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COMESA’S Competition Commission opens its doors for merger regulation – But are companies ready?

13th December 2012


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Mergers and acquisitions in the Common Market for Eastern and Southern Africa (COMESA) may now require notification to the COMESA Competition Commission. As of yesterday, the Commission indicated that is has opened its doors for business and that, in accordance with COMESA’s Competition Rules and Regulations, all mergers with a “regional dimension” - namely where both the acquiring firm and target firm, or either the acquiring firm or target firm, operate in two or more COMESA member states must be notified.

On 22 November 2012 the CC took a decision to publish a notice, which prescribes that the financial threshold which must be exceeded by the merging parties in order for a merger with a regional dimension to qualify for compulsory notification is zero Dollars. ie all transactions.

COMESA currently comprises 19 member states, namely Burundi, Comoros, the Democratic Republic of Congo, Djibouti, Eritrea, Ethiopia, Kenya, Libya, Madagascar, Mauritius, Rwanda, Seychelles, Sudan, Swaziland, Uganda, Zambia, Zimbabwe and the Republics of Egypt and Malawi, which collectively form the “Common Market”.

These developments at the Commission are likely to have a significant impact on companies doing business in some or all of these states because merging parties may now have to notify their transactions to the relevant COMESA member states separately, as well as to the regional Commission. Notification of such mergers to the regional authority must be given no later than 30 days after the parties decide to merge.
The COMESA Competition Commission was launched at the end of 2008 and has, up until now, been building capacity in order to give effect to its mandate and governing legislation, which applies to all economic activity within the member states and now most notably, to all mergers and acquisitions with a regional dimension in the Common Market.

It is essential that companies contemplating a cross-border merger transaction, in Eastern and Southern Africa, give careful consideration to whether they must notify COMESA’s Competition Commission of the deal. If they fail to do so, the merger will have no legal effect in the COMESA Common Market and, what is more, companies may face fines of up to 10% of their annual turnover in the COMESA Common Market for the previous financial year, as well as significant legal costs and negative publicity.

Written by Jason van Dijk, associate and Philippa Beasley, candidate attorney at Norton Rose in South Africa.



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