Pending Amendments to the COMESA Merger Control Regime

In early 2024, the Common Market for Eastern and Southern Africa (COMESA) Competition Commission (CCC) proposed significant amendments to its merger control regime. The Draft Regulations aim to transform the current voluntary, non-suspensory regime into a mandatory, suspensory system. Although initially expected to take effect by late 2024, the timeline appears uncertain.

Key Proposed Changes:

Mandatory Notification and Suspensory Effect

Under the new regime, notification will be required if a transaction meets regional dimension and notification thresholds, leading to a change of control. Transactions cannot be closed before receiving CCC approval. Violations, such as closing a deal prematurely, may result in fines of up to 10% of the parties’ COMESA annual turnover.

Unlike the current regime, which allows parties to proceed with transactions before CCC approval, the amendments impose a standstill obligation, ensuring transactions are paused until reviewed.

Regional Dimension and Notification Thresholds

The dual criteria of regional dimension and turnover thresholds remain, but specific definitions will now be set by the CCC board with approval from COMESA’s Council of Ministers. Currently, a transaction has a regional dimension if at least one party operates in two COMESA Member States and another operates in one, and if the parties’ COMESA revenue/assets are not concentrated in one Member State. Notification thresholds currently require combined revenue/assets of USD 50 million and at least USD 10 million each for two parties.

Filing and Review Procedures

The Draft Regulations remove the 30-day filing deadline, instead requiring notification only before closing. The review period remains 120 days, with a possible 90-day extension, replacing the current open-ended extension option. A simplified review procedure is also proposed for transactions unlikely to raise competition or public interest concerns, though detailed guidelines on its application are pending.

Expanded Public Interest Considerations

The CCC’s assessment will prioritize competition concerns but expand public interest considerations to include impacts on employment, small and medium enterprises, international competitiveness, sustainability, and innovation. These factors will complement traditional concerns such as pricing, quality, and market access.

Digital Markets and Gatekeepers

To address challenges posed by digital platforms, a separate transaction value threshold for digital markets will be introduced. While gatekeeper provisions target digital markets, the amendments lack clear definitions for these terms.

Joint Ventures

Joint ventures with a regional dimension and meeting notification thresholds will now explicitly require notification. This aligns with existing CCC practice but formally codifies these requirements, including for greenfield ventures that intend to operate in the COMESA market.

Market Inquiries

For the first time, the CCC will gain authority to conduct formal market inquiries into competition or consumer-related concerns. Remedies addressing these issues may also be imposed.

Challenges and Considerations

Uncertainty about the new regime’s effective date and ambiguities in the Draft Regulations pose challenges for businesses. Additionally, some Member States, such as Egypt, do not adhere to the one-stop-shop principle of COMESA’s merger control, requiring domestic filings alongside COMESA notifications.

Way Forward

The shift to a mandatory, suspensory regime has broad implications for businesses operating in the COMESA market. Parties must account for the new rules when planning transactions to avoid regulatory delays and penalties. Enhanced clarity through further guidelines is anticipated to streamline compliance.

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