Decoding CSI: A New Pillar in India’s Merger Control Framework

Introduction

The Shape of Merger Control has started to change significantly as India’s competition regime matures. Traditionally, the Competition Commission of India (CCI) assessed mergers and acquisitions through the lens of structural overlaps i.e. horizontal integration among competitors, vertical integration across supply chains or conditions of joint control. However, recent regulatory practice and enforcement trends indicate the emergence of a new focus on non-structural factors, especially with the potential access to Commercially Sensitive Information (CSI). With a remarkable shift in form-based analysis, the CCI has been growingly interested in the content of the transaction. Such as whether even non-controlling financial investments can provide an acquiring company with strategic information into the inner workings of a competitor.

The merger control regime in India is becoming more globalized and is moving towards the global norms, where the emphasis is not on structural control but the risk of access to CSI. The mere ability to obtain pricing, customer or R&D information, even by minority stakes or board observer rights, can raise Appreciable Adverse Effect on Competition (AAEC) concerns. CSI is no longer marginal it is now at the center of compliance. With the enactment of Section 5 & Section 6 of the Competition Act, 2002, (Act), the CCI is now focused on the possibility that transactions, even those involving minority stakes or board observer rights, may result in sharing of CSI. This is an indication of replacing structural thresholds with protection against the possible flows of information that can cause AAEC issues, particularly in highly innovative sectors, or those with a small number of participants. In industries where there are few players or where innovation intensity is high, access to even small amounts of pricing or customer or R&D data can skew competition. CCI has started questioning the possibility of flow of information between competing parties through transactions especially in concentrated or innovation driven industries. This is an indication of a wider pledge to avoid not only anti-competitive arrangements, but also unhealthy knowledge transfers that may skew market realities.

In this blog, the author seeks to explore how CSI is influencing merger control in India by unpacking what constitutes CSI, its competitive significance, and the CCI’s shift from structural control to data access scrutiny, and the strategic implications that dealmakers must now account for during transaction planning.

Legal Evolution of CSI in Indian Merger Review

With the development of Indian merger control, the court and the regulatory practice have started to adopt a more sophisticated view of CSI marking a watershed event towards international best practice. Access to CSI is no longer viewed by the CCI as a side-issue, but as an independent source of regulatory concern. The shift was notably visible in the landmark rulings of ChrysCapital/Intas and Goldman Sachs/Biocon where the CCI raised issues about investors getting access to sensitive information, even without control. In ChrysCapital/Intas, the issue was that ChrysCapital had interests in other pharmaceutical firms, and its investment in Intas was to be accompanied by a board seat, which would allow ChrysCapital access to information that may be sensitive to competition. Likewise, in the case of Goldman Sachs/Biocon, CCI observed that Goldman Sachs was already a shareholder in Syngene which was a competitor of Biocon and the proposed investment was subject to board observer rights which could result in sharing of information. To avoid this, it stressed the need for strict information walls not just in boardrooms, but across day-to-day operations. The underlying rationale lies in the acknowledgement that such rights can allow investors to keep an eye or control business decisions of their competitors and therefore skew the business playing field.

The Indian approach is increasingly becoming similar to the developed antitrust jurisdictions. For instance, the European Commission considers premature access to CSI as a type of “gun-jumping”, where in it is a violation in which parties start to integrate or merging their businesses prior to the merger clearance. Gun-jumping negates the regulatory process because it enables companies to operate as one without the required consent thus it may distort competition within the concerned market. On the same note, the U.S. antitrust regulators, such as the Federal Trade Commission (FTC) and the Department of Justice (DOJ), have issued warning signs where passive investors also obtained access to sensitive strategy documents of their competitors particularly in concentrated or innovation-intensive markets such as pharmaceuticals, tech, and telecom.

What is notable in the Indian path is the instrumental change in the interpretation of the Competition Act, an interpretation that gives pre-eminence to the consequence of the flow of information rather than the traditional characteristics of control or shareholding. The courts and the CCI are no longer concerned only with the majority acquisition levels or the board seats but are posing more penetrating questions: Does the investor obtain valuable insights into a rival business? Is it possible that such access can alter market behaviour?

These interpretive changes not only bring Indian practice into line with international practice but also extend the compliance burdens of dealmakers. CSI is no longer a sidelined issue it has now become the focal point of how the CCI evaluates the competitive impacts of contemporary investment structures.

Mapping CSI: Where Sensitive Data meets Deal Design

CSI refers to more than just confidential business data it encompasses any strategic insight that, if accessed by a competitor, could alter the dynamics of market rivalry. It refers to strategic business data that, if accessed by a competitor, could affect how companies compete in the market. Recognizing this, the CCI, in its May 2025 FAQs, formally defined CSI as any information crucial to protecting or enhancing a firm’s market position It includes insights into pricing, customer plans, production capacity, sales and strategic decisions like market entry or exit. Hence the core idea remains that if information can shape competitive behaviour, its mere access may trigger standalone antitrust scrutiny.

