New Delhi, Dec 1 (IANS): Mergers and acquisitions need to be encouraged to promote larger domestic companies but the country's fair trade watchdog also needs to understand the limits while implementing competition law, Finance and Corporate Affairs Minister Arun Jaitley said Monday.

"When our own corporates are of moderate size, mergers, acquisitions and consolidation need to be encouraged to promote size. So when it is that we draw the red line?" Jaitley asked at the inaugural of the International Competition Network merger workshop organised here by the Competition Commission of India (CCI).

The CCI is becoming "extremely mature" in this regard, Jaitley said, adding there was a need to apply the "principle of proportionality" while implementing competition law.

"What are the kind of consequences and penalties that we impose in the larger implementation of the law?"

Jaitley said the question of jurisdiction was emerging in common turf issues on account of multiple regulators.

"If two telecom majors are to amalgamate, will there be common turf areas between the telecom regulator and market regulator CCI? Therefore, how do you build the jurisdiction of the two? Obviously jurisdiction in this area is emerging," he said.