As reported in our briefing
COMESA's Competition Commission commences operations the
COMESA Competition Commission (CCC) has started to enforce its
competition rules and to accept merger control filings since 14
January 2013 for the 19 eastern and southern African states that
are members of COMESA. In the two weeks since enforcement has
commenced, there have been significant developments in relation to
the following issues:
the nature of the CCC's jurisdiction over transactions with
a regional dimension and whether national authorities will retain
the question whether COMESA's merger control regime is
the CCC's intentions regarding the calculation of merger
'Jurisdictional turf war' looming
As reported in our briefing, the CCC is working on the
assumption that it will have exclusive jurisdiction over
transactions meeting COMESA's merger control test, subject to
the possibility of a 'referral back' request by a COMESA
national competition authority. However, COMESA's Competition
Regulations are stated to have only 'primary jurisdiction'.
It is unclear therefore whether COMESA's national competition
authorities will retain (parallel) jurisdiction over transactions
with a regional dimension, over and above the right to request a
referral. For example, Kenya's competition authority is
reported to be seeking to clarify the extent of the CCC's
jurisdiction and the interaction between COMESA's competition
rules and Kenya's competition rules. In the meantime,
Kenya's competition authority is reported to be advising
parties to continue to apply Kenya's merger control rules and
therefore to file transactions to the Kenyan Competition Authority,
in addition to any COMESA filing.
Uncertainty over merger suspension obligation
The CCC states in its merger filing form that merging parties
may not implement a transaction until it has been approved and that
implementation prior to clearance may attract fines of up to 10 per
cent of aggregate turnover in the COMESA region. As reported in our
initial briefing, there is some uncertainty in this respect. This
is because COMESA's Competition Regulations do not explicitly
provide that merging parties must suspend completion of their
transaction prior to receipt of approval or that fines should be
imposed for implementing prior to clearance. The upcoming COMESA
Merger Assessment Guidelines 2013 – which are referred to in
the merger filing form but which have not been made public yet
– may shed further light on this issue.
CCC clarifies its intentions over calculation of merger filing
As a result of the confusion created from the drafting of
COMESA's rules on merger filing fees, senior officials at the
CCC have clarified to us that the CCC intends to apply the USD
500,000 filing fee as a maximum fee. As a result,
the CCC would calculate the filing fee as follows: (i) the
higher of 0.5 per cent of the parties' combined annual
turnover or combined value of assets in the COMESA region; and then
(ii) the lower of the result in (i) and COM$ 500,000 which
is equivalent to USD 500,000.
For example, company A – which operates in three COMESA
member states – and company B are planning to merge. Company
A has combined turnover and assets in the COMESA region of USD 10m
and USD 15m respectively. Company B has combined turnover and
assets in the COMESA region of USD 70m and USD 50m respectively.
The merger filing fee will be calculated as follows: (i) the higher
of 0.5 percent of 80m (turnover) and 65m (assets), ie USD 400,000;
and then (ii) the lower of USD 400,000 and USD 500,000. As a
result, in this example, the filing fee will be USD 400,000.
The CCC's proposal for calculating filing fees would
somewhat alleviate the financial burden for those merging parties
with combined turnover or assets in the COMESA region below USD
100m. Nevertheless, the financial burden will clearly continue to
Further clarification on these and other points of
interpretation are likely to be provided in the near future as the
first transactions are notified to the CCC. We will continue to
monitor and report on significant developments.
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guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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