First 2 COMESA merger notifications unconditionally approved

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The COMESA CCC has approved (without any commitments) two notified mergers, as it announced on its web site today.  They are the first of their kind, with at least one additional notification currently pending.

The two deals, including the first-ever notification to the COMESA Competition Commission (“CCC”) of the Philips/Funai Electric transaction, lay the groundwork, in principle, for future COMESA merger reviews. That said, the approval notices (here and here) come without any elaboration of the reasoning or competitive & economic analysis undertaken to clear the mergers, unfortunately.  The second deal involved pharmaceutical companies Cipla Limited and Cipla Medpro South Africa (Proprietary) Limited.

We will report more later, as we learn additional facts surrounding these transactions and their CCC review procedure.


COMESA Commission responds to our article on Kenya’s competition authority taking jurisdiction away from CCC

     kenya‘s prior reporting here (and also here, as well as the corresponding Nortons brief) on the jurisdictional dispute between the Competition Authority of Kenya (“CAK”) and COMESA has garnered the attention of the multi-national organisation’s Competition Commission (“CCC”).

After reporting on Kenyan Attorney General Githu Muigai’s actions, seemingly wresting jurisdictional power over the review of certain transactions that clearly affect the Kenyan geographic market, we reported briefly and neutrally on this interesting development, concluding as follows:

This power purports to shield, at least temporarily, local firms from the COMESA competition laws. Under the multi-state competition regime, firms engaging in certain mergers and acquisitions with an effect in two or more member states are required to seek clearance from COMESA’s Competition Commission, a process that comes with significant costs and time delays not expected to the same extent with the CAK procedure.

The CCC asked, in its letter, to set the record straight and “to put the situation in its right context.”  We are happy to oblige and publish below COMESA’s official position on the jurisdictional dispute with Kenya.

As to the cost point, the CCC had this to say in its letter (full reprint below):

Consequently you may also need to know that from our preliminary assessment the Commission’s fees are much lower than that of the national competition authorities and this has resulted in the cost of doing business (notifying using the COMESA route) being reduced by about 43.4%.

This is an interesting “preliminary assessment” and must be based on theoretical calculations of notification fees, as there had not been any substantial number of notifications made as of 22 March.  The first publicly known notification was that of Philips/Funai, made around the same time in March.  Indeed, the CCC itself writes in its letter to us that the Commission has not yet concluded any merger investigation for one to have a basis for any comparisons yet.”  Fair point.

All of this begs the quite pragmatic question, of course, which is: how are merging/acquiring parties dealing with the existence of the COMESA notification regime?

In our “Is COMESA being ignored” post, we postulated the hypothetical question whether publicly known deals that clearly meet the COMESA thresholds but are not apparently notified should be taken as an indication of the CCC being turned a cold shoulder by certain sophisticated parties.

Why would they?  Perhaps the filing fees are, after all, not that insignificant or even lower than filing domestically with African NCAs?  Or the uncertainty of a rather untested, as of yet, CCC staff team has the parties worried about (1) the length/duration, or (2) outcome of the CCC procedure?  We don’t know, but we look forward to further analysis, insight, and news in coming months.

Here is the original language of the letter (signed “COMESA Competition Commission”), dated 22. March 2013:

The COMESA Competition Commission (the Commission) wishes to respond to the above article as follows:

1.         The above article raises serious concerns especially coming from a Member State of the COMESA Treaty whose competition authority was one of the architects of the COMESA Competition Regulations (the Regulations).  The article and its undertones challenges the very existence of the Regulations and the institution mandated with their enforcement.

2.        With the adoption of the COMESA Competition Regulations and Rules, there are now two separate legal regimes which govern the enforcement of competition law and policy in the COMESA Member States, namely;

a)      The National Competition laws: these are the national legal orders comprising the respective bodies of legal rules within each of the COMESA Member States.

b)      The Regional Legal Framework: these comprise the body of legal rules created at COMESA level such as the COMESA Competition Regulations and Rules.

