MERGER NOTIFICATIONS IN AFRICA IN LIGHT OF COVID-19
Several competition regulators, particularly in Europe, are discouraging parties from submitting merger notifications temporarily. The European Commission (EC) has encouraged companies to delay merger notifications originally planned until further notice, where possible, due to likely difficulties in collecting information from third parties (such as customers, competitors and suppliers) over the coming weeks, and the limitations that the EC may face following the remote working measures recently put in place. The Competition Commission of India has decided to adjourn matters listed for hearing, other than urgent matters, until 31 March.
With respect to Africa, as at the time of writing, we are not aware of any competition regulators suspending operations or discouraging merger notifications in light of COVID-19.
However, the unprecedented challenges brought about by the virus mean that the position of competition regulators across Africa will need to be reassessed over the coming weeks, particularly for time-sensitive transactions.
There are approximately 31 competition regulators (national and regional) operating in Africa and developments in key jurisdictions are being monitored closely by our Competition Practice. Highlights are as follows:
Botswana
The Competition and Consumer Authority (CCA) is functioning as usual. All merger notifications are being accepted and officials are working on site.
COMESA*
The COMESA Competition Commission (CCC), based in Malawi, is currently functioning as usual and officials are working on site.
Egypt
The Egyptian Competition Authority (ECA) is functioning as usual.
Kenya
Officials of the Competition Authority of Kenya (CAK) are working off site and are limiting face-to-face external meetings, but are expected to enable these to take place remotely via video or telephone conference where necessary/ possible. Merger parties are encouraged to file electronically.
Namibia
The Namibian Competition Commission (NaCC) is encouraging merger parties to file merger notifications electronically.
Nigeria
The Federal Competition and Consumer Protection Commission (FCCPC) is functioning as usual.
South Africa
The South African Competition Commission (SACC) is fully functional but has suspended external meetings and has relaxed its Service Standards’ (2015) timeframes, which are non-binding timeframes that the SACC seeks to achieve for the review of Phase 1 and Phase 2 mergers.
This means that non-contentious intermediate mergers that would ordinarily be reviewed within 20 business days may be subject to a far longer review period.
On 17 March 2020, the South African Competition Tribunal (the SACT) issued a directive which notes that the SACT remains open and that all matters currently on the SACT’s hearing roll will be heard as scheduled.
However, it is also noted that while the business of the SACT will continue to be conducted on its premises, if the South African President declares further restrictions that affect the SACT’s business, the practicality of virtual hearings will be considered.
Separate to mergers, on 19 March 2020, the Minister of Trade and Industry published the COVID-19 block exemption for the Healthcare Sector, 2020 regulations (Regulations).
The Regulations exempt certain agreements or practices in the healthcare sector in South Africa from the application of section 4 (restrictive horizontal practices) and section 5 (restrictive vertical practices) of the South African Competition Act, No. 89 of 1998 (as amended) (South African Competition Act) in response to the declaration of the COVID-19 pandemic as a national disaster in South Africa.
The Regulations apply to agreements or practices between (i) hospitals and healthcare facilities, (ii) medical suppliers, (iii) medical specialists and radiologists, (iv) pathologists and laboratories, (v) pharmacies, and (vi) healthcare funders.
Tanzania
The Tanzanian Fair Competition Commission (FCC) is functioning as usual.
Zambia
The Zambian Competition and Consumer Protection Commission (CCPC) is functioning as usual.
Practical Considerations
As the position of regulators evolves, COVID-19 may result in unplanned delays in obtaining merger clearance. Practical considerations, depending on the regime, include:
- pre-notification communications around a practical and preferred approach to the submission of merger filings in the prevailing circumstances;
- the viability of hold-separate or carve-out arrangements, where timing challenges arise; and
- the consequences of withdrawing a filing and re-notifying in circumstances where the review of a merger cannot be completed within statutory periods, even after available extensions.
A high-level summary of the merger review periods of regimes in Africa that are commonly impacted by foreign-to-foreign mergers is set out below.
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Botswana |
The merger control regime is mandatory and suspensory. The CCA is required to consider a proposed merger and make a determination within 30 calendar days from the date of receipt of a complete merger notification, subject to extension in circumstances where the CCA requests additional information, convenes a hearing, and/ or considers the merger to involve complex issues. |
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COMESA |
The merger control regime is mandatory and non-suspensory. In terms of the COMESA Competition Regulations, the CCC is required to consider a proposed merger and make a determination within 120 calendar days after receiving a complete merger notification, subject to any extensions granted to it by the Board of Commissioners of the CCC. |
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Egypt |
The merger control regime is mandatory and parties are required to submit a merger notification to the ECA within 30 calendar days of closing a transaction. There is no review period. |
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Kenya |
The merger control regime is mandatory and suspensory. In relation to applications for exclusion from Part IV of the Competition Act, No. 12 of 2010 (as amended) on merger notification, the CAK is required to make a determination within 14 days of receiving a complete application for exclusion. With respect to merger notifications, the CAK is required to provide its determination within 60 days of receiving a complete merger notification, subject to extension. |
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Namibia |
The merger control regime is mandatory and suspensory. The NaCC is required to consider a proposed merger and make a determination within 30 calendar days from the date of receipt of a complete merger notification, subject to extension in circumstances where the NaCC requests additional information, convenes a hearing, and/ or considers the merger to involve complex issues. |
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Nigeria |
'Large' mergers require mandatory notification to the FCCPC. A large merger cannot be implemented in Nigeria until the FCCPC has approved the merger with or without conditions. Under the Federal Competition and Consumer Protection Act, 2018, the FCCPC is required to consider a proposed merger and make a determination within 60 business days from the date of receipt of a complete merger notification, subject to extension. Notably, foreign-to-foreign mergers with a Nigerian component can be submitted for expedited review to the FCCPC upon payment of an additional fee. The expedited review period is 15 business days. |
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South Africa |
'Intermediate' and 'large' mergers require mandatory notification to the SACC. Intermediate and large mergers cannot be implemented in South Africa until the SACC or the SACT, as the case may be, approves the merger with or without conditions. Under the Competition Act, 89 of 1998 (South African Competition Act) the SACC has a maximum review period for intermediate mergers of 60 business days and neither the SACC nor the SACT is empowered to extend the legislated periods for intermediate mergers. The South African Competition Act provides for an extension of the review period of large mergers by the SACC or the SACT. |
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Tanzania |
The merger control regime is mandatory and suspensory. The FCC has an initial review period of 14 days, which can be extended by a further 90 days. |
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Zambia |
The merger control regime is mandatory and suspensory. The CCPC is required to consider a proposed merger and make a determination within 90 days from the date of receipt of a complete merger notification, subject to extension. |
This summary excludes African countries subject to a competition law regime that is in place, but not yet operational.
*COMESA comprises 21 member states: Burundi, Comoros, the Democratic Republic of Congo, Djibouti, Egypt, Eritrea, eSwatini, Ethiopia, Kenya, Libya, Madagascar, Malawi, Mauritius, Rwanda, Seychelles, Sudan, Somalia, Tunisia, Uganda, Zambia and Zimbabwe.