WILL AFRICAN MERGERS
WILL AFRICAN MERGERS ANDACQUISITIONS BE AFFECTEDBY MORE REGULATION?New regional and continental competition regulators have been established. Is this good for M&Aor a cause for concern, ask Daryl Dingley, Partner, Gina Lodolo, Associate, and Elisha Bhugwandeen,Knowledge has been the target of a Lawyer proposed acquisition at Webber by Canal+. Wentzel?Competition laws are being enforced in most African countries. Several newnational and regional competition regulators have recently become operational,and plans are underway for the African Continental Free Trade Area agreement(AfCFTA) to harmonise competition law across the continent. While these arepositive developments to promote fair markets, the impact on mergers andacquisitions (M&A), particularly those involving foreign investment, is complex.The flurry of new competition regulators (national, regional and continental)may bring more convenience and consistency to the merger filing process, butthere are also concerns about political tensions, overlapping jurisdictions andhigh merger filing fees.There have been some regulatory developments in 2024, including theAfCFTA Competition Protocol being published. The protocol aims to establisha continental regulator who will assess merger transactions with a “continentaldimension”. The AfCFTA will apply to the whole continent, not just certainmember states. Regulations setting out merger thresholds are expected to befinalised soon.The ECOWAS Regional Competition Authority (ERCA) became fullyoperational in October 2024. The ERCA must be notified of mergers involvingparties that meet certain financial thresholds. The ECOWAS region comprises15 West African member states, including Gambia, Guinea, Guinea-Bissau andTogo. Military coups in member states such as Burkina Faso, Mali and Niger,which have led to their withdrawal from ECOWAS, also undermine the politicalstability of ECOWAS.The publication of draft COMESA Competition Commission (CCC)regulations proposes that the CCC enforce a suspensory merger control regime.This shift from the current suspensory regime, which allows parties to implementtheir transaction before CCC merger approval, means that merger parties mustnow first obtain approval from the CCC before implementation. The COMESAregion covers 21 African member states, including Egypt, Ethiopia, Kenya,Malawi, Mauritius, Uganda, Zambia and Zimbabwe.The East African Community Competition Authority is expected to beginaccepting merger filings soon. The East African Community (EAC) region24PHOTO: Multichoice
MERGERS AND ACQUISITIONScovers eight member states, including the Democratic Republic of Congo, Kenya,Rwanda, Tanzania and Uganda.From a national perspective, the Uganda Competition Act 2024 becameeffective, and merger thresholds were expected to be published in the same year.The Malawi merger-control regime changed its voluntary merger notificationrequirement to a mandatory requirement. Egypt also introduced a new mergercontrol regime requiring that mergers be submitted to the national competitionregulator for approval before implementation.Proliferation complicationHowever, many complications arise due to the proliferation of regional regulators,in contrast to the European Union (EU), where only the European Commission(EC) regulates competition law across the continent, with national competitionregulators across the EU recognising the EC’s jurisdiction.In Africa, several overlapping countries exist among regional regulators, andmost AfCFTA member states also belong to a regional competition regulator.For example, Kenya, Uganda and Rwanda are common member states acrossboth COMESA and the EAC – with all their member states also falling under theAfCFTA competition law regime.These overlaps may introduceconflicts when regulators exercisejurisdiction. This has been the casewith the Egyptian CompetitionAuthority and the Ethiopian Trade, Competition and Consumer ProtectionAuthority, who have taken the approach that merger parties should submit mergerfilings to it separately, even if a merger is submitted to the CCC. This approachcould result in increased transactional costs through duplication, from both atiming and resources perspective, including the possibility of paying merger filingfees to multiple competition regulators.The ECOWAS merger thresholds are also relatively low. Compared to the CCCcombined turnover thresholds of themerger parties, which is -million,the ECOWAS thresholds are almost halfat approximately -million. Reducedthresholds will lead to an increase inmerger filings where there may not bean impact on competition that requiresregulatory scrutiny.Increased competition law enforcementin Africa has potential positivedevelopments for M&A transactions.In some instances, submittingmerger filings to a regional regulatoraddresses the issue of navigatinguncertain competition law processes inindividual jurisdictions. For example,most Francophone countries in Africa have newly established competition lawregimes or no competition law. From a deal-planning perspective, this alsomeans that merger parties will ideally pay one merger filing fee to the regional(or continental) regulator and have more certainty on review timelines whenplanning towards closing transactions.Addressing these complexities requires a coordinated effort tostrengthen legal frameworks, enhance regional integration, andbuild the capacity of competition regulators across Africa.However, some regional competition regulators, such as the CCC, allowmember states to call for national review of transactions. The ability of nationalregulators to exercise concurrent jurisdiction can create deal uncertainty. Thishas recently been seen in the Canal+ proposed acquisition of Multichoice,wherein the Competition Commission of Mauritius requested a referral of themerger to it, and in the CCC’s approval of a merger involving Access Bank Plcand National Bank of Kenya Limited, which was referred to the CompetitionAuthority of Kenya for approval, separately to the CCC’s determination.It will be necessary for the various competition regulators to align theirapproaches. African competition regulators, both nationally and regionally, areincreasingly demonstrating continental integration and an ability to learn fromeach other. Newer competition regulators should learn from the best practices ofmore established regulators. For example, the ECOWAS competition regulator isencouraged to adopt a similar approachto the CCC with regard to merger filingfees. While the merger filing fees inCOMESA and ECOWAS are 0.1% ofthe merging parties’ combined annualturnover or assets in the common market, COMESA has capped the fee at 0000. In contrast, the ECOWAS filing fee is uncapped. This may raise seriousconcerns for merger parties with substantial turnover across the ECOWASmember states.Addressing these complexities requires a coordinated effort to strengthen legalframeworks, enhance regional integration, and build the capacity of competitionregulators across Africa without losing sight of the need for increased investmentand economic growth.Daryl Dingley Gina Lodolo Elisha Bhugwandeen25