3.         Given the two legal orders, the national order shall apply to the enforcement of anti-competitive practices emanating at national level hence, enforced by the national competition authorities in the respective Member States. Whereas the regional framework shall be invoked generally where there is a cross border impact.

4.         In the first place, as far as we are concerned, there has never been a jurisdictional battle between the COMESA Competition Commission (the Commission) and any national competition authority on the control of mergers at national level.  The scope of application of the Regulations as provided for under Article 3 and more specifically on mergers under Article 23(3) is very clear that its limited to transactions with a regional dimension and not local transactions as stated in the Article.  The relevant Articles are quoted below for clarity:

“Article 3

Scope of Application

“These Regulations apply to all economic activities whether conducted by private or public persons within, or having an effect within, the Common Market, except for those activities as set forth under Article 4. These Regulations apply to conduct covered by Parts 3, 4 and 5 which have an appreciable effect on trade between Member States and which restrict competition in the Common Market.””[emphasis added]

Article 23

Merger Control


3.  This Article shall apply where:

a) both the acquiring firm and target firm or either the acquiring firm or target firm operate in two or more Member States; and

b) the threshold of combined annual turnover or assets provided for in paragraph 3 is exceeded”.

5.         It is important to note that the Regulations were initiated by the COMESA Member States who had competition authorities in the 1980s and 1990s namely Kenya, Zambia and Zimbabwe, when they realized that with globalization, markets continued to extend beyond national boundaries and the national laws and their enforcement institutions were no longer sufficient to deal with the new market problems of the region.  To address these problems of enforcing multi-jurisdictional competition cases, a regional approach to the competition cases with regional coverage was found to be the solution.  They were also of the view that cooperation and transparency in procedures was essential for business as they would not be subjected to excessive costs arising from multiple, parallel and poorly coordinated investigations.  In fact Mr Justus Kijirah the then Commissioner for the then Monopolies and Pricing Commission of Kenya (the predecessor of the Competition Authority of Kenya) was part of the team of Consultants who were involved in the formulation and drafting of the Regulations and the Rules in April 2002.

6.         The draft Regulations and Rules prepared by the consultants went through a rigorous legislative review which included their discussion by the Trade and Legal Experts from COMESA Member States in October 2002 in Mangochi (Malawi), and by the COMESA Trade and Customs Committee in October 2002 and February 2003 in Lusaka (Zambia).  The COMESA Legal Committee also discussed the draft texts in February 2003, again in Lusaka (Zambia), and the COMESA Ministers of Justice and Attorneys-General approved the drafts during the same month.  The COMESA Competition Regulations were adopted by the COMESA Council of Ministers in December 2004 and they became effective upon their publication in the COMESA Official Gazette Vol. 9 No.2 as Decision No. 43 in Notice No 2 of 2004.

7.         Please note that of importance is Article 10(2) of the Treaty which categorically states that: “A regulation shall be binding on all the Member States in its entirety.”  This means that Kenya as a COMESA Member State is bound by the Regulations and is obliged by Article 5(2)(b) “…..take steps to secure the enactment of and the continuation of such legislation to give effect to this Treaty and in particular to confer upon the Regulations of the Council the force of law and the necessary legal effect within its territory”.

8.         We appreciate that under the Vienna Convention on the Law of Treaties 1969, the consent of a state to be bound by a treaty and therefore for the treaty to apply to the state at an international plane may be expressed by way of signature, exchange of instruments constituting a treaty, ratification, acceptance, approval or accession.  The Convention does not address the question of how States may then bring about the domestic implementation of the treaties which they have made applicable to them internationally.  The Convention leaves this question to be settled by each State, in accordance with its legal system.  Thus, “domestication” of treaties is a matter of national law and is not governed by international law.  A different process altogether is necessary in order for a treaty to be applicable at a domestic level.  Unless a treaty accepted by any Member State is incorporated into the domestic laws of that state, the rights and obligations contained in such a treaty are inapplicable and unenforceable domestically in the state concerned.  Most Member States constitution are the ones that state the position of the relationship between the treaty law and domestic law in the state’s legal system.

