COMMON MARKET FOR EASTERN AND SOUTHERN AFRICA (COMESA)

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Content last updated: 20-03-2020

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  • Merger Control Regime
  • Merger Screening

1. Supranationality

1.1 Membership of Supranational Organization

1.1.1 Is the jurisdiction a member of/party to a supranational jurisdiction?

No.

1.1.2 Is the jurisdiction itself a supranational jurisdiction?

Yes.

The Common Market for Eastern and Southern Africa (COMESA) is a free trade area and is one of the pillars of the African Economic Community.

COMESA members: Burundi, the Comoros, the Democratic Republic of Congo, Djibouti, Egypt, Eritrea, Ethiopia, Kenya, Libya, Madagascar, Malawi, Mauritius, Rwanda, Sudan, Swaziland, Seychelles, Uganda, Zambia and Zimbabwe.

1.1.3 If the answer to Section 1.1.1 and/or 1.1.2 above is in the affirmative, what are the implications hereof?

The COMESA merger control regime is based on a "one-stop-shop" principle. This means that if the thresholds described in Section 2.3.1 under the Merger Screening Schedule are met, the transaction will only have to be notified to COMESA.

Consequently, the national authorities of the COMESA member states will as a general rule be precluded from applying their own merger control rules to the transaction.

However, this is not entirely supported by national law in every member state.

In member states where there is no established domestic competition authority there is generally not an issue, but in states where there is a competition authority, the issue becomes more complex and risky, since undertakings may face significant penalties for failing to notify a domestic authority.

Kenya, for instance, explicitly requires domestic notification. Only some other domestic authorities have confirmed that domestic notification is not required if COMESA is notified.

2. Nature of merger control regime

2.1 Mandatory or voluntary

2.1.1 Is filing mandatory or voluntary?

Mandatory.

2.2 Suspensory effect

2.2.1 Must completion of the transaction await clearance by the relevant authorities?

The transaction may be implemented prior to the merger review process being completed but after COMESA has been notified. A merger must be notified within 30 calendar days of the decision to merge, i.e. the conclusion of a definitive, legally binding agreement to carry out the merger (which may be subject to conditions precedent) or the announcement of a public bid.

1. What type of transactions are caught by the merger control regime?

1.1 Concentrations

1.1.1 Type of transactions that are caught by the merger control rules?

A transaction is caught by the merger control rules if it brings about a merger or a 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.

1.3 Definition of "control"

1.3.1 How are the concepts of "control" and "change of control" defined?

“Controlling interest” in relation to an undertaking is defined as any interest which enables the holder thereof to exercise, directly or indirectly, any control whatsoever over the activities or assets of the undertaking; and in relation to assets means any interest which enables the holder thereof to exercise, directly or indirectly, any control whatsoever over the assets.

“Control” is not defined in the regulations or the rules. The merger guidelines, however, provide that COMESA shall regard “control” as being constituted by rights, contracts or any other means which, either separately or in combination and having regard to the considerations of fact or law involved, confer the possibility of exercising decisive influence on the undertaking or asset concerned.

2. Establishing jurisdiction for notification of mergers

2.3 General thresholds

2.3.1 Threshold(s) for when a concentration must be notified under the general merger control regime?

Filing with the COMESA Competition Commission is needed if:

  • at least one of the undertakings concerned operates in at least two member states and has assets or turnover in each of those members states exceeding USD 5,000,000; and
  • a target undertaking operates in at least one member state and has assets or turnover exceeding USD 5,000,000 in at least one of those members states; and
  • the combined assets or turnover of the undertakings concerned in the common market amounted to at least USD 50,000,000; and
  • the assets or turnover of each of at least two of the undertakings concerned amounted to at least USD 10,000,000 in the common market; and
  • 2/3 or more of the assets or turnover in the common market of each of the undertakings concerned are/is not held or achieved within one and the same member state.

The acquirer may, alone or jointly with another acquirer, request a comfort letter determining that a merger is not notifiable because it would not have an appreciable effect on trade between member states or restrict competition in the common market.

COMESA members: Burundi, the Comoros, the Democratic Republic of Congo, Djibouti, Egypt, Eritrea, Ethiopia, Kenya, Libya, Madagascar, Malawi, Mauritius, Rwanda, Sudan, Swaziland, Seychelles, Uganda, Zambia and Zimbabwe.

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