What a Valentine’s Day Letter: Kenyan Authorities Question Effect of COMESA’s Regulations

COMESA old flag colorkenya

In an illuminating Valentine’s Day letter to the Head of the COMESA CCC, the Competition Authority of Kenya has stated its view that the CCC’s Competition Regulations may not have become effective yet, due to an allegedly improperly followed publication and public-comment procedure.

Very intriguing.  This provides a helpful factual and analytical backdrop to the other Kenya vs. COMESA-CCC stories we have reported elsewhere here and here.

Advertisements

COMESA receives first global merger notification

COMESA old flag color
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.

Helpful COMESA documentation

COMESA old flag color
The COMESA Competition Commission’s FAQ and business guide documents provide important information for corporations doing business in the organisation’s member states.

For even more insight into the COMESA antitrust regime — and its actual operation in real life — stay tuned for upcoming seminar information.

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

COMESA old flag color
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.

COMESA CCC now functional

COMESA old flag color
COMESA Fundamentals:

COMESA (Common Market for Eastern and Southern Africa) is a supra-national group of 19 sovereign African countries; it is the successor entity to the 1982 Preferential Trade Area Agreement among eastern and southern African nations.  For starters, here is a map of COMESA’s member states, which are as follows: Burundi, Comoros, the Democratic Republic of the Congo, Djibouti, Egypt, Eritrea, Ethiopia, Kenya, Libya, Madagascar, Malawi, Mauritius, Rwanda, Seychelles, Sudan, Swaziland, Uganda, Zambia, and Zimbabwe.

Notably absent from its membership is the largest economy of the region, namely South Africa.  Likewise, Tanzania is no longer a member, having left the bloc in 2000.

What is the competition-law relevance of COMESA:

Headquartered in Lusaka (Zambia), the 19 year-old organisation has recently upped the ante for companies engaged in commercial activities within the borders of COMESA member states…  It has created and activated the COMESA Competition Commission (the “CCC”).

The CCC, based in Lilongwe (Malawi), is tasked with supervising and enforcing competition-related matters within the bloc.  In this function, it may be compared to the Directorate General Competition (“DG COMP”) of the European Union, as a supra-national enforcement authority, specialised in antitrust / competition-law matters.  The CCC’s primary areas of responsibility are, unsurprisingly:

  1. Merger enforcement (using an “SLC” – substantial lessening of competition – test)
  2. Cartel conduct and other horizontal and potentially also vertical agreements
  3. Unilateral conduct (i.e., abuse of a dominant position in the market)

The COMESA Board of Commissioners is an appellate authority in relation to the CCC.  Companies may also maintain actions against COMESA member states before the Court of Justice, provided they have fully exhausted their national-court remedies.