9.         Two major approaches, and some variations of them, may be identified with respect to the question of the status of treaties in domestic legal systems.  Some States follow the dualist approach to this question, while others follow the monist approach.

10.       Under the dualist approach, treaties are part of a separate legal system from that of the domestic law: They do not form part of domestic law directly. Thus, under this approach, a treaty to which a State has expressed its consent to be bound does not become automatically applicable within that State until an appropriate national legislation has been enacted to give the treaty the force of law domestically.  This is the so-called “act of transformation”, which has several ways for bringing about.  One of them is the direct incorporation of the treaty rules through a drafting technique which gives the force of law to specified provisions of the treaty or indeed the whole treaty, usually scheduled to the transforming act itself.  This is the approach which was inherited by Kenya and other commonwealth countries from the British practice, as the prime example.[1]

11.       Under the monist approach, traditionally a legal system of a State is considered to include treaties to which that State has given its consent to be bound. Thus, certain treaties may become directly applicable in that State domestically (self executing) and do not rely on subsequent national legislation to give them the force of law once they have been ratified by the State. “Where a treaty is thus considered to be “directly applicable”, under this approach, it means that the domestic courts as well as other governmental bodies would look to the treaty language itself as a source of law.”[2]

12.       Kenya now has a new constitution that was promulgated on 27 August 2010 replacing the 1969 Constitution.  The 2010 revised Constitution of Kenya introduced a monist approach with respect to the question of the status of treaties in domestic legal system.  Section 2 of the Constitution which deals with the issue of supremacy of the Constitution provides that:

Supremacy of this Constitution

(1) This Constitution is the supreme law of the Republic and binds all persons and all State organs at both levels of government.

(2) No person may claim or exercise State authority except as authorised under this Constitution.

(3) The validity or legality of this Constitution is not subject to challenge by or before any court or other State organ.

(4) Any law, including customary law, that is inconsistent with this Constitution is void to the extent of the inconsistency, and any act or omission in contravention of this Constitution is invalid.

(5) The general rules of international law shall form part of the law of Kenya.

(6) Any treaty or convention ratified by Kenya shall form part of the law of Kenya under this Constitution.

13.       In essence, section 2(6) of the Constitution of Kenya means that the COMESA Treaty and the Regulations made under it form part of the law of Kenya and are directly applicable domestically.  Since the Regulations form part of the laws of Kenya which the Competition Authority of Kenya should uphold there is therefore no basis for any jurisdictional battle.  In fact, the Competition Authority of Kenya has all along been acting in compliance with the Regulations when it accepted the appointment of its then Acting and now Director General Mr Wang’ombe Kariuki as a Board Member for the COMESA Competition Commission established under the Regulations.  Mr Kariuki took part in the setting up of the COMESA Competition Commission Secretariat.  He also participated in the drafting and recommending for approval to the COMESA Council of Ministers, which met in Kampala, Uganda in November 2012, the COMESA Rules on Merger Notification Thresholds and on Revenue Sharing of Merger Filing Fees whose underpinnings was the transfer of jurisdiction of mergers with a regional dimension from the national competition authorities to the COMESA Competition Commission.  For him to now make the Competition Authority of Kenya wrestle the COMESA Competition Commission for the right to control mergers and acquisitions within the COMESA region boggles the mind to say the least.

14.       As far as the statement to the effect that “Kenyan Attorney-General Githu Muigai has given the CAK the authority to act as the sole agency with the mandate to administer and clear local mergers and acquisitions” is concerned, it is our considered view that CAK has failed to comprehend the advice by the Attorney-General which according to the article above specifically states that CAK shall continue to exercise its jurisdiction on local mergers and acquisitions.  It is our understanding from the above article that the Honourable Attorney-General has not referred to merger transactions with regional dimension.  This is the correct position.  It is also our view that the Attorney-General is not the right office to interpret the provisions of the Treaty but the COMESA Court of Justice.  We are however, always happy to be persuaded by such advice.

