Warning Shots: Enforcement Disparities and Regulatory Lessons from Adani and Altice

[Simone Avinash Vaidya is a 2nd-year student at MNLU Mumbai.]

Introduction

The phenomenon of gun-jumping, or the consummation of mergers before the antitrust authority has reached a final decision on the combination, has triggered intense regulatory scrutiny worldwide. Gun jumping violates the standstill obligations, which act as a safety catch to deter and penalise premature actions having the potential to distort market competition. Information exchange has emerged as a hotbed of gun-jumping violations, particularly when the information is commercially sensitive.

Such a suspensory regime is essential to preserve competition between the parties to a merger as well as in the market as a whole. The decision of the European Commission (EC) in Altice/ PT Portugal (Altice) reflects a hardline stance when there exists a pre-closing contractual clause permitting the Acquirer to exercise influence over the Target company’s business operations. Similarly, in India, the Adani Green Energy Limited (Adani) case brought this issue to the forefront as the Competition Commission of India (CCI) examined the contours of a similar contractual clause as a violation of the standstill obligations under Section 6(2A) of the Competition Act, 2002 (the Act).

In both Altice and Adani, the subjects of scrutiny were pre-closing covenants focused on information exchange and strategic business integration. The EC and CCI noted the absence of procedural safeguards in the form of clean teams in both cases, as the parties neglected to actually constitute a restricted group of individuals who are ring-fenced from the strategic and operational management of an enterprise to mitigate the risks of anti-competitive conduct. Interestingly, there is a consensus that there is no need to establish that the Acquirer has actually exercised influence over the Target, and the existence of an agreement enabling the same is sufficient. Furthermore, both Commissions incorporated an effects-based analysis, concluding that such a covenant was incompatible with the internal market in Altice and that it caused an appreciable adverse effect on competition in Adani. However, both regulatory authorities followed different approaches in imposing penalties, with Altice’s fines being to the tune of €124.5 million, or $136 million. In contrast, Adani was ordered to pay only a nominal fine of Rs. 5 lakh ($6,000).

This blog compares and contrasts the decisions in Adani and Altice, arguing the need to effectively implement Section 6(2A) by imposing heavy penalties on instances of substantive gun-jumping. The author begins by critiquing the CCI’s stated rationale of raising awareness in light of the prevailing factual matrix of this case. Next, the third subheading examines how India’s adherence to the material influence test further reinforces the need to levy stringent penalties in order to secure effective enforcement. In the fourth subheading, the author engages with possible counter-arguments of regulatory capacity from the lens of nascency in competition jurisprudence in India, as well as the institutional and resource limitations of the CCI. Both perspectives are shown to be untenable in this regard, and the author concludes by distilling the core lessons to be learned concerning effective and efficient gun-jumping regulation, highlighting the need for India’s merger enforcement regime to evolve.

Questioning The Justification For A Nominal Penalty

The CCI justified the nominal penalty as a means to “raise awareness” regarding the exchange of information and business integration being violations of Sec. 6(2A). However, this rationale is flawed on several counts. The conduct of the parties, the CCI’s own precedents, and the factual matrix of the transaction all suggest that this reasoning does not withstand scrutiny.

Firstly, Adani and SB Energy were cognisant of compliance requirements, as the clause in question provided for the constitution of clean teams. Although this safeguard was not implemented in spirit, its inclusion in the agreement indicates that the parties were aware of the commercially and competitively sensitive nature of such information exchange.

Secondly, while the CCI correctly noted that the specific factual matrix in Adani is the first of its kind, it has previously established the anti-competitive nature of such exchanges in two separate instances. In Hindustan Colas Private Limited, the CCI laid down a three-pronged test to determine if an action amounts to gun-jumping, with the third limb being “a reason/basis to access the confidential information of the target.” Similarly, a Compliance Manual published by the CCI in 2017 addresses information exchange, as well as pre-merger integration planning, flagging them as potential gun-jumping. It is interesting to note that these have been invoked and relied upon in the Adani order as well, which makes the CCI’s justification all the more puzzling.

The imposition of penalties in competition law regimes is for punitive and deterrent purposes. It must be noted that Adani Group is a multi-billion-dollar conglomeration, and the Adani Green-SB Energy deal value stands at $3.5 billion. In light of such a consideration, it is even more perplexing to comprehend the CCI’s magnanimously low penalty as such a flagrant violation in the context of a high-value transaction warranted stringent action.

The Relevance of the Decisive v. Material Influence Tests

A critical point of departure between Adani and Altice lies in the specific language used in their respective covenants. In Altice, the agreement specifies that Altice is vested with veto rights over PT Portugal’s business operations. While the impugned clause has been redacted in the Adani order, subsequent paragraphs evidence that it entailed Adani providing SB Energy with inputs, which may not be binding on the target company. While the Commission rejected the notion of the non-binding nature of such inputs being relevant in determining a violation of Section 6(2A), the question that now arises is whether such a distinction in the factual matrix contributed to the outcome of penalties imposed.

