Frequently Asked Questions

Yes: The COMESA Competition Regulations (“the Regulations”) and the COMESA Competition Rules (“the Rules”) regulate mergers and acquisitions with cross-border effect in COMESA. The Regulations and Rules are administered by the COMESA Competition Commission (“the Commission”).

No: However, the Commission has since 31 October 2014 developed the COMESA Merger Assessment Guidelines (“the Guidelines”). The Guidelines provide the approach the Commission takes when applying the Regulations and Rules pertaining to merger assessment. It should also be pointed out that the Guidelines are not law and therefore not binding on the Commission. This notwithstanding, the Commission does not blatantly depart from them but may do so only in exceptional circumstances with clear justification.

Yes: The Regulations call for the mandatory notification of mergers and acquisitions that satisfy the requirements of Part 4 of the Regulations. Among these requirements are:

• The definition of a merger under Article 23(1) of the Regulations
• Both the acquiring firm or the target firm or either the acquiring firm or the target firm operate in two or more Member States under Article 23(3)(a)
• The exceeding of the prescribed thresholds as required under Article 23(3)(b)

Article 24 of the Regulations makes it mandatory to notify mergers that meet the above requirements.

A “merger” is defined as the direct or indirect acquisition or establishment of a controlling interest by one or more persons in the whole or part of the business of a competitor, supplier, customer or other person. Therefore, in order to be notifiable, a transaction should fall within the above definition. In simple terms, a merger is constituted whenever two or more previously independent undertakings begin to operate as one in the market.

Not all mergers that satisfy the definition above are notifiable to the Commission but only those that involve parties with operations in two or more Member States and meet the prescribed thresholds. The thresholds are met where:

• the combined annual turnover or value of assets (whichever is higher) in the Common Market of all parties to a merger equals or exceeds US$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 US$10 million, unless each of the parties to a merger achieves two-thirds of its aggregate turnover or assets in the Common Market within one and the same Member State.

The thresholds are enshrined under Rule 4 of the Rules on the Determination of Merger Notifications and method of calculations.

Yes: the Commission is transparent at all stages of the merger procedure. The Commission is open to engagement with the parties before they notify a merger, during the assessment of the merger until the decision is issued.

A merger must be notified to the Commission within 30 calendar days of the parties’ decision to merge.

The Commission considers that a decision to merge must either be

• a joint decision taken by the merging parties and so comprise the conclusion of a definitive, legally binding agreement to carry out the merger (which may or may not be subject to conditions precedent); or
• the announcement of a public bid in the case of publicly traded securities.

A merger that has not been notified to the Commission has no legal effect and no rights or obligations imposed on the participating parties by any agreement in respect of the merger will be legally enforceable. In addition, the Commission may impose financial penalties of up to 10% of either or both of the merging parties’ annual turnover in the Common Market.

Yes: the COMESA merger control regime is non-suspensory and parties may implement their merger before approval is granted and after notification has been made. However, caution should be exercised as the parties may implement the merger at their own peril should the Commission decide to reject their merger after assessment.

Yes: a merger notification fee is required for merger notification. The merger notification fee is calculated as 0.1% of the merging parties’ combined annual turnover or value of assets in the Common Market (whichever is higher) with a cap of US$ 200 000. Rule 55(5) of the COMESA Competition (Amendment) Rules, 2014 provides for this.

The Commission has up to a 120 calendar days within which to give its decision on a merger. This period may in some exceptional circumstances be extended if the Commission decides a longer period is necessary. In these circumstances, the Commission shall inform the parties of such an extension.

Yes: it is possible where the Commission refers such a case to a Member State. A Member State having attained knowledge of merger notification submitted to the Commission may request the Commission to refer the merger for consideration under the Member State’s national competition law if the Member State is satisfied that the merger, if carried out, is likely to disproportionately reduce competition to material extent in the Member State or any part of the Member State. It is important to note that the Commission shall consider such a request and decide whether or not to refer the case to the requesting Member State.

After the assessment of the merger, the Commission may issue the following decisions:

• Approve the merger unconditionally
• Approve the merger with conditions
• Reject the merger

Breaching the conditions of approval of a merger will render the merger illegal and no rights or obligations imposed on the participating parties by any agreement in respect of the merger shall be legally enforceable in the Common Market