Worldwide: Key Changes Made To COMESA's Merger Control Rules

Last Updated: 13 November 2014
Article by Alex Haffner and Emmanuelle van den Broucke

Merger Control Guidelines Published by the COMESA Competition Commission

On 31 October the COMESA Competition Commission (CCC) published its first set of formal guidelines as to its merger notification requirements (the Merger Guidelines).

The CCC has been operational since January 2013 and is charged with enforcing the supranational competition regime of the Common Market for Eastern and Southern Africa (COMESA), a collection of 19 Member States, many of which do not have competition laws of their own (see below).

During this time, the CCC has begun enforcing a merger control regime which requires qualifying transactions to be notified for merger clearance within 30 days of the parties' decision to merge. The parties to a notifiable transaction are therefore entitled to close prior to receiving clearance, although in so doing they run the risk that the CCC subsequently finds the transaction to be anti-competitive and imposes remedies.

The existing regime has been criticised for being inflexible and overly burdensome. The notification requirement currently applies wherever at least one party to a transaction operates in two or more COMESA Member States. This, combined with the fact that the asset and turnover based thresholds were set at zero, has meant that many transactions with little or no nexus to the COMESA region are caught. The Merger Guidelines, which were drafted as part of a project sponsored by the World Bank to improve the COMESA competition regime, go some way to addressing this issue.

The new thresholds

The Merger Guidelines acknowledge that the CCC should only take jurisdiction over mergers with a "regional dimension" with a view to regulating only those transactions that are actually capable of having an appreciable impact on trade between COMESA Member States.

The new rules keep the requirement that at least one party "operates" in two or more Member States, but now state that, in order to "operate" in a Member State, an undertaking must have achieved annual turnover in that Member State for the most recent financial year of greater than US$5 million. In addition, the regional dimension test will not be met if:

  1. a target company does not operate in at least one Member State; and
  2. the merger is not capable of having an appreciable effect on trade between Member States or does not restrict competition. This will be the case if more than 2/3 of the annual turnover of each of the merging parties in COMESA is achieved or held within one and the same Member State.

Comfort letters and pre-notification consultation

Prior to issuing the Merger Guidelines, an informal practice had been developed by the CCC by which it made itself available to discuss with merging parties whether or not their transaction had an appreciable impact on COMESA competition and, in appropriate circumstances, issued "comfort letters" exempting a transaction from the need for a full notification.

The Merger Guidelines now formalise this policy and set out a more formal process by which any party to a transaction can submit a reasoned request for a comfort letter including any information or supporting documentation deemed necessary.  Such requests are kept confidential by the CCC, which will respond within 21 days after receipt of the request.

The Merger Guidelines specifically state that, in the absence of any countervailing factors, the CCC will not regard a transaction as having any appreciable effect on COMESA competition if the parties satisfy the 2/3 rule set out above. The Merger Guidelines do not expressly state whether or not the CCC would be prepared to issue a comfort letter in any other circumstances. However, it does not rule this possibility out either and therefore there may be scope for parties to seek a comfort letter irrespective of the application of the 2/3 rule.

As well as the comfort letter procedure, the Merger Guidelines also explain that the CCC is willing to engage in pre-notification discussions with merging parties in order to deal with specific issues that may speed up the notification process and/or enable the parties to decide whether they need to notify in the first place. Given that the CCC merger regime remains in its formative stages and there is limited precedent for parties to rely on, this is clearly a useful development.

Other points covered by the Merger Guidelines

Other than the changes referenced above, the Merger Guidelines broadly confirm the CCC's existing practice, although they explain that practice in further detail. In particular the Merger Guidelines confirm that the type of transaction covered by the rules is any acquisition of direct or indirect "control" over another undertaking. The definition of control for these purposes mirrors that used by the European Commission under the EU Merger Regulation.

This will therefore include the acquisition of a minority interest in another undertaking if this gives the holder the ability to veto decisions which are important to determining that undertaking's commercial behaviour. Examples given in the Merger Guidelines include a veto over the appointment of senior management, strategic commercial policy, the budget or the business plan. So-called full function joint ventures (those set up by their parents to operate autonomously on the market for a sustainable period) are also caught.

The substantive test applied by the CCC for purposes of assessing a merger remains whether or not a notifiable transaction gives rise to a "substantial prevention or lessening of competition". The Merger Guidelines give a useful steer on how the CCC would expect to apply this test in practice, based on a comparison of the competitive situation in the light of the merger as against that which would exist without it (known as the "counterfactual").

Further changes imminent

One key issue which has not been dealt with by the Merger Guidelines is that of the filing fee payable on notification.  At present, the level of the fee is extraordinarily high by international standards - set at the higher of 0.5 per cent of the parties' combined annual turnover and the value of their assets in the COMESA region with a fee cap of US$500,000.

When it announced a review of the merger rules, the CCC made clear that it would also be looking at the way filing fees are calculated. No such changes have been made in the Merger Guidelines. However, this appears to be more a matter of process than substance. Any such amendments would need the separate approval of the COMESA Council of Ministers and it is understood that such approval is unlikely to take place until February 2015 at the earliest. It is also possible that the Council will at the same time be asked to consider further changes to the financial thresholds for notification.

Otherwise, the CCC is dedicating more resources to enforcing its rules. It has already stated that it fully intends to penalise parties that do not comply with the merger notification requirements, if only to set an example for others to follow. Any notifiable merger that is carried out in contravention of the merger control rules will have no legal effect in the Common Market and parties may also be liable for a fine of up to 10% of their annual turnover in the Common Market. Those undertaking transactions with any COMESA dimension will need, therefore, to pay close attention to the CCC's regime as it develops further.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Events from this Firm
6 Sep 2018, Business Breakfast, Glasgow, UK

Decarbonising our heat is a key component of The Scottish Energy Strategy and an essential piece of the complex matrix we must tackle if we are to meet our climate change obligations.

11 Sep 2018, Business Breakfast, Milton Keynes, UK

Join us for our next development breakfast round table event reflecting on the on-going planning discussion regarding the Oxford-Cambridge corridor and helping you consider how best to cash in on the exciting opportunities by considering the benefits of promotion and option agreements.

20 Sep 2018, Seminar, London, UK

Environmental regulation and liability have risen up the boardroom agenda over the past decade. Recent changes to environmental sentencing have brought this area of risk even more into focus.

Similar Articles
Relevancy Powered by MondaqAI
King & Wood Mallesons
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
King & Wood Mallesons
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions