provide an orderly framework of takeover. In the United Kingdom, merger and acquisition are controlled under the provisions of the fair Trading Act, This act empowers the Government (Secretary of state) to decide on reference recommendations from the Director General of fair trading if any case of merger is to be referred to the Monopolies and merger commission for investigation and report. Fees are payable to the office of fair trading in respect of mergers which qualify for investigations. It should be noted that recommendations of the monopolies and merger commission are not mandatory for the Government. Under the United Kingdom Law, when a merger arises under the 2 Kumar Naresh, Takeover and Merger : Need for Model Code, Chartered secretary, September 1994, Pg

3 Financial services act, 1986 in different circumstances qualifies for investigation by the monopolies and merger commission under the Act, it is known as Qualifying merger. The target as well as the acquirer company is subject to a range of laws and regulations which affect not only the companies involved but also the directors, close advisers, and major shareholders of those companies. The statute under which merger activity in the U.K. is done is the Fair Trading Act, 1973 (hereinafter referred to as the Act). The act specifically provides for certain merger conditions that qualify for investigation. There is a designated body called the Monopolies & mergers commission to whom the secretary of state for Trade and Industry refers certain matters for decision. The advise of the Director General of Fair Trading has to be taken into consideration while deciding on such matters. The merger which qualifies for investigation are those as categorized by the Act. There is a certain limit during which the reference may be made to the mergers. This time limit may vary from four weeks to four months depending upon the disclosure of the relevant statements to the public. It may be useful at this stage to make a brief reference to the way the mergers commission works. The mergers commission has to deliver a report within six months and a further extension of three months is allowed. Where a merger reference is made to the chairman of the Monopolies commission, he will appoint a group of members to deal with it. The companies concerned are then asked to submit a written statement describing the reasons and circumstances for the merger inclusive of other relevant details. The companies are invited to attend a hearing with the commission as soon as possible after receipt of their written statements. The parties concerned are then examined on the public interest issues. The commission may ask for further additional submissions to be made by the parties concerned and they may also be asked to comment on any third party criticisms of the merger likely to be affected. However the commission cannot negotiate with the parties and they are not in a position to disclose the information gathered from the parties. The commission can ask for any appropriate information from the parties in the form of evidence on oath and deviant behaviour with the requests of the commission may constitute an offence. The commission shall submit 133

4 its final report to the secretary of state and send a copy to the Director General. The report should be in reference to the following: a factual description of the companies, their development and current activities; a description of the market in the U.K.; the case of the merger as stated by the companies; the views of third parties; the commission s conclusion. During the preparation of the final report, making of the recommendations on the existing situation, the mergers commission may take into account the following factors: maintenance and promotion of effective competition within the country. Promotion of interests of consumers, purchasers and other users of goods and services in respect of prices, quality and variety of goods and services supplied Reduction of costs, development of new technologies and their use and facilitating the entry of new customers into the market. Maintenance and promotion of balanced distribution of industry and employment in the U.K. Maintenance of competitive activity in overseas markets. Therefore after the preparation of the report, and presentation of it to the Secretary of state, the secretary may exercise its statutory powers. The listing rules made by the London stock Exchange limited are a further important source of rules governing takeovers. They apply only to listed companies provisions of the Yellow Book related to listed companies have statutory effect as rules made by the competent authority pursuant to section 142 of the Financial Services Act, These rules and regulations while being discussed must make one aware of the fact that more or less the same rules may apply when it s a case of a cross border merger or amalgamation. For domestic law purposes, there is a classification of companies according to their size. 134

5 Examples of domestic laws from England may provide guidelines for us. This could be convenient as we follow the same legal system as that of England i.e. The Common Law system. The principal rules and regulations affecting the participants in the bid are derived from the city code on Takeovers &Mergers. In addition to the code companies whose securities are listed on the London Stock Exchange or who in connection with a takeover propose to apply for their securities to be listed on the LSE must comply with the listing rules made by the London Stock Exchange. There is a code dealing with the conduct of companies in U.K. called the City code on Takeovers & mergers. The code and the Takeover panel were created in response to and following criticism in the press and parliament of the tactics of bidders and defenders in a number of prominent bid battles. The code is administered by the Takeover panel. Currently, in the U.K., an interesting fact can be noted which is reflected in the coexistence of the city code on Takeovers and mergers and the takeover directive. The code was under threat from the proposed 13 th company law directive which was finally rejected. The code covers companies which may include a listed public company, an unlisted public company and a private company. The code consists of 10 General principles and 38 rules together with a collection of notes and four appendices. The code does not have the force of law, therefore what does it hold for any prospective learner. The primary function of the code is to supplement the companies Act, 1985 of the U.K. therefore it could be said that it strengthens the operation of law and in due course, gets implemented. What does it holds for India? The answer to the question lies in the fact that India already has very less provisions in its companies Act, 1956 dealing with mergers and mergers and acquisitions and there are a few scattered provisions here and there dealing with cross border mergers and amalgamations. Therefore the enactment of such a code could hold freat promise for a country like India. The provisions of the city code in the U.K. can be treated as a helpful guide to the fairness which is to be deciphered while interpreting other laws. The highlighting facto while observing the city code on Takeovers & Mergers is that the panel constituted under the code is subject to judicial review. This shows that nothing is being taken away from the courts. The idea behind the 135

6 constitution of such a panel and such a code has been the protection of the interests of the shareholders. The panel has promulgated rules which are not ultra virus of any law, and is based on the concept of doing equity between one shareholders of the target company from the controllers of the offeror company or the company which has made the bid. The English law provides protection to the shareholders in cases of oppression from the target company but it does not say anything about the protection being offered to the shareholders from the target companies. This is where the code comes in and protects the shareholders of the target company from the offeror s tactics. The practice of the code is generally dealt with by the Panel where presentations are heard orally with a member of the panel taking notes and decisions are most often transmitted to the parties by phone. If a party to a takeover or merger wishes to contest a ruling by the panel executive, it should notify the panel executive in writing as soon as possible and at the latest within one month of the executive ruling. The proceedings before the panel are relatively informal and normally the panel does not allow having a barrister representing them. There are no formal rules of evidence. There is a right of appeal from panel rullings. This has been provide where a panel executive believes that there has been a breach of the code, the offending person will be informed in writing of the nature of the alleged breach and of the matters to be presented before the full panel and that person will be invited to appear with his advisers and any witnesses before the full panel. Punishment to the offender may involve private reprimand, public censure or temporary suspension from operating in the securities markets. The case of British Aluminium Company brought to the surface the deficiency in enlisting the code of conduct and the London city code was evolved. To remove these deficiencies, the Bank of Business which was amended in the form of revised notes on company amalgamations and mergers, known as Queen Berry Rules. In addition to the relevant provisions the Companies Act, 1985 and the Financial Services Act, 1986 are also applicable to ensure fair deal to concerned parties. 136

7 (i) THE UNITED KINGDOM ANTITRUST REGIME In the United Kingdom, mergers have been subject of antitrust regulation since During that period, the policies of the United Kingdom government have gone through distinct phases. The enactment of the Monopolies and Merger Act, 1965 of the United Kingdom adopted method for merger control in the form of Monopolies and Merger Commission, to investigate a merger when called upon to do so. 3 The merger investigation in the United Kingdom is two stage process. First stage-it is the preliminary screening by the office of fair Trading (OFT) created under the Fair Trading Act, 1973 (FTA). Second stage- It is the Monopolies and merger commission s investigation. The first stage may lead to a recommendation to the president Board of Trade for a more detailed investigation by Monopolies and merger commission. (ii) THE OFFICE OF FAIR TRADING AND ITS OPERATIONS The office of Fair Trading created under the Fair Trading Act, 1973 monitors all merger proposals in the United Kingdom as well as the actual mergers. From its initial screening of a merger or proposal the office of Fair Trading has to determine whether it is a merger situation qualifying for investigation by Monopolies and merger commission. The office of Fair Trading judges decides case on its merits keeping in mind the following factors: Competition in the United Kingdom. Efficiency of the merging firms 3 Sudarsanam, P.S., Essence of Merger and Acquisition, 1997, Pg

