On 14 January 2013, the Competition Commission for
the Common Market for Eastern and Southern Africa (COMESA) became
operational, bringing into effect a new supra-national competition
law regime for much of Africa. The new regime includes new
merger control regulations under which the COMESA Competition
Commission (CCC) will operate as a one-stop shop for transactions
with a regional COMESA dimension. However, with costly filing
fees, lengthy periods of review and heavy penalties for
non-compliance, the new regime is likely to have a significant
impact on international and regional transactions. In the
absence of any clear guidance, companies in the region and beyond
should proceed with caution.
COMESA comprises the following member states:
Burundi, Comoros, the Democratic Republic of Congo, Djibouti,
Egypt, Eritrea, Ethiopia, Kenya, Libya, Madagascar, Malawi,
Mauritius, Rwanda, Seychelles, Sudan, Swaziland, Uganda, Zambia,
In December 2004, the Competition
Regulations were adopted. The Regulations include the
establishment of a new merger control regime with effect on 14
January 2013. Almost all transactions with a connection to
the 19 Eastern and Southern African states that are members of
COMESA now have to be notified to the CCC.
The key features of the new merger control regime
- Any merger or acquisition where at least one of the parties
operates in two or more COMESA member states must be notified to
the CCC where the transaction has “an appreciable effect
on trade between Member States and which restricts competition in
the Common Market”. As mentioned below, it is
unclear what the term “operating” means for this
purpose. This means that some transactions will be notifiable
even where the target has no presence in a COMESA state.
Non-notifiable mergers may also be reviewed at any time by the CCC
at its request.
- Filings are mandatory and must be made within 30 days of the
decision to merge. Each party must individually submit a
notification to the CCC. Each party must pay a filing fee of
the lower of either (a) US$500,000 or (b) the higher of 0.5% of the
parties’ combined annual turnover or combined value of assets
in the COMESA region. The maximum fee of US$500,000 is almost
twice that of the next most expensive regime, the United States, at
- Completion of a transaction must be suspended pending
- The CCC Merger Form requires extensive information to be
supplied. Merging parties will have to provide information on
their business activities and the products or services that form
part of the transaction.
- Should a party wish to keep certain information confidential,
they must complete a form identifying the confidential information
by page, paragraph and line number, explain the information’s
economic value, and provide a justification for the
confidentiality. The CCC will then decide whether to grant
confidentiality or not. By all accounts, this process may
prove to be burdensome and costly.
- The CCC will have 120 days from receipt of a complete
notification to reach its decision. This timeframe may be
extended. At present there is no alternative simplified
procedure for very minor transactions.
- The CCC will reach its decision based on a two-fold test.
First, the CCC will consider whether the merger “is likely
to substantially prevent or lessen competition”.
Second, the CCC will assess (i) whether the merger will produce
benefits greater than its anti-competitive effects; and (ii)
whether it can be justified on public interest grounds.
- Failure to notify carries a fine of up to 10% of the
parties’ aggregate annual turnover in the COMESA region for
the preceding financial year, and may result in any merger being
declared null and void in the COMESA region.
- Appeals are available to “aggrieved parties”
via complaint to the Board of Commissioners, another competition
body alongside the CCC. However, precise details of the
appeals procedure, and who may constitute “aggrieved
parties”, have not yet been given.
The announced requirements seem to have caused more
uncertainty than clarification. Some of the fundamental
issues requiring elaboration include whether COMESA member
states’ own competition authorities will have to be notified
as well as the CCC. At present eight members of COMESA have
their own national merger control regimes which involve merger
control filings - Burundi, Egypt, Kenya, Malawi, Mauritius,
Swaziland, Zambia, and Zimbabwe.
COMESA member states may request the CCC to refer
back part of, or the entire, transaction where the merger is likely
to disproportionately reduce competition to a material extent in
all or part of that member state. The CCC will have 21 days
following receipt of the request to decide whether to refer the
transaction, in whole or in part, to that relevant state authority,
or to retain the matter itself. This creates the potential
for multiple, parallel investigations.
Some of the terminology and definitions used in the
regulations require clarification. For example, the crucial
concept of operation in two or more Member States is unclear.
Will this only be triggered by a physical presence in the region,
or would any activity or interest be sufficient? There are
hints of further guidance being provided, however, it is unclear as
to if/when this will happen.
Reforms to wider competition
Even if notification is not required under the
merger control regulations, companies should still bear in mind the
reforms to the wider competition regime. This regime involves
behavioural prohibitions which are subject to financial penalties
and which have a discretionary exemption for ventures designed to
improve “the production or distribution of goods
or… technical or economic progress” and providing
consumers with “a fair share” of the
technological or economic benefits. The award of this
exemption is entirely at the CCC’s discretion. For the
avoidance of doubt, these behavioural prohibitions do not require
prior notification for clearance.
Whilst there is much about COMESA’s new
merger regime that remains unclear, it is certain that companies
entering into any form of transaction or agreement in the African
region must take careful heed of this new regulation. The
impact on the timing and cost of transactions in the region will be
In addition, companies with agreements in place may
wish to re-evaluate these arrangements, and seek advice on whether
they are compliant with the regime or will require an application