15.       It is in fact the COMESA Court of Justice, regardless of whether a Member State has ratified the Treaty or not, that has the mandate to ensure the adherence to law in the interpretation and application of the Treaty (Article 19(1)) and by inference the Regulations made under the Treaty.  If Kenya as a COMESA Member State has issues pertaining to the application of the Regulations on its nationals which implies a challenge to the legality of the Regulations, we recommend that the best course of action would be for Kenya to refer the matter for determination by the COMESA Court of Justice in terms of Article 24(2) of the COMESA Treaty.

16.       It is also premature to conclude that the Regulations’ requirement for firms engaging in certain mergers and acquisitions with an effect in two or more member states should seek clearance from Commission came with significant costs and time delays not expected to the same extent with the Competition Authority of Kenya.  With all due respect, the Commission has not yet concluded any merger investigation for one to have a basis for any comparisons yet.  There is therefore no empirical evidence to support such a bold and far reaching statement.

17.       You may further wish to know that the current schedule of merger notification fees was debated on and approved for presentation to Council by the COMESA Competition Commission’s Board of Commissioners which comprise of heads of competition authorities in Member States.  Consequently you may also need to know that from our preliminary assessment the Commission’s fees are much lower than that of the national competition authorities and this has resulted in the cost of doing business (notifying using the COMESA route) being reduced by about 43.4%.

From the foregoing, we implore your good offices to put the situation in its right context.

COMESA Competition Commission


[1] Dr.A.O.Adede,Chairman, Constitution of Kenya Review Commission, “Domestication Of International Obligations”, An Abstract, 15-09-2001.

[2] Ibid.

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Parties turn a cold shoulder: Is COMESA’s CCC being ignored … ?

COMESA old flag colorZambia

A pressing question on many COMESA observers’ minds is this: do corporations (and their legal advisers) consciously ignore the CCC‘s jurisdiction and essentially flaunt the supra-national organisation’s merger-notification regime?

As reported by us yesterday, there may be an interesting test case coming up in the Uganda telecommunications sector, which may help clarify whether parties to known merger deals are simply ignoring the notification mandate of COMESA.

Today, we noticed what appears to have been two recent deals in the poultry sector in Zambia (yet another COMESA member state).  As the Zambian newspaper The Times reports, there were two transactions** that have been approved by the Zambian Competition and Consumer Protection Commission (CCPC) Board of Commissioners — seemingly unilaterally and without involvement of COMESA’s CCC.

Again, as with the potential Ugandan test case we discussed, the question now becomes: were the conditions to notifiability at the COMESA level met (likely yes), and if so, did the parties intentionally fail to notify the deal to the CCC … ?  To date, only one deal (Philips/Funai) is known to have been notified to the CCC, as reported here.  We would love to hear from a representative of the CCC itself to get their view on the current state of affairs.

One possible explanation of the apparent lack of COMESA notification is that the transactions pre-dated the January 2013 effective date of the COMESA competition regime, but that seems unlikely at this late stage, given that it’s already May and the CCPC is only now giving its green light to the deals.


** The names of some of the parties are entertaining, no less, as they are Zamchick and Rainbow Chicken.  Presumably, the merged entity might adopt Rainbow Zamchick?

Ugandan telecoms merger may test COMESA regime

COMESA old flag colorUganda

The announced merger between Warid Telecom and Airtel in Uganda (a COMESA member state) may become an interesting test case for the COMESA Competition Commission‘s merger-notification regime.  At least we here at think so.

Not only does this deal present the opportunity for outsiders to watch whether, and if so, when the parties will notify the transaction to the CCC (the thresholds and conditions to notifiability are almost certainly met, given the pan-African activities of Bharti, Airtel’s Indian parent company) — it also may raise substantive concerns from a competition-law and merger-enforcement perspective, in light of the fact that the reported fusion of the #2 and #3 players in the Ugandan mobile telecoms market would result in a de facto 3-to-2 merger.

