The long-awaited COMESA Amendments of 2015 allow the merger parties and their legal advisers to have working guidelines that enable them to calculate the notification Thresholds, process the valuation of parties’ assets and revenue, as well as the Filing Fees.
Despite the considerable clarifications the Amendments of 2015 bestowed on the merging parties and their legal advisers, there are still uncertainties: in particular regarding COMESA as a ‘One-Stop Shop’, as we have noted in our April 2014 update. As such, more legislative guidance is needed as to whether the COMESA will be a ‘one-stop shop’ or individual member countries will insist on separate notifications. Clearly, the running of a dual-notification is burdensome for all parties involved.
The Path to clarity
In our last update in April 2014 (See Link) we touched upon the uncertainties which were created by the original COMESA Competition Rules and COMESA Competition Regulations 2004 (Regulations) and the Draft Merger Assessment Guidelines in April 2013 (Draft Guidelines). These uncertainties have been addressed in the interim by CCC COMESA Merger Assessment Guidelines of 2014 (Revised Guidelines) published on 31 October 2014 (See Link).
In April 2015, the COMESA Competition Commission (CCC) announced that the new amendments to the COMESA Competition Rules (Amendments) have been adopted as a result of the COMESA Council of Ministers meeting held in Addis Ababa on 26 March 2015 (See Link). CCC confirmed that approval of the Amendments by the Council of Ministers brings the Amendments into force on the same date of the meeting i.e. on 26 March 2015.
It has also been reported that the merger notifications filed with the CCC soared by 239% in 2014 (44 filed) from 2013 (13 filed). The transactions covered a range of sectors: agriculture, electronics, energy, mining, insurance, pharmaceuticals and others. Hence, the adoption of the Amendments of 2015 is timely, and of no surprise, to accommodate any upcoming notifications following this trend.
The Aim of the Amendments of 2015
The key changes presented in the Amendments of 2015 aim to clear ambiguities in respect of:
- Determination of the merger notification thresholds (Thresholds)
- Merger filing fees (Filing Fees)
- Merger notification form (Form)
Key changes by the Amendments of 2015
CCC in response to criticism ensured that the Amendments of 2015 repealed, modified or went further beyond the interim changes of the Revised Guidelines. It is worth noting that in revising the Merger Control Rules the EU Competition Rules were consulted.
Notification Thresholds Increased
Zero Thresholds were removed in the Revised Guidelines making a merger only notifiable to CCC where:
- at least one merging party operates in two or more Member States (an undertaking “operates” in a Member State if it has annual turnover or value of assets in that Member State exceeding US $5 million);
- a target undertaking operates in a Member State;
- it is not the case that more than 2/3 of the annual turnover or value of assets in the Common Market of each of the merging parties is achieved or held within one and the same Member State.
The Thresholds in the Amendments of 2015 were increased. The merger is notifiable, where both the acquiring firm and the target firm, or either the acquiring firm or the target firm, operate in two or more Member States, if:
- the combined annual turnover or combined value of assets (of both/all parties in the merger), whichever is higher, in the Common Market equals or exceeds COM$ 50 million; and
- the annual turnover or value of assets, whichever is higher, in the Common Market of each of at least two of the parties to a merger equals or exceeds COM$ 10 million, unless each of the parties to a merger achieves at least two-thirds of its aggregate turnover or assets in the Common Market within one and the same Member State.
Filing Fees Decreased
In the Revised Guidelines, the Filing Fees were the greater of 0.5% of the parties’ combined annual turnover or assets with a ceiling of COM$ 500,000. The Amendments of 2015 have considerably lowered the Filing Fees to be the lower of:
- COM$ 200,000; or
- the higher of 0.1% of the parties combined annual turnover or value of assets in COMESA.
The Filing Form
A notification Filing Form, Form 12 on Notice of Merger, was also published for use by the notifying parties. The highlights to note from the Filing Form:
- It must be completed jointly by the parties.
- It is to be submitted to CCC as soon as practicable but not later than 30 days after the merging parties’ decisions to merge.
- CCC shall make its decision on the proposed merger within 120 days from the date a completed merger notification is received unless an extension is approved.
- Payment (Filing Fee) must accompany the Filing Form.
Implications of Failing to Notify CCC
Failure to notify CCC within 30 days carries a penalty of up to 10% of the parties’ combined turnover in the COMESA region as well as rendering the transaction unenforceable.
Other Changes – Four New Commissioners Elected
The adoption of the Amendments of 2015 also saw the elections and confirmation of four new Competition Commissioners, as follows:
- Amira Abdel Ghaffar – Egypt
- Merkebu Zeleke Sime – Ethiopia
- Georges Emannuel Jude Tirant – Seychelles
- Patrick Okilangole – Uganda
Author - Katherine Ramo