In a previous article, titled, "A refreshed competition act ushers in a new dawn for competition law in Malawi", we highlighted the significant changes brought about by the new Competition and Fair Trading Act No. 20 of 2024 (the "Act"), which came into effect on 1 July 2024 in Malawi. Among its key reforms, the Act introduced a suspensory merger control regime in Malawi – a major shift from the previous non-suspensory approach. At the time, however, the Act did not set out certain practical guidance (including, inter alia, the prescribed financial merger thresholds applicable to notifiable transactions), leaving businesses and competition law practitioners uncertain as to the operational status of the Malawian merger control regime.
To some extent, this uncertainty has now been resolved. Through Government Notices No. 76 and No. 77 of 2024, the Minister of Trade and Industry recently published financial thresholds for mandatory merger notifications and outlined the fees payable to the Malawi Competition and Fair Trading Commission ("CFTC"), marking a critical regulatory development for businesses operating in or those investing in Malawi.
New Merger Notification Thresholds
Under the Competition and Fair Trading (Thresholds for Proposed Mergers) Notice, 2024 (Government Notice No. 77 of 2024), a merger, takeover, or acquisition, which is defined as occurring when:
"one or more enterprises directly or indirectly acquire or establish direct or indirect control over the whole or part of the business of another undertaking..."
– must be notified to the CFTC if it meets either of the following financial thresholds:
- The combined annual turnover or combined value of assets [presumably of the merging parties], whichever is higher, in, into, or from Malawi, equals to or exceeds MWK 10 billion (approximately USD 5.7 million / ZAR 105 million); or
- The annual turnover of a target undertaking, in, into, or from Malawi, equals to or exceeds MWK 5 billion (approximately USD 2.8 million / ZAR 53 million).
This means that any transaction meeting the definition of a merger and exceeding these financial thresholds will require prior approval from the CFTC before implementation.
Merger Filing Fees
In addition to setting merger notification thresholds, the Competition and Fair Trading (Fees) Regulations, 2024 (Government Notice No. 76 of 2024) introduced a new fee structure for merger filings. The merger filing fee payable to the CFTC is now set at 0.5% of the combined annual turnover or total assets of the merging parties derived from Malawi, whichever is higher.
Implications for Businesses
Firms engaging in transactions that meet or exceed these thresholds should not lose sight of the CFTC's increased sense of regulatory oversight. In this regard, the new Act grants the CFTC authority to impose an administrative order for the implementation of a notifiable transaction that has been implemented without having obtained the CFTC's prior approval to do so. Additionally, if the CFTC becomes aware of a notifiable transaction being implemented without formal approval, it now has the authority to intervene. The CFTC may apply to the High Court of Malawi for a cease and desist order or any other interim order to prevent the transaction from proceeding prior to receiving the CFTC's approval. From a merger and anti-competitive practice perspective, businesses are advised to monitor the investigations and decisions resulting from the CFTC over the coming months, to ensure compliance with the new regime.
Conclusion
These regulatory changes mark a significant step in the modernisation of Malawi's competition law framework, bringing greater transparency and predictability to merger control processes. Firms operating in Malawi or considering acquisitions within the jurisdiction should ensure full compliance with these new notification requirements and fee structures to facilitate smooth transactions and avoid statutory sanctions.
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.
