Under competition regulations, parties to certain transactions (i.e., acquisition, merger or amalgamation) that meet specified asset/turnover thresholds have to obtain approval of the Competition Commission of India (Commission). The approval is deemed given if the Commission does not respond in 210 days from the date of notification. The Commission can refuse to approve a transaction (referred to as 'combination') if it finds that it causes or is likely to cause an appreciable adverse effect on competition in India (AAEC).

The Commission expects that any commercially sensitive information (CSI) of a party is not disclosed to the other party in transactions. This is easier said than done since in most corporate transactions, parties do need to share information with each other and such information tends to include information other than publicly available information, some of which may typically be CSI.

To reduce the risk of anti-competitive concerns and yet be able to make an informed decision about a deal, the Commission advocates the use of 'clean teams' as a mechanism to assist parties navigate the complexities that disclosure of any CSI may cause.

Clean Teams –Relevance & Practical Considerations

A 'clean team' usually consists of individuals who are not involved in decision-making related to pricing, sales, marketing, etc. This is to ensure that such individuals are not influenced by any CSI disclosed to them.

There are some practical challenges in deploying clean teams. For instance, the deal size may not justify expenses involved or the parties may not have senior executives who are not involved in the decision-making process. It is important for the clean team to have executives who are able to understand the import of the CSI and appreciate the business rationale. Often there is a risk of divergent views being taken by the deal teams on CSI and whether a data point is in fact disclosable to the deal teams.

The use of clean teams is critical in transactions involving entities in related or similar businesses. In such transactions, clean teams would be involved in all stages of the transaction. The primary function of the clean team is to sanitise any CSI and ensure that no CSI is disclosed to the other parties to the transaction unless such information is anonymized or aggregated.

Gun Jumping

The Commission expects parties to a proposed combination to remain independent until approval of the Commission is obtained. Gun jumping is broadly understood to occur when parties implement any part of the proposed combination or act together or as a combined unit without receiving the Commission's approval. Gun jumping may result in financial penalties.

The terms 'CSI' and 'gun jumping' are not defined under competition law and one has to take guidance from the Dos and Don'ts manual for enterprises involved in a proposed combination (

While the manual is not binding, it reflects the views of the regulator and consequently should be followed. The manual, however, is not exhaustive and does leave scope for interpretation. The lack of proper guidelines also creates difficulty for clean teams to effectively address anti-competitive concerns. CSI can have a wide ambit and would include data that can disclose pricing assumptions and strategy, cost information, marketing strategy, critical terms of material contracts. In the context of a company with different revenue centres, potentially aggregated data relating to turnover, input costs, etc. for all revenue centres may be CSI and not disclosable as they could indicate the pricing strategy.


Unlike other jurisdictions such as the EU or USA, India does not have any formal guidelines explaining what events would constitute gun jumping and how parties can mitigate the risk of gun jumping. The Commission, however, has in some of its decisions dealt with this issue. The Commission has held pre-payment of consideration to constitute gun jumping since it creates a tacit collusion which may cause an AAEC even before consummation of the transaction.

In another case, the Commission made a reference to other jurisdictions and held that actions such as acquisition of beneficial ownership/operational control, sharing of competitively sensitive information on price, sales, etc., exercise of voting rights, influencing the strategic decision making of the merging party, sharing of profits etc., are typically considered to be in nature of premature integration and coordination.

It is clear that exchange of CSI could result in gun jumping since it affects the ability of enterprises to remain independent and therefore it is important to have clean teams to reduce the risk of gun jumping.


Issues around gun jumping will keep gaining prominence as the Indian deal environment becomes more active, especially in the post COVID-19 era when one is likely to see opportunistic moves being made. Issues such as the types of information considered as CSI and the extent to which exchange of information is permissible would need some clarity. One hopes that while businesses take a cleaner approach to deals by engaging clean teams and mitigate the risk of being considered as being anti-competitive, the Commission sets out more elaborate guidelines explaining its perspective on the subject.

Originally published 13 July, 2020

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