Key Changes Made To COMESA's Merger Control Rules

Merger Control Guidelines Published by the COMESA Competition Commission

On 31 October the COMESA Competition Commission (CCC) published its first set of formal guidelines as to its merger notification requirements (the Merger Guidelines).

The CCC has been operational since January 2013 and is charged with enforcing the supranational competition regime of the Common Market for Eastern and Southern Africa (COMESA), a collection of 19 Member States, many of which do not have competition laws of their own (see below).

During this time, the CCC has begun enforcing a merger control regime which requires qualifying transactions to be notified for merger clearance within 30 days of the parties' decision to merge. The parties to a notifiable transaction are therefore entitled to close prior to receiving clearance, although in so doing they run the risk that the CCC subsequently finds the transaction to be anti-competitive and imposes remedies.

The existing regime has been criticised for being inflexible and overly burdensome. The notification requirement currently applies wherever at least one party to a transaction operates in two or more COMESA Member States. This, combined with the fact that the asset and turnover based thresholds were set at zero, has meant that many transactions with little or no nexus to the COMESA region are caught. The Merger Guidelines, which were drafted as part of a project sponsored by the World Bank to improve the COMESA competition regime, go some way to addressing this issue.

The new thresholds

The Merger Guidelines acknowledge that the CCC should only take jurisdiction over mergers with a "regional dimension" with a view to regulating only those transactions that are actually capable of having an appreciable impact on trade between COMESA Member States.

The new rules keep the requirement that at least one party "operates" in two or more Member States, but now state that, in order to "operate" in a Member State, an undertaking must have achieved annual turnover in that Member State for the most recent financial year of greater than US$5 million. In addition, the regional dimension test will not be met if:

a target company does not operate in at least one Member State; and the merger is not capable of having an appreciable effect on trade between Member States or does not restrict competition. This will be the case if more than 2/3 of the annual turnover of each of the merging parties in COMESA is achieved or held...