8 Employment and regional distribution of industry International competitiveness of the United Kingdom firms National strategic interests. The scope of turning around the acquired firm. In practice the office of fair trading completes its assessment quickly, having regard to the time table for a public company bid under the City Code of Takeover and Merger. Under the city code a bid lapses on its being referred to the monopolies and merger commission. (iii) THE MONOPOLIES AND MERGER COMMISSION It is an independent advisory body with the first aim is to establish whether the merger situation qualifies for investigation and must then determine whether a merger as a whole or in parts operates against the public interest. The president of Board of Trade is bound by the Monopolies and merger commission s conclusion that the merger doesn t operate against the public interest, but if merger is against public policy, the president of the Board of Trade can override the conclusion. (iv) FAST TRACK OFFICE OF FAIR TRADING AND THE MONOPOLIES AND MERGER INVESTIGATIONS. Under the United Kingdom Company s Act, 1989, fast track procedure has been introduced providing for voluntary pre-notification of a publicly announced merger bid to the office of fair Trading. Under it, office of Fair Trading must make its reference recommendations within 20 working days. (the consideration period), however in the absence of relevant information, a maximum of 45 working days is allowed. 138

9 TAKEOVER REGULATION IN THE UNITED KINGDOM In the United Kingdom, takeover where the target company is a public company are regulated by the city panel on Takeovers and Mergers (the panel) under the city code on Takeovers and mergers (the code) also known as Blue Book because of the colour of its binder. A scheme of takeover is carried out under section 425 of the United Kingdom companies Act, 1985 but because of the involvement of the court, a scheme is tedious, time consuming and expensive. For this reason, mergers by schemes of arrangement are much less frequent than public offer under the code. The takeover panel was formed in 1968 and is also recognized by the United Kingdom Government and regulatory bodies under the Financial services Act, The panel can receive information from Department of Industry and trade (DIT). (i) CITY CODE: This code is based on General Principles and Rules. The main provisions of the General Principles of the Code are as follows: Equality of treatment and opportunity for all shareholders in the same class in takeover bid. No preferential release of information to some shareholders not made available to all shareholders. No action which might frustrate an offer is taken by target company during the offer period, without shareholders being allowed to approve it. Where control of company is acquired or consolidated by a person, he or she must normally make a general offer to all other shareholders. 139

10 (ii) STATUTORY RULES Following are the main statutory rules: Scheme of arrangement is carried out under the companies Act, 1985 provisions (Section 425 to 427). The use of target company resources to provide financial assistance to pay for acquisition is prohibited under sections 151 to 155. An offeror having 90 percent of its offer accepted can compulsorily purchase the remaining 10 percent of the shares that are the subject of offer under section 429. This provision helps the acquirer to get rid of any unwanted minority. The company Act, 1985 lays down the minimum level of acquisition (90 percent) for the acquirer to claim merger relief (section 131) and also qualify for merger accounting. The company securities (Insider Dealing) Act, 1985 prohibits a person who has received price sensitive information about an offer or contemplates offer from a person connected with a company from dealing in shares in the target company. Under the Criminal Justice Act, it is a criminal offence for an individual having information as insider such as director, to deal insecurities whose price would be significantly affected if the insider were made public. (iii) THE LONDON STOCK EXCHANGE RULES: These rules are known as the international Stock Exchange Rules of the United Kingdom and the Republic of the Ireland. The rules are as follows. The announcement of takeover bid. 140

11 Dividing acquisition, disposals, takeovers and the merger into size class. The need for shareholder approval for larger transaction. The content of offer document and notification of the London Stock Exchange (LSE). The content of listing parties when securities are issued in consideration. 5. LAW RELATING TO MERGER AND ACQUISITION IN THE UNITED STATE OF AMERICA (USA MERGER POLICY) Among other countries the United state of America has the longest tradition of the antitrust regulation by enacting the regulations detailed as : (i) THE SHERMAN ACT, 1890 The most important sections of this Act dealing with Merger are sections 1 and 2. Section 1 of the Act 1890 prohibits contract, combinations or conspiracies in restraint of commerce. 4 This section makes illegal every formal arrangement among firms aimed at curbing independent action in the market. It places restrictions on market conduct, in particular those means of co-ordination between the sellers who use formal agreements to reduce the independence of their actions. 5 Section 2 of the act of 1890 is directed against actual or attempted monopolization enjoins the market structure, where seller concentration is so high that it could be called monopolization. Monopolization in literal sense means the monopolies that existed before 1890 couldn t be touched or those that somehow became monopolies inspite of section 2 were immune from prosecution. As interpreted by court section 2 4 J.Fred Weston and Kawang S.Shung, Merger Restructuring and Corporate Control, 1997, Pg Rogene A.Buchholz, Business Environment and Public Policy, 1992, Pg

