Recognising that anti-competitive behaviour is likely to prevent
economic growth, efficiency and trade liberalisation in its member
states, the Common Market for Eastern and Southern Africa recently
launched a regional Competition Commission to promote fair
competition within the common market across its member states.
COMESA comprises member states Burundi, Comoros, the Democratic
Republic of Congo, Djibouti, Eritrea, Ethiopia, Kenya, Libya,
Madagascar, Mauritius, Rwanda, Seychelles, Sudan, Swaziland,
Uganda, Zambia, Zimbabwe and the Republics of the Egypt and
Based in Blantyre in the Republic of Malawi, the COMESA
Competition Commission is tasked with the enforcement of fair trade
practices and the eradication of abuse of dominance and cartel
behaviour by certain firms in the common market. Most notably, the
Commission may also investigate conduct that, whilst falling
outside of the common market, may nonetheless have an impact on
trade between member states.
Prior to the establishment of the Commission, COMESA enacted
Competition Rules and Regulations governing both the Commission and
its operations, as well as conduct within the common market and
competition related matters that have an effect on trade between
member states. The Regulations include provisions for the
Commission to be notified of mergers in certain instances, failing
which, such mergers will not be legally enforceable in the common
market and the parties may be liable for a fine of up to ten per
cent of both merging parties' annual turnover in the common
'Notifiable Mergers', in terms of the Regulations, occur
when the acquiring and target firms to a proposed merger, or either
the acquiring or the target firm, operate in two or more COMESA
member states. In addition, the combined annual turnover or asset
value of the firms must exceed the specified threshold provided for
in the Regulations. Notwithstanding the fact that a firm to a
merger transaction may operate in a jurisdiction that is not a
member state of COMESA, if the other party to the transaction is
operative in two or more member states, notification to the COMESA
Commission is obligatory if the financial threshold values are met
by the transaction.
Examples of mergers that would be notifiable in terms of the
Regulations would include a firm operating in Germany for instance,
that would have to notify the Commission of its intended
acquisition of a firm that is operative in both Kenya and Mauritius
(provided the financial thresholds are met), albeit that Germany is
not a member state of COMESA. Alternatively, a merger transaction
that meets the financial thresholds, whereby a firm that operates
in Ethiopia and Libya wishes to acquire a firm with a South African
presence, would also constitute a notifiable merger.
Due to the fact that the Regulations have such a far-reaching
impact on business in Africa, and in particular those provisions
pertaining to merger transactions, African jurisdictions that are
not COMESA member states may not necessarily escape the
Regulations. It is imperative that firms, when proposing to merge
with a firm operative in any African country (irrespective of
whether that country is a member state of COMESA), must have regard
to the Regulations, lest the merger should be notifiable. Failure
to do so may render the merger and any consequent rights and
obligations of no legal effect within the COMESA member states and
may result in a substantial fine being imposed.
Whilst many COMESA member states have moved towards developing
and further implementing domestic competition legislation, many
member states, for various reasons, only have fledgling competition
authorities and are therefore often unable to adequately implement
legislation targeting anti-competitive behaviour. However, with the
launch of COMESA's Competition Commission, firms may not be
able to escape compliance with competition law principles and
engage in anti-competitive conduct.
It is clear that doing business in the African landscape is
rapidly changing and the need to be able to adapt to and address
new business issues is becoming imperative. Continually recognised
as the African leader in competition law, South Africa, with its
fully functional competition authority, has legal experts who are
well versed in competition law principles and who will certainly
play a major advisory and integrated role in the development and
application of competition law throughout the African arena, and
perhaps be the key to unlocking Africa's business
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guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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