United States: COMESA Competition Commission: African Merger Notification Comes Of Age

In November 2012, the COMESA Competition Commission (the Commission) approved guidelines that require notification to the Commission if a merger or other transaction involves two or more member states. The new guidelines implement a set of rules originally adopted in 2004. COMESA, the "Common Market for East and Southern Africa," is a free trade union made up of 19 member states throughout much of Africa, and constitutes a market of more than 400 million people. The COMESA member states are Burundi, Comoros, the Democratic Republic of Congo, Djibouti, Egypt, Eritrea, Ethiopia, Kenya, Libya, Madagascar, Malawi, Mauritius, Rwanda, Seychelles, Sudan, Swaziland, Uganda, Zambia, and Zimbabwe.

Under the new guidelines, notification is required whenever at least one of the parties involved in the transaction (either acquiring or acquired party) operates in two or more of the COMESA member states. The filing must be made within 30 days of a decision to enter into a transaction, and the Commission has a 120-day deadline to review the transaction, although this may be extended at the discretion of the full Commission. Until the deal is approved, the parties may not close the transaction.

The guidelines may prove somewhat onerous in that there are no associated minimum size thresholds. Any party of any size contemplating a transaction of any magnitude must make a filing if, as discussed above, at least one party to the transaction does business in two or more member states. Moreover, the associated filing fees are particularly high: the lower of (1) 0.5 percent of the merging parties' combined turnover in the COMESA region or 0.5 percent of their combined assets in the COMESA region, whichever is higher, or (2) $500,000. Parties doing business in one or more member states may now have to notify any transaction to both the relevant states, as well as the Commission. Failing to file may be even more expensive: penalties for not filing are up to 10 percent of turnover within the COMESA region.

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