The risk of CSI exposure does not hinge solely on formal control or board representation. Even more indirect arrangements such as board observer rights, quarterly reporting obligations, side letters, or shared service contracts may serve as conduits for competitively sensitive insights. In today’s deal-making environment, where financial investors frequently hold minority stakes in several competing companies, the sharing of sensitive information can raise serious antitrust concerns.

In line with this, deal teams should take initiative in conducting CSI-mapping exercises at the initial phases of transaction planning. It includes finding all structural or contractual factors that can enable access to strategic data and measuring its possible effects on competitive neutrality. The CCI has reinforced this approach in cases like General Atlantic/Acko Tech, Northern TK/Fortis, and Ruby/Singtel. In this way, the transacting parties are able to address not only regulatory risks but also to develop firewalls and address potential concerns from the CCI well in advance of the merger review process.

How CSI Skews Market Dynamics?

In the current more data-driven realm of competition, access to CSI is not a passive structural characteristic of investment it is a strategic weapon capable of influencing competitive outcomes in a subtle yet material way. This transition represents an increasing understanding that the structure of competition in the present day is as much informational as it is structural.

From a competition perspective, access to CSI can reduce the incentive for firms to compete actively. When competitors gain access to each other’s pricing methods, expansion strategies, or profit margins, it can lead to soft coordination. Companies may then avoid undercutting each other or pushing innovation too far. This results in a quieter, less competitive market. In this case, one investor who possesses insider information on the internal strategies of several competitors can unintentionally or otherwise affect market behaviour. This dulls competition and transforms competitive motives.

Unilateral harm occurs when a company gains access to a competitor’s pipeline or cost details and uses that information to gain an edge such as by lowering prices, delaying product launches, or quickly releasing similar offerings. This kind of strategic interference, especially common in tech and pharma sectors, doesn’t require explicit collusion. Even the possibility that it could affect how firms compete is enough for it to qualify as an AAEC under the law.

This expanded perspective on competitive harm is a product of a developed view of how markets operate in the modern world. The interest of the CCI in the CSI is connected with a global tendency in regulation when the material content of influence is more important than the form of control. This wider perspective of competitive harm is in line with the changing perception of CCI on the nature of influence in the current markets. Instead of only paying attention to formal control, the current emphasis is on the question of whether an investor or entity will gain access to CSI that can tilt the fair competition. Such a change coincides with the regulatory philosophy practiced everywhere, yet it also poses significant legal questions. Among them, the most important is how the CCI will evaluate investments made by the private equity funds in rival companies, or how it will regulate data-sharing platforms that can erase the lines between competitive enterprises

Risk Mitigation & Designing Deals: Managing CSI Early in the Deal

In India’s evolving merger control regime, managing access to CSI has become a central element of deal structuring. Transactions that fail to address CSI risks early on may face extended regulatory delays, reputational fallout, or even financial penalties. Proactive mitigation must begin at the pre-signing stage.

Comprehensive CSI audits should be undertaken before filing to identify every potential channel through which strategic data might be accessed whether via board observer rights, reporting covenants, shared services, or ancillary agreements. These insights must inform the architecture of the transaction. Structural safeguards such as eliminating observer seats, curbing information rights, limiting exposure to internal reports, and deploying clean teams and data firewalls must be embedded from the outset. It can be assumed that a clean team is a group of independent advisors or internal employees that are independent of commercial teams, who are separated from commercial teams and are bound by a strict level of confidentiality obligations. They are supposed to inspect sensitive information solely on the legal, regulatory or due diligence grounds and are allowed to make any business decision. This ensures that there is no misuse of the sensitive information between the merging parties.

Conclusion

The emergence of CSI as a pivotal point in merger control reflects a defining shift in India’s competition law landscape from a form-driven analysis of ownership and overlaps to a substantive, effects-based scrutiny. CSI is no longer a side issue but the centrepiece of regulatory evaluation that affects the viability and form of transactions.

This change brings Indian practice closer to the major antitrust regimes around the world that are outcome-oriented and not threshold-oriented. Regulators are increasingly seeing that the mere availability of strategic information, such as pricing, customer intelligence, and R&D development, can skew market forces even when there is no control or overlap. The increasing focus of the CCI on CSI is an intelligent appreciation that competition is not just being preserved by restricting shareholding but also by ensuring that there is no unwarranted information asymmetry.

This means that successful merger strategy in the todays time should incorporate a strong CSI framework, which identifies exposure points, incorporates specific mitigation procedures, and develops justifiable compliance narratives upstream.