12 couldn t be used to break up firms that had become dominant in their line of business. It could also be used to prohibit mergers that would result in dominant firms. This act was not particularly suitable for the prevention of prospective mergers and monopolies, especially in the form of stock to gain control of companies. 6 (ii) THE FEDERAL TRADE COMMISSION ACT, 1914 This act created the Federal Trade Commission (FTC) and gave it sweeping powers to investigate business organisations and examine business conduct, practices and the management of companies engaged in inter-state commerce. Section 5 7 of this Act says: Uniform methods of competition in or affecting commerce, and unfair or deceptive acts or the practice affecting commerce are hereby declared unlawful. 8 But it was upto the commission to define what was unfair. The Federal Trade commission was allowed to attack practices it defined as unlawful even though such practices did not violate the established antitrust laws. Federal Trade commission could block a merger where it perceived a trend that might ultimately result in competition. (iii) THE CLAYTON ACT, 1914 In order to correct the deficiencies present in the Sherman Act, 1890 the congress passed the Clayton Act, It attacks a series of business policies in so far as they would substantially lessen competition or tend to create a monopoly. This Act was formulated to remove the deficiencies of Sherman Act. It also contains a section that was designed to slow down merger moment that had resulted in emergence of many large corporations. 6 Wyatt and Kieso, Business Combinations : Planning and Action, 1969, Pg Section 5 of Federal Trade Commission Act, Routedge and Kegan Paul, The Logic of British and American Industry, 1972, Pg

13 The important sections of the Clayton Act, 1914 are as follows: Section 2 9 of the Act bare price discrimination when it tends to lessen competition in any line of commerce or tends to create monopoly. The act prohibits the seller from granting lower prices to favoured buyers, whether the price discrimination is integrated by the seller or forced upon the seller by the buyer. The Robinson Patment Act, 1936 amended section 2 of the Clayton Act, 1914 to strengthen it by removing the shortcomings. Section 3 10 of the Act for bids sellers from requiring the buyers of their line of good to refrain from buying goods of their rivals when such a policy tends to create monopoly. Section 4 11 of the Act provides for treble damage in a private suit. It specifies that the successful claimant in an antitrust case shall recover threefold the damages by him sustained and the cost of suit including reasonable attorney s fee and thus encourages private parties such as the corporations to pursue antitrust suits against alleged violators. Section 7 12 of the Act provides that merger is considered illegal if it Substantially lessen competition or tends to create monopoly. According to this above sections, the United States Government in 1962 in Brown Shoe Case, 13 blocked a merger between Brown shoes and Kneey shoes ranking third and eight in the industry. Similar decision was followed in Von s Grocery case. 14 This Act strengthened the Sherman act, 1890 by defining several practices as being unlawful. Section 1 of the Clayton Act 1914 forbids sellers to discriminate in price 9 Section 2 of The Clayton Act, Section 3 of The Clayton Act, Section 4 of The Clayton Act, Section 7 of The Clayton Act, Brown Shoe Co. vs. U.S., (1962) 370 US Von s Grocery Co. vs. U.S. (1966) 374 US

