The New Moroccan Merger Control Regime. One Year In.

Like other Middle Eastern and North African countries, Morocco has been rather inactive as an antitrust and merger control jurisdiction until the late 2010s. A competition regime was introduced in 2014 already with the Moroccan Competition Law, Law No. 104-12 and its implementing decree, Decree No. 2-14-652. Still, the regime remained largely dormant, in part due to the Moroccan competition authority—the Competition Council—not having been convened until 2022. Internationally the Moroccan merger control regime gained notoriety through their fine of approx. USD 1.2 million against Swiss construction chemicals manufacturer Sika AG in 2022 for failure to notify their acquisition Dry Mix Solutions. Regulatory changes—including new notification thresholds—were introduced in late May 2023 with the amendment of the Competition Law by Decree No. 2-23-273 and further clarification on the authority’s interpretation of the law was provided by guidelines issued in December 2023 that also introduced a local effects test. This brief looks at how the recent developments have shaped merger control review in Morocco.

Notification Thresholds

As of the most recent amendment of May 2023, notification is required, if the parties meet one of the following thresholds:

• international turnover threshold — all parties to the transaction together have an annual, worldwide turnover of MAD 1.2b (approx. USD 118m) or more and at least one party to the transaction has an annual turnover in Morocco of at least MAD 50m (approx. USD 4.8m);
• domestic turnover threshold — the combined, annual Moroccan turnover of at least two parties is MAD 400m (approx. USD 39m) or more and at least two parties each have an annual Moroccan turnover of MAD 50m (approx. USD 4.8m); or
• market share threshold — the transaction will create an undertaking with a market share of at least 40 percent in the relevant market in Morocco.

Local Nexus Test

With the guidelines a rudimentary local nexus test was introduced. This local nexus test requires that, if the target does not itself meets the Moroccan turnover threshold elements, a notification is only required, if the target has some other connection to Morocco.

The language of the guidelines remains ambiguous in defining what would constitute such a connection to Morocco. However, the authority has since issued decisions, that outline some of their views on the local nexus test.

The first decision after the guidelines were issued was the decision of the Competition Council on the acquisition of Kohler’s energy business by funds controlled, managed, and/or advised by Platinum Equity LLC of 25 December 2023. In this case the Competition Council found that the Kohler energy business had a relevant connection to Morocco, because they operate in Morocco through their subsidiary Clarke Energy.

In a subsequent decision issued on 2 January 2024 concerning a joint venture between Smulders Group NV and Meyer Neptun Sarl, the Competition Council found that the transaction was not notifiable in Morocco. The authority found that while both joint venture parties had relevant activities in Morocco, the transaction still did not require notification since (1) the joint venture was not active in Morocco and there were not plans for it to enter the Moroccan market, and (2) there was no vertical or horizontal relationship between Moroccan activities of the joint venture parties and the business of the joint venture.

Considering the Competition Council’s practice a connection to Morocco could likely be established by be revenue in Morocco (below MAD 50m) of the target, Moroccan assets or subsidiaries of the target, supplies procured by the target from Morocco, (potential) horizontal or vertical links between the activities of the target and the acquirers’ group, or registered trademarks or patents of the target in Morocco.

Simplified and Expedited Procedure

In addition to the local nexus test, the guidelines introduced a simplified and an expedited merger control review procedure. The simplified procedure applies to transaction that pose no or minor competition concerns in Morocco. The guidelines include a non-exhaustive catalogue of transactions that qualify for simplified review such as the acquisition of sole control in cases where the acquirer had joint control over the target prior to the transaction. Where parties believe their transaction qualifies for simplified review, they may request the Moroccan Competition Council to apply the simplified procedure. This application must provide relevant details on the transaction and the parties as well as the expected impact on competition in Morocco and other reasons that would support the transaction being considered in simplified review procedure.

Unlike the simplified procedure under which information on the transaction and parties can be limited, the expedited procedure requires the same scope and detail of information to be provided as in a standard filing. However, the review time for the expedited procedure is reduced. Furthermore, while the simplified review track is only available for transactions that do not pose relevant competition concerns, there are no such requirements for the expedited review procedure. Any transaction may be approved for expedited review. What standards the Competition Council will apply when determining whether to review a transaction in expedited procedure or not is still unclear. Also, the law gives the Competition Council authority to revert to the standard review process, should it prove infeasible to review the transaction in expedited procedure. The filing fee cap for the simplified review procedure is the same as under the regular track. For the expedited review procedure, the filing fee is doubled. Thus, the filing fee for the expedited review is capped at MAD 300,000 (approx. USD 30,000) instead of MAD 150,000 (approx. USD 15,000) for the standard and simplified review processes.

Penalties

The amendments to the Competition Law also raised penalties available to the authorities to address violations of the merger control regime. The principle, sanction available to the authorities are fines. Legal entities may be fined with up to 5 percent of their Moroccan pre-tax turnover achieved during the previous full financial year. Individuals may be fined with up to MAD 5m (approx. USD 500,000). In addition to one off fines the Competition Council may compel the parties to make a filing after the fact and impose daily fines until the filing is submitted. Both acquirer and target may be fined.

Increase of Merger Control Activity

The Competition Council decision to fining Sika AG in early 2022 lead to a noticeable increase in notifications made; especially of foreign-to-foreign transactions. This trend has continued through 2024. The introduction of the local nexus test in the guidelines issued in December 2023, did not lead to a decrease of notification. Likely this is at least in part due to concerns of parties raised by the continuously increasing enforcement activity in Morocco—especially, targeting foreign-to-foreign transactions. As part of this effort, we have seen the Competition Council increasingly looking back and scrutinizing transactions concluded in the past. Thus far, the Competition Council been quite lenient where they discovered transactions not notified to them and settled cases unless the transaction had an impact on competition in Morocco. However, as time goes on, we expect the authority to more strictly enforce the regime.