Introduction

Mergers and Acquisitions (M&As) have been a distinctive feature of the dynamics of the world economy since the late nineteenth century. However, it is only in the recent past, particularly since the onset of globalisation, that they have become a regular phenomenon in developing countries. Apparently, the new international trading environment, Trade Related Intellectual Property Rights (TRIPs), and the Trade Related Investment Measures (TRIMs) across member nations of the World Trade Organization (WTO) have contributed to Cross-border Mergers and Acquisitions (CBM&As). Local content requirements and measures to control the levels of import and export in foreign-owned firms are considered to be restrictions of trade under the new TRIMs agreement. Safeguard measures have been given to local producers only under a situation in which a rise in imports threatens ‘serious injury’ to domestic industry.1 Similarly, the scope for copying and modifying foreign technology as part of the national industrial programme is significantly reduced under the new agreement on TRIPs. This new agreement states that patent protection must be available for inventions at least for 20 years, while industrial designs could be protected for 10 years. ‘Compulsory licences’ can be allowed by the government to competitors to produce products only if the holders of the patents or protected design abuse their rights by refusing to supply a product in the domestic market. The remarkable feature of the present wave of M&As at the global level is that it includes many CBM&As2 and is propelled by a different set of forces such as opening up of Foreign Direct Investment (FDI), financial liberalisation and technological advancement, including information and communication. Significant amount of inflow or outflow of FDI has taken place at the global level through CBM&As. Firms from developed countries are

increasingly acquiring firms in the developing world in order to strengthen their market dominance. The trend of developing country firms acquiring developed country firms has also caught up in recent times. It is argued that the potential for monopolistic behaviour and restrictive practices would continue to exist in the liberalised business environment in the integrated global economy (Singh 1999; Evenett 2002).