Gun Jumping and Failure to Notify Compared

The Indian merger regime is both mandatory and suspensory: a transaction crossing the thresholds must be notified, and it must not be consummated until the Commission has approved it or the statutory period has expired. Breach of either obligation is penalised under Section 43A, and the expression gun jumping is used for both. They are nevertheless distinct. Failure to notify is an omission; consummating before approval is an act. A party may commit either without the other, and the second is committed far more often than parties expect, because partial integration counts.

1. The Two Breaches

Basis	Failure to notify	Consummation before approval
Obligation breached	Section 6(2), which requires notice of a combination	Section 6(2A), under which no combination shall come into effect until an order is passed or the period expires
Nature	An omission, usually founded on a view that the transaction was not notifiable	An act, or a series of acts, integrating the businesses
When it occurs	On closing without having filed	After filing but before approval, or in part before either
Typical cause	Misjudging control, the thresholds, or the availability of an exemption	Commercial pressure to begin integration, or interim covenants that go too far
Penalty	Section 43A: up to one per cent of the total turnover or assets or the value of the transaction, whichever is higher	The same
Additional consequence	The combination remains void under Section 6(1) if it causes an appreciable adverse effect	The same, and the conduct may itself be examined under Sections 3 and 4

2. Partial Consummation

This is where most gun-jumping exposure arises, because the parties do not think of themselves as closing at all. The question is whether, before approval, the acquirer has begun to exercise control or the businesses have begun to operate as one.

Board and management. Appointing directors or observers, participating in management decisions, or requiring approval for ordinary course decisions before completion.
Operational integration. Merging sales forces, combining distribution, aligning pricing, transferring employees or migrating systems.
Exchange of commercially sensitive information. Sharing current pricing, customer-specific terms, costs or bidding intentions beyond what due diligence requires and without a clean team or other protection.
Transfer of part of the business. Closing one leg of an interconnected transaction while the rest awaits approval, where the steps form a single composite combination.
Payment and possession. Paying the consideration and taking possession of assets, even without a formal transfer of title.

⚠ Interim covenants: the line

A buyer is entitled to protect the value of what it is buying between signing and closing, and covenants restricting the seller from disposing of assets, incurring unusual liabilities, changing the capital structure or terminating key contracts are ordinary and acceptable. What crosses the line is a covenant that gives the acquirer control of the ordinary conduct of the business: approval rights over routine pricing, over day-to-day purchasing, over the appointment of ordinary staff, or over commercial decisions unconnected with the preservation of value. The test is preservation against direction: protecting the business is permissible, running it is not.

3. Related Penalties

Section 43A penalises failure to give notice under Section 6(2), with the base being the higher of total turnover, assets or the value of the transaction, a formulation adopted because a target may have negligible turnover and a very large price.
Section 44 penalises making a false statement or omitting to state a material particular in a combination notice, which is the provision engaged where the filing is made but is inaccurate.
The green channel declaration. Where a transaction is filed under the green channel and the declaration of no overlap proves incorrect, the filing is void ab initio and the transaction is treated as consummated without any approval, so the party is exposed under Section 43A notwithstanding that it filed.
Section 45 penalises furnishing false information or destroying or concealing documents generally.

4. Avoiding the Problem

Assess notifiability at signing, not at closing, and treat control as the question rather than the percentage.
Treat interconnected steps as one transaction and do not close any of them early.
Use a clean team for sensitive information during due diligence and integration planning, and record the arrangement.
Plan integration on paper without implementing it; preparing is permitted, doing is not.
Where notifiability is genuinely arguable, take pre-filing consultation or file, since the cost of a filing is far below the penalty base.

5. Related Topics and Provisions

Topic or provision	Connection
Regulation of Combinations: Sections 5 and 6	The notification obligation and the standstill
Control and Material Influence Compared	The question that decides notifiability
The CCI (Combinations) Regulations, 2024	Forms, the green channel and interconnected transactions
Sections 6(1), 6(2), 6(2A), 43A, 44 and 45, Competition Act, 2002	The provisions relied on here