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COMESA: PENALTY IMPOSED FOR FAILURE TO TIMEOUSLY NOTIFY A PROPOSED MERGER

By Tamara Dini,Nazeera Mia Tuesday, September 07, 2021
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For the first time since it started operating in 2013, the COMESA Competition Commission (Commission) has issued an administrative penalty for a merger-related contravention. Although the merger in this instance had not yet been implemented, the merging parties failed to notify the Commission of the merger within 30 days of the parties’ decision to merge – a requirement in terms of the COMESA Competition Regulations, 2004 (Regulations).

In terms of Article 24(1) of the Regulations, ‘a party to a notifiable merger shall notify the Commission in writing of the proposed merger as soon as it is practicable but in no event later than 30 days of the parties’ decision to merge’.

It transpired that in this matter, Helios Towers Ltd sought to acquire Madagascar Towers S.A. and Malawi Towers Ltd, and that a share sale and purchase agreement between the parties was executed on 23 March 2021 – the latter being viewed by the Commission as a ‘decision to merge’. The parties notified the Commission of the merger, but only on 2 July 2021, more than 30 days from the date of the decision to merge. 

In terms of the Regulations, failure to timeously notify a merger is an offence, and in terms of Article 24(2), such agreement shall have no legal effect and no rights or obligations imposed on the parties shall be legally enforceable in the Common Market. In addition, and in terms of Article 24(4), the Commission may also impose a penalty of up to 10% of either or both parties’ annual turnover in the Common Market in the preceding financial year.

The Commission has levied a penalty of 0.05% of the parties’ combined annual turnover in the Common Market, for the 2020 financial year. In arriving at the penalty, the Commission considered that:

  • the breach did not result in any loss or harm in the market;
  • the parties cooperated with the Commission; and
  • that the parties have no record of having previously contravened the Regulations.

The Commission’s decision in this matter signals a change in the enforcement regime. While the Commission initially adopted a soft stance in relation to the submission of merger notifications, it is clear that an era of stricter enforcement has begun.

Notably, however, in practice, where merging parties are unable to meet the 30-day deadline for notifying a merger, the Commission has been pragmatic by affording parties an extension of time to submit a complete merger notification, provided that the parties have engaged with the Commission on a ‘names basis’, indicating their decision to merge and confirming that a complete merger notification will be submitted as soon as possible.