Effective October 2024 the Economic Community of West African States (ECOWAS) introduced a merger control regime as part of their continued affords of building a common market. Administered by the ECOWAS Regional Competition Authority (ERCA), this supranational regime aims to prevent anti-competitive effects of mergers that could adversely affect market dynamics across multiple Member States. A central feature of the ECOWAS merger control framework is its local nexus test, which determines whether a transaction is subject to mandatory notification. This test consists of two core limbs: a financial threshold based on ECOWAS-wide turnover, and a geographic component based on regional presence. Together, these criteria aim to ensure that only transactions with potential effects on the ECOWAS common market are caught.
Turnover threshold — ECOWAS-wide activity criteria
The first limb of the local nexus test is the ECOWAS-wide turnover requirement. According to the ECOWAS Merger Guidelines, a transaction must be notified to ERCA if the combined aggregate turnover of all undertakings concerned is equal to or exceeds CFA Francs 100 billion (approx. USD 165 million) within the ECOWAS region. Furthermore, at least two of the transaction parties must each individually have turnover of no less than CFA Francs 3 billion (approximately USD 5 million) in the ECOWAS region. These thresholds are high compared to those of some domestic regimes of ECOWAS Member Countries. This aims to ensure that only mergers of a certain economic significance are caught by the ECOWAS regime. With the dual turnover thresholds, the ECOWAS regime reflects other supranational merger control regimes, requiring both a significant overall footprint and meaningful domestic operations from at least two parties.
Regional effect — activity in multiple ECOWAS Member States
The second limb of the local nexus test is the requirement of activity in more than one ECOWAS Member State, commonly referred to as the regional effect requirement. This condition reflects the purpose of the ECOWAS merger control regime, which is not to duplicate domestic oversight but to establish a common approach to review of transactions with supranational effect. To meet the regional effects criterion, the transaction must involve undertakings that carry out activities in at least two ECOWAS Member States. Activity is interpreted broadly and can include exports to ECOWAS Member States, physical presence such as branches or subsidiaries, or sustained contractual and commercial operations within the territory of Member States. Even where turnover in a Member State is relatively modest, the presence of recurring business activity may suffice to meet the threshold.
As of 2024, ECOWAS comprises fifteen Member States: Benin, Burkina Faso, Cabo Verde, Côte d’Ivoire, The Gambia, Ghana, Guinea, Guinea-Bissau, Liberia, Mali, Niger, Nigeria, Senegal, Sierra Leone, and Togo. A transaction involving undertakings with operations, however modest, in any two of these countries—provided that the turnover thresholds are met—may trigger a notification obligation to ERCA. Hence, while intended to limit the scope of the EWOAS merger control regime to transactions with considerable, regional effect, the regional effects test may fall short of achieving this goal. Since even the regional effects test only requires minor activities in several ECOWAS Member States, a transaction, the parties to which primarily operate in one ECOWAS Member State may still trigger a filing under the ECOWAS regime, where the parties have some, minor activities in other ECOWAS Member States.
Material influence and the ECOWAS Interpretation of Control:
In addition to the local nexus test, the ECOWAS regime adopts a broad interpretation of what constitutes a notifiable transaction. Under the ECOWAS Competition Regulation and accompanying guidelines, mergers include any change in control or acquisition of material influence over an undertaking. This approach aligns ECOWAS with global enforcement trends but diverges in notable ways from national rules within the region. For example, the notion of material influence extends beyond majority ownership or formal control to include situations where a minority investor may still influence key strategic decisions. Such influence may arise from contractual rights, board representation, or significant commercial dependencies, and does not require the acquirer to hold a majority of voting rights. This flexible and expansive concept of control is a distinctive feature of the ECOWAS framework.
Comparison with Nigeria’s merger control regime:
A comparative look at how ECOWAS’s control test differs from national rules is instructive, particularly in the case of Nigeria, the region’s largest economy. Nigeria applies merger control rules through the Federal Competition and Consumer Protection Commission (FCCPC) under the 2019 FCCPA. The FCCPC recognizes various forms of control, including de facto and indirect control, and has begun to take a more nuanced approach to governance rights and minority shareholdings. However, Nigeria’s assessment still leans towards formal thresholds, such as acquiring more than 50% of voting shares, as the primary trigger for notification. While influence-based assessment is not excluded, it is not yet consistently applied. In contrast, the ECOWAS approach expressly embraces a broader and more flexible understanding of control, including the notion of material influence, thus potentially capturing a wider range of transactions that may escape scrutiny under Nigerian law.
Practical Implications for deal planning
The practical implications of the new ECOWAS merger control regime for deal timelines are considerable. While the ERCA appears to take the position that where an ECOWAS filing is required, no notification must be made to domestic enforcers, the ECOWAS Member States may take a different view. Hence, transaction teams should assess merger notification obligations under both national and regional regimes in parallel, rather than assuming that clearance in one jurisdiction excludes the need for others. Second, early legal assessment is critical in identifying whether minority acquisitions, convertible instruments, or governance rights could give rise to material influence under ECOWAS rules. Third, deal timelines must take into account the mandatory and suspensory nature of the ECOWAS regime, which prohibits closing prior to ERCA clearance. Failure to comply may result not only in procedural penalties but also in reputational risk and post-closing uncertainty. Lastly, given the broad interpretation of both turnover and regional effect, businesses should maintain robust internal data on revenue streams and operations across the ECOWAS Member States in order to support early jurisdictional analysis.
AUTHOR
Walaae Mahnaoui