14 between different purchasers of commodities. It was in this section which was cited in a landmark case. 15 Thus, it can be said that the Clayton Act, 1914 was passed to overcome the shortcomings of the Sherman Act Section 7 of the act permits full or partial acquisition by Commercial Corporation of stock or assets of another engaged in commerce in the company, if the effect of such an acquisition may be substantially to lessen competition or tend to create monopoly. The prohibition applies to horizontal, related or conglomerate mergers and acquisitions. It should not be noted that the Clayton act 1914 did not said anything about the purchase or sale of assets of one corporation of or to another even in the same line of business, which turned out to be a huge loophole in law and in turn exploited by merger-minded people. (iv) THE SURETIES ACT, 1933 This Act contains a broad rule of law stating that it is unlawful for a person to sell any security unless a registration statement is in effect with respect to that security. Under law the distribution by an acquiring corporation of its stock to acquire another company may be considered a sale of stock of acquiring company, unless the transaction is cast in such form as to be an exempt transaction or exempted under the Rules and Regulations under the Securities Act, (v) THE WHEELER LEE ACT, 1938 This Act was amended section 7 of Clayton Act, 1914 to read. Unfair and deceptive acts or practices in commerce. Thus giving FTC the authority to pursue deceptive advertising and other market practices FTC vs. IBM-Telex Co. (1973) 291 FTC Matt. M.Starcevich and Kames I. Wittenbach, Introduction to Business, 1975, Pg Peter Hilton, Planning Corporate Growth and Diversification, 1970, Pg

15 (vi) THE CELLER KAFAUVER (AMENDMENT) ACT, 1950 On December 29, 1950, the Celler-Kefauver Act, 1950 was passed and provided for the amendment in the Clayton Act, 1914 and the Federal Trade commission. The Celler-Kafauver (Amendment) Act, 1950 amended section 7 of the Clayton Act, 1914 so as to cover all types of merger and acquisition made by the companies subject to the jurisdiction of Federal Trade Commission and thus brought a major substantive change in government antitrust policy. This Act also amended section 11 of the Clayton Act 1914 thereby authorizing the Federal Trade commission to order divestment of assets, as well as stocks acquired in violation of section 7. The amendment of 1950 had made Clayton Act an effective instrument for dealing with monopoly problems resulting from any form of business combination. 18 (vii) THE RICO ACT, 1970 Under the Racketeer Influenced and Corrupt Organisation Act, 1970 (RICO) either the Government or the private person can sue. In connection with the Sherman Act, 1890, section 2, the case where dominant market power is alleged, Racketeer Influenced and Corrupt Organisation Act, 1970 could be invoked because such power would result in non-competitive behaviour and prices. Similarly in connection with section 1 of the Clayton Act, 1914, the cases alleging a conspiracy and section 7 of the Clayton Act, 1914, the cases alleging unlawful combination, Racketeer Influenced and Corrupt Organisation Act, 1970 (RICO) could be invoked on the ground of deceptive and fraudulent consequences. 18 Vermon A.Musselman and Eugene H.Hugher, Introduction to the Modern Business Analysis and Interpretation, 1973, Pg

16 (viii) CURRENT DEVELOPMENTS-THE HART-SCOTT- RODINO-ACT, 1976 Another development in the antitrust area as far as policy measures are concerned in the Hart-Scott-Rodino Antitrust Improvement Act, This Act was signed on September 30, 1976 and has been considered of equal importance with Sherman Act, 1890 and the Clayton Act, Title I: Title II: Title III: It expands the power of department of justice to issue Civil Investigative Demands (CID) in connection with investigation related to the antitrust laws. It deals with the Pre-merger Notification Act. This Act provides for the 30 days waiting period after the designated information is submitted both to the Federal Trade Commission and the Department of Justice before the acquisition or merger is consummated. The period can be extended to further 20 days by request of either Government or agency. It deals with the Patents Pat Riae Act which expanded the power of the State Attorney General to institute antitrust triple damage suite on behalf of the natural citizens injured by violation of the Sherman Act, TAKEOVER REGULATION IN THE UNITED STATES OF AMERICA In the United States of America, tender offer are regulated by the William Act, 1968, The Securities and Exchange Commission. The William Act imposes obligations on both offerors and the targets, and prevents secret accumulation of large stakes by acquisition of five percent or more voting shares to be disclosed within ten days. The William Act imposes obligations on targets in their response to tender offers and 146

