After a slow implementation phase the regional merger control regime for the Economic Community of West African States (ECOWAS) came into effect in October 2024. In early October key officials of the ECOWAS Regional Competition Authority (ERCA) were sworn in. This client brief considers the implications for parties contemplating transactions with connection to the ECOWAS region.

The implementation of the ECOWAS merger control regime has been stagnating for some time. First steps were taken in May 2019, when the ECOWAS introduced the Competition Rules Act that included a supra-national competition regime for the ECOWAS region and set up the ERCA as a regional competition authority. After this initial move we did not see any movement until early 2023, when the ECOWAS authorities implemented supplementary regulations providing detail and filling gaps in the Competition Rules Act. In addition, drafts for manual of procedures, forms, and templates for the ECOWAS merger control regime were reviewed. Further clarification, was provided with the ECOWAS Merger Manual and Fines Manual implemented in January 2024. Notably, these include provisions shifting the ECOWAS merger control regime from a voluntary to a mandatory regime, establishing revenue based thresholds, and introducing fines for gun jumping / failure to notify. Finally, in October 2024 the ERCA took up operations.

Notification Threshold

The Competition Rules Act implemented in 2019 does not include specific notification thresholds. Instead it require notification of transactions with potentially adverse effects on competition in the ECOWAS region.

However, in early 2024 the Merger Manual introduced established revenue based notification thresholds. Pursuant to these, transactions must be notified to the ERCA, if both of the following thresholds are met:

• the combined, annual ECOWAS-wide revenue of the parties to the transaction exceeds WAUA 20 million (approximately USD 26.5 million); and
• at least two parties to the transaction each achieve an annual ECOWAS-wide revenue of WAUA 5 million (approximately USD 6.6 million) and are active in at least two—not necessarily the same—ECOWAS Member States.

Overlap or vertical relationships between the parties’ business is not required to trigger a filing obligation. Furthermore, it remains unclear whether the target must have activities or assets in the ECOWAS region to trigger a filing.

Joint ventures are expressly caught by the ECOWAS regime. Still, the regulations do not address full functionality and the ERCA has so far not addressed this issue in practice.

The ERCA has discretion to review transactions that fall below the thresholds, provided these transactions potentially have a negative effect on competition in the ECOWAS region.

Change of Control

The regulations broadly defines control as the ability to exercise influence over the operations of an undertaking through (1) holding the majority of shares, or voting rights in the undertaking, (2) specific decision making authorities conferred by the articles, bylaws, or similar instruments of the undertaking, (3) or factual means of materially influencing the decision making  processes of the undertaking. Notably, change of control is not explicitly included as a requirement for a filing obligation to arise in the Competition Rules Act. Still, considering that the regulations include a definition of control, there are arguments for considering change of control as necessary for such an obligation to arise.

Mandatory Filing and Suspensory Effect 

With the implementation of the Merger Manual, notification appears to be mandatory and suspensory where the notification threshold is met

Initially, the ECOWAS merger control regime was concepted as generally voluntary. Only transactions establishing or furthering a market dominant position required approval. By the ERCA.

However, the Merger Manual introduced provisions making notification mandatory and suspensory, where the notification threshold is met. This conflicts with the Competition Rules Act, which initially established a generally voluntary merger control regime. Still, given that the Merger Manual—the more recent regulatory instrument—establishes a stand still obligation, it appears that the Merger Manual shifted the regime from a voluntary to a man-datory, suspensory regime. This view is further supported by the Fines Manual, which was implemented in parallel to the Merger Manual and introduced fines for gun-jumping and failure to notify. Hence, while there is some ambiguity, parties should operate under the assumption that the regime is mandatory and suspensory until ERCA says otherwise.

Review Process and Deadline

There is no statutory deadline for when a filing must be made. Still, a notification must be made prior to closing.

The review is split into to segments: the preliminary review by the ERCA Executive Director and the secondary review by the ERCA Council.

Upon the filing being deemed complete, the Executive Director has 60 calendar days to conclude their review. The review period may be extended by an additional 30 calendar days. Once completed the Executive Director will submit their report to the ERCA Council. The Council may refer the matter back to the Executive Director should they have additional questions or disagree with the recommendation of the Executive Director. The Council has 30 calendar days, with the option to extend by an additional 15 calendar days, for their review. It is unclear what process will attach, where the Council refers a matter back to the Executive Director. The regulations do not describe the process or review period for such a second review by the Executive Director.

Penalties 

Failure to notify or gun jumping may be penalized by fines of WAUA 500,000 (approx. USD 660,000) per business day the violation persists. It is unclear how the ERCA will define the period for which the violation persists in case of gun jumping of failure to notify. Conceivably, the parties would have to either unwind the transaction or find a hold separate arrangement acceptable to the ERCA to stop the daily fines.

There is no cap for the fines. Furthermore, fines can be increased, if there is evidence of wilful breach of obligation, or in case of repeat offences.

The Fines Manual does not include fines for individuals for failure to notify or gun-jumping. However, individuals may be fined for providing false or misleading information in a filing, or for failing to comply with an order of the ERCA.

Relationship Between ERCA and National Authorities

The ECOWAS regulations envisage a close cooperation between the ERCA and the national competition authorities of the ECOWAS Member States. However, they do not provide detailed provisions governing the relationship between the different authorities. The allocation of competences among supranational and national agencies is vital to the functioning of supranational competition regimes. Competing authorities will make regulatory processes more burdensome for investors by requiring them to handle multiple filing. Furthermore, competing jurisdiction poses the risk of conflicting decision on transactions. Thus, it may have negative impact on investment in the ECOWAS region, if the relationship between ERCA and the domestic agencies of the ECOWAS Members States are not clearly defined. In the interest of effective application of the ECOWAS merger control regime and the domestic regimes of the ECOWAS Member States alongside each other, provisions governing the relationship among the regimes and the competent authorities should established. Furthermore, regulations addressing the involvement of sector specific authorities of the ECOWAS Member States in transactions in regulated industries such as banking and healthcare would be beneficial. In particular, since such sector specific authorities assume authority in merger control review processes in some ECOWAS Member States such as Nigeria.

Way Forward

As with any new regulatory regime there remain ambiguities, and we expect some procedural issues to arise gen that the ERCA is an entirely newly established authority. Despite some uncertainty, parties will have to consider the ECOWAS merger control regime as mandatory and suspensory. This appears all but clear given the provisions of the Merger Manual and the Fines Manual.

Also, parties will have to consider the novelty of the ECOWAS merger control regime as well as the fact that the ERCA is a newly stablished authority when assessing timelines for the ECOWAS merger control process. The regulations define review periods. Still, the initial review period for the review by the ERCA Executive Director, will only commence upon the ERCA determining that the filing is complete. Hence, delays may be caused due to the process for receiving the necessary confirmation of completeness.

Finally, parties will have to consider engaging both the ERCA and national authorities since the relationship between these has not been finally established yet.