Comesa Competition Commission takes first steps to introducing merger control thresholds

Publication | November 3, 2014

The Comesa Competition Commission (CCC) has now taken its first steps to introducing merger control thresholds to determine which mergers fall within the scope of the Comesa merger control regime. While formal thresholds are yet to be introduced, in publishing the final Merger Control Guidelines on 31 October 2014, the CCC is applying a degree of pragmatism into this much-criticised merger control regime. What you need to know is that there are now clear-cut ways to exclude Comesa-related deals from the Comesa merger control regime.

Upon its introduction in January 2013, the Comesa merger control regime received significant backlash due to having zero thresholds. As a result, a transaction could be seen as triggering a Comesa filing even where the target had no presence in Comesa. At the time, the CCC maintained that it was sufficient for either the acquirer or target to ‘operate’ in two or more Member States.

As part of the final guidelines, the CCC has now confirmed that a party will only be considered to operate in a Member State if its gross assets or annual turnover in that Member State for the most recent financial year exceed US$ 5 million. Moreover, no Comesa filing is necessary if the target does not operate in Comesa or if 2/3 of the merging parties’ annual turnover or value of assets is achieved within one and the same Member State. These criteria will effectively serve as some form of thresholds while the official zero thresholds continue to apply.

In addition, the CCC has formalised its existing comfort letter procedure where parties can apply for an exemption from a Comesa filing if a transaction has no impact on trade within Comesa.

While the CCC is still understood to be seeking to introduce formal thresholds as well as revisions to the Comesa filing fee, these amendments may be further delayed because they need to be approved by the Comesa Council of Ministers. Accordingly, the effective thresholds introduced by the Merger Control Guidelines, coupled with the formalisation of the comfort letter procedure, provides parties with further options to mitigate the impact of the Comesa merger control regime on transactions across the region.

Norton Rose Fulbright assisted the CCC in the formulation of the guidelines and has acted for a range of parties in obtaining merger approvals and comfort letters from the CCC.


Contacts

Mark Griffiths

Mark Griffiths

Johannesburg