17 requires the target to inform its shareholders of its position on the tender offer within ten business days. Since the united states of America are Incorporated under state Law the structure of an acquisition is a matter party of state & party of federal laws. LAW RELATING TO MERGER AND ACQUISITION IN THE EUROPEAN COMMUNITY: The European Community Act, 1972 empowers the organisation to issue directives as member nations from time to time to maintain the uniformity in rules and regulations, accounting procedure in the case of merger and acquisition. The European community merger control is exercised by invoking the European community merger Regulation. Under the European community merger Regulation a merger which creates a dominant position as a result of which effective competition would be significantly impeded in the common market are to be prohibited. Merger of enterprises operating within the European Union since 1990 are subjected to the European Union Merger Regulation, which was promulgated with the aim of achieving one-stop-shot clearance of mergers. As a result there is now hierarchy of merger regulation in the European Union, with very large merger being examined by the European commission, while the smaller mergers being examined by the stats own antitrust regulations. (i) ANTITRUST REGULATION IN THE EUROPEAN COMMUNITY The European Union Antitrust Regulation provide for the European Union Rules which in turn are designed to prevent distortion of competition in the common market and abuses of the dominant market position. Article 85 of the treaty of Rome aims at preventing arrangement among enterprises which have the effect of distorting competition. Article 86 of the treaty of Rome precludes firms form abusing their dominant position so as to restrict competition and inter-state trade. 147

18 The European Courts held that both Articles 85 and 86 have application in merger area, but their scope is not well defined. The term concentration is being used in the European Union competition law so as to cover merger, acquisition and takeover, whether they involve acquisition of controlling or minority interest in shares or assets. Application of Article 85: Article 85 was designed so to be applicable to cartel agreements. This article was extended by the European Court to the acquisition of share ownership. Application of Article 86: The commission has used the Article 86 to intervene in a number of proposed mergers, either to prevent them altogether or to modify them. But with the passage of time it was found that both Article 85 and 86 of the Treaty of Rome were inadequate to deal with merger and amalgamation. As a result in 1990 the merger regulation was put into effect. (ii) THE MERGER REGULATION: The merger regulation lays down criteria for the concentrations (including mergers) which will be subjected to screening by the Merger Task Force of commission. The regulation sets up procedure for notification and a timetable for the commission s deliberations. It seeks to minimize the overlap between the European Union and the National Antitrust Regulation and procedures. Concentration arises when two or more previously independent undertakings merger or one undertaking acquire, through purchase of shares direct or indirect control of another undertaking or persons who already control at least one undertaking acquire direct or indirect control of another. The merger regulation exempts certain types of shareholding like investment by security firms and certain types of control such as administrators in receivership. For a transaction to fall under the merger regulation it must be a concentration and must 148

19 have community dimensions. Mergers with community dimension must be notified by the participating companies to the European commission within a week of announcement and should be suspended for three weeks. Within one month of notification the commission must decide whether the concentration is compatible with the common market (First phase) if not, it will be proceed with its investigation, which should be concluded within for months (Second Phase). If a merger threatens competitions in the European Union, the commission may prohibit it altogether or allow it to proceed subject to undertaking by merging companies to eliminate the anticompetitive aspect of merger. From the inception of the regulation to January 1994, the European commission considered 197 merger cases, out of which only one (Aerospatiale and Alanis Joint bid for De Havilland of Canada in 1991) was prohibited. In eight cases the merger was clear subject to certain conditions and another eight were clear without conditions after second phase of investigations. CONCLUSION To conclude, we can say that concept of Takeover emerged before 200 yrs back in U.S and UK basically for acquiring monopoly, but in India, The impact of Takeovers emerge in 1990 s with the era of liberalization. Instead of India all major countries have rules, governing Takeover of listed companies where public company is involved. UK has also incorporated provisions for Takeover Regulations in Companies Act, and it has also a separate code for Takeovers. USA had Securities Exchange Commission, UK has financial services authority and India has Securities Exchange Board of India. India has not yet specified a level of shareholders for control, but control defined as - The power to appoint majority of Directors. - Control major policy decisions. 149

20 In India there need to disclosure when shareholding cross 5%, 10%, 14%, 54%, 74% & for transactions of 2% in a year by person holding 15% -75% but in UK require disclosure at acquisition of 15% or more. 150