Viatris Merger Notification Violation in Morocco

In November 2024, the Moroccan Competition Council (Direction Générale de la Concurrence et de la Répression des Abus de Marché) imposed a fine of MAD 7.58 million dirhams (approx. USD 760,000) on Viatris Inc., a US based pharmaceutical company, for failing to notify the merger that formed it. The fine was calculated as on 2.5% of the Moroccan revenue of the businesses that were combined to form Viatris for the year preceding the merger. This constitutes half of the maximum fine possible, which would be 5% of annual Moroccan turnover. Viatris did not appealed the decision has since paid the fine and has since paid the fine.

End of 2020 Pfizer Inc. spun out its Upjohn Business and merged it with Mylan N.V. The combined company was renamed Viatris. In the distribution, Pfizer stockholders received approx. 0.124079 shares of Viatris common stock for every one share of Pfizer common stock held as of the close of business on the record date, which was 13 November 2020. In addition to the Viatris shares received in the distribution, Pfizer stockholders retained as of the closing the same number of shares of Pfizer common stock as they held immediately prior to the transaction. As of the closing of the combination, Pfizer stockholders owned approximately 57% of the outstanding shares of Viatris common stock, and Mylan shareholders owned approximately 43% of the outstanding shares of Viatris common stock, in each case on a fully diluted, as-converted and as-exercised basis.

Moroccan law mandates that businesses involved in mergers or acquisitions must notify the Moroccan Competition Council before closing transactions that meet certain financial and market share thresholds. The Moroccan Competiton Council found that the merger met the notification threshold and that the parties violated the Moroccan Competition Law by failing ton notify the transaction to them.

The fine imposed on Viatris is part of a broader regulatory crackdown on unnotified mergers in Morocco. The Moroccan Competition Council has over the past years taken increased interest in past transactions completed without the parties making a notification in Morocco. In particular, the Moroccan Competition Council has started investigating prior transactions of parties making a merger control notification to the Council. Furthermore, where the Council discovered a violation they have been increasing aggressive in investigating other transactions concluded by the parties  to verify whether they had failed to notify other transactions to the Moroccan Competition Council. Similarly, following the fine imposed for the Viatris merger, the Council initiated investigation into other transactions closed by the parties including the joint venture between OCP and Fertinagro Biotech, as well as Arcelik’s acquisition of Whirlpool’s Middle East and North Africa operations.

Business considering transactions with connection to Morocco should consider the increasingly aggressive enforcement of the Moroccan merger control regime by the Moroccan Competition Council. The authority has been aggressively perusing transactions not notified to them. Especially, where parties had to disclose these as part of a merger control filing for later transactions. For transactions closed before end of 2022 the Council introduced a leniency regime that applied if (1) the parties disclosed the transaction not notified to the Council on their own volition, and (2) the transaction had no relevant impact on competition in Morocco. The Council also appears to be open to settle violations related to transactions closed after 2022. However, such settlements are not regulated. Hence, the process is not entirely clear. Still, parties should consider their exposure in Morocco when contemplating transaction.