The EC maintains that “decisive influence” must be established to ascertain a violation of standstill obligations. This refers to the power to block decisions that determine the strategic commercial behaviour of an undertaking. In India, the “material influence” test is applied, providing for the lowest level of control or influence, as codified by the 2023 Competition Amendment Act. This threshold has been used to establish substantive gun-jumping violations, most prominently in the Bharti Airtel proceedings under Section 43A. 

A lower threshold, like India’s “material influence”, is meant to cast a wider net and catch early-stage forms of control in merger transactions. This expands the scope of regulatory oversight, and it is thus incumbent on the regulator to ensure that such violations are met with credible penalties. As established in the previous sub-heading, the violations in the Adani case were in the context of a high-value, multi-billion-dollar transaction between parties who were clearly aware of the regulatory risks.

In such serious cases, the lower threshold cannot be a mechanism to excuse enforcement; it should be a tool to facilitate it. Coupling broader standards with nominal penalties defeats the purpose and rationale of having a lower threshold, as violations carry little consequence. Therefore, differences in the factual matrix and the applicable thresholds do not justify the CCI’s nominal penalty in Adani, especially given that the Indian test of material influence sets a lower bar than the EU’s decisive influence standard.

Evaluating the Role of Regulatory Capacity

One possible counterargument lies in the CCI’s relatively nascent development stage and limited institutional resources. The former rationale might be cited as a justification for prioritising awareness-building over deterrence, but it cannot be sustained in this case. India’s mergers and acquisitions (M&A) deals touched $ 41.5 billion in the first half of 2025, with Adani Green-SB Energy being just one example of India’s rapidly expanding M&A landscape. With the market forecast looking exceedingly promising, the scale and complexity of deals and cross-border transactions are likely to grow. It is thus essential for the regulatory response to evolve in tandem. For a developing merger control authority that is currently outpaced by a growing market, leniency in enforcement would only widen this disconnect between regulatory capacity and market realities further.

The limited institutional resources may affect the ability to conduct in-depth investigations, but this reasoning does not stand in the light of the procedural history of this transaction. The transaction had already been substantively assessed under Section 6(1) of the Act, requiring an extensive market analysis. Given that the prevailing market conditions have already been studied and determined, the subsequent Section 6(2) analysis did not require substantial additional investigatory effort. The CCI’s own interpretation of this provision revolves around three tests: (i) whether it infringes upon the ordinary course of business of the target; (ii) whether it reduces competition intensity, and (iii) whether it distorts competition practices. Moreover, the CCI has explicitly outlined that the mere existence of such a contractual clause is per se sufficient to establish tacit collusion. Thus, Adani was a case where the CCI’s constraints do not constitute a tenable counterargument.

Conclusion

The penalty imposed in Adani is a shot in the dark, setting a concerning precedent of leniency and discretionary enforcement. Stringent penalties in such instances are the need of the hour as they have a demonstrable deterrent impact. This would serve the CCI’s objective of raising awareness among stakeholders in a much more effective manner. Thus, the CCI’s decision should have been along the EC’s stance, as anything less risks sending a message that such violations in billion-dollar transactions may be met with little more than a warning shot.

This can be mechanised by ensuring an in-depth analysis of a violation of standstill obligations on the basis of the three tests laid down for Section 6(2) violations. The CCI can optimise resources by utilising substantive assessments under Section 6(1) while issuing orders under Section 43(A). This would provide a greater insight into the potential anti-competitive effects and consequences of certain actions that amount to gun-jumping. This would enable the Commission to levy penalties as a consequence of conduct and potential effects, rather than basing penalties on the perceived need to signal compliance expectations. 

The CCI’s resource constraints should also be addressed by the Central Government, as this would enable a thorough analysis and investigation of each case. One possible solution lies in evening out the workload by establishing additional benches of the CCI, as identified in Section 22 of the original, unamended Act. This provision envisaged one Principal Bench and multiple Additional Benches, apart from a separate Merger Bench. This was amended in 2007, with the Central Government linking its “rightsizing” practice to align with the sizes of competition authorities in various mature jurisdictions. However, this has only resulted in the CCI being understaffed, thus exacerbating the existing workload concerns, which have led to delays and inefficiencies. Thus, expanding the CCI and introducing additional benches is the way forward to ensure that each case undergoes detailed scrutiny and investigation.

As delineated in previous sections, M&A is an integral part of India’s economic growth story, and it is essential for regulation and policy to align with such goals. This case serves as yet another lesson from a more mature regime, as such a model ensures that merger and combination control remain legally robust and economically impactful.