It will also show how the Ugandan authorities deal with COMESA’s claim to supranational jurisdiction over transactions such as this.  (Kenya had not taken well to it previously, as we reported on this blog…)  That said, aside from any NCA (since there is none in Uganda…), the Uganda Communications Commission (UCC) has already backed the deal as apparently pro-competitive, as The Independent reports. The reasoning there seems to be that a stronger #2 player will present more competitive challenges to the #1, which is MTN Uganda. Not necessarily orthodox antitrust doctrine, but it also comes from a non-competition body, so there…

COMESA receives first global merger notification

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Once more, big news out of southern Africa. According to a notice published on COMESA’s web site, the Competition Commission (“CCC”) has received its first merger filing. And it is not merely any old filing — rather, two large global consumer electronics players, Philips and Funai, are the parties to this virginal transaction being notified to the CCC. As the notice points out in its aptly-named (yet somehow almost ‘cute’, if there is such a thing as cute in competition law) title, it constitutes “Merger notice no. 1”.

With the CCC numbering these filings sequentially (based on all appearances), one can’t help but wonder how many more of these notices will we see in the near future? Will the number reach 2 or 3 digits in the first year of operation of this young competition watchdog? After all, as we pointed out previously on this blog, the scope and reach of the (suspensory!) COMESA merger regime are extremely broad and would presumably cover hundreds of transactions similar to the now-notified first deal…

As background to the transaction, neither party apparently operates on its own in the COMESA jurisdictional countries. They merely have sales via distributors and remote agents. An article in the Kenyan paper “Daily Nation” mentions that the parties had announced in January (right around the time that COMESA’s CCC became operational) that Philips would be selling its remaining audiovisual business to Funai as part of a changing business strategy.

Here’s the upshot for antitrust lawyers and parties to future transactions with a potential impact in any of the COMESA member states: the mere fact of this notification legitimizes the entire COMESA regime. This is all the more true, as the parties are two global and important players, with presumptively excellent legal competition counsel (who must have advised that a filing with the CCC would be required, if not advantageous).

My take: The fact that this rather important (and moreover rather remote, for COMESA jurisdictional purposes!) deal constitutes “Merger notice no. 1” is an absolute stroke of luck for the CCC. It lends serious credibility to its legitimacy.

Competition Authority of Kenya wrests right to control M&A from COMESA.

(See also our prior reporting here:

COMESA old flag colorkenya
The Competition Authority of Kenya (“CAK”) has won the first round in its apparent jurisdictional battle against COMESA to control acquisition of shares, interest or assets among local firms, ending two months of uncertainty as to who the regulatory authority was for dealmakers. Kenyan Attorney General Githu Muigai has given the CAK the authority to act as the sole agency with the mandate to administer and clear local Kenyan mergers and acquisitions.

This power purports to shield, at least temporarily, local firms from the COMESA competition laws. Under the multi-state competition regime, firms engaging in certain mergers and acquisitions with an effect in two or more member states are required to seek clearance from COMESA’s Competition Commission, a process that comes with significant costs and time delays not expected to the same extent with the CAK procedure.

Clarification of COMESA merger regime filing fee

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Yesterday, on 26. February 2013, the COMESA Competition Commission issued new guidance relating to the amended merger notification requirements, as follows. Note especially the clarification on the “higher of / lower of” filing fee issue that had previously reported on, correcting several law firm client alerts, which had falsely described the fee as the “higher of” the two thresholds:


Rule 55(4) of the amended COMESA Competition Rules reads as follows:

“Notification of a notifiable merger shall be accompanied by a fee calculated at 0.5% or COM$ 500000, or whichever is lower of the combined annual turnover or combined value of assets in the Common Market, whichever is higher”. The interpretation of the above provision is that the COM$500,000 is the maximum fee payable for merger notification.

1. When a merger is received, the COMESA Competition Commission (‘the Commission’) will first calculate 0.5% of the combined turnover of the merging parties.

2. The Commission will then calculate 0.5% of the combined value of assets of the merging parties.

3. The Commission will then compare results in 1 and 2 above and get the higher value.

4. The Commission will then compare this higher value to the COM$500,000. If the higher value is lower than the COM$500,000, the Commission will consider the higher of either the combined assets or turnover as a notification fee. If either the combined assets or turnover is higher than COM$500,000, then the latter shall be the notification fee.

The example below illustrates this:

• Company A proposes to acquire 100% of the assets of Company B. Both operate and have sales in at least two COMESA member states. Company A has turnover (within COMESA) of $15 million; Company B has turnover of $10 million. One-half of one percent of their combined turnover is equal to $125,000 (i.e., $25 million X 0.5%).

• Company A has assets (within COMESA) of $7 million; Company B has assets of $3 million. One-half of one percent of their combined assets is equal to $50,000 (i.e., $10 million X 0.5%). $125,000 (turnover) is the higher of the two figures in steps 1 and 2.

• Since the higher value of the assets vs. turnover (i.e., $125,000) is lower than $500,000, the filing fee is $125,000.

S.A. Clears 3-to-2 Infant Nutrition Merger with Remedies


The South African Competition Tribunal has green-lighted the almost $12bn (R106bn) Nestlé/Pfizer deal, which will combine the largest and 3rd-largest infant-nutrition companies in the South African republic, leaving competitor Aspen in second place.

The conditions imposed by the Tribunal echo those accepted by the E.U., the Australian and other authorities, which require the merged entity to license certain of its brands to independent third parties, for up to 10 years post-closing, in order to stimulate and maintain a competitive marketplace.

To seasoned antitrust practitioners, certain aspects of the deal ring a bell — although the outcome is diametrically different (except for Mexico, where the transaction has been rejected thus far by the authorities): I speak of the Heinz/Beech-Nut U.S. deal in 2000, where the FTC blocked the deal. In the agency’s view at the time, the only competitive constraint, according to the FTC, was the Gerber company, which would have been the sole effective remaining competitor. For a retroactive analysis on this, see here for one of the voting Commissioner’s point of view. The FTC promptly sued to block the 3-to-2 “Baby Food” deal, as it became known in the antitrust world, and ultimately prevailed both at the court level and, in the end result, with the parties’ abandonment of the merger while an appeal was pending.

In conclusion, it appears that the efficiencies defence, creative design of remedies (e.g., licensing), and overall agency outlooks have changed in more than a decade, after all.


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The COMESA Competition Commission has recently made available the relevant merger filing documentation and forms.  Complying with the requirements set out in Form 12 certainly appears, at first glance, to be relatively straightforward, however, contrary to what is stated in the COMESA Regulations, the Merger notification form appears to prohibit the closing of a transaction without approval (i.e., parties may not implement the merger or acquisition without the COMESA Commission approval).

The attempt to legislate by way of the notification documents further erodes  merger control certainty.  Given the extremely wide ambit of what constitutes a notifiable merger, the COMESA Commission will need to ensure that the contradiction contained in the merger filing forms is urgently rectified.

“How much for this merger filing?” – Clarifying the COMESA fees

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We have recently seen several articles and law firm client alerts incorrectly identifying the filing fee schedule of COMESA.  This post is designed to clarify and to provide accurate information to our readers.

Rule: The filing fee for a merger notification under the COMESA regime is the lower of:   [1]   500,000 COMESA-$,  or    [2]   0.5% of parties’ combined annual turnover or asset value within the COMESA market.

The confusion as to “higher of” vs. “lower of”, which has sprung up in many firm publications, may be due to the somewhat awkwardly worded language of the amendments to the original 2004 Competition Rules.  The amendments changed the text of Rule 55(4), dealing with the fee schedule and its calculation.

Example:  The two notifying parties have a combined turnover of 90m COM$ in the common market of COMESA.  In this scenario, 0.5% of 90m COM$ equals 450,000 COM$, which is lower than the maximum fee of 500,000.  Thus, the fee to be paid by the parties is 450,000 COM$.

As a rule of thumb, if the combined annual turnover/revenues/asset values of the notifying parties is 100 million COMESA-$, then the fee will be the maximum 500,000 amount.  Otherwise, it will be lower.