BRICS, COMESA, fees, merger documentation, mergers, new regime, notification

Slow-going M&A statistics in COMESA before anticipated threshold revision

COMESA Competition Commission logo

Strong numbers from early 2014 did not hold up

After posting a record three merger notifications in January, the COMESA Competition Commission has seen its M&A filing statistics decline to zero in February and merely one in March.

As we have reported here (optimistic for 2014) and here (pessimistic on 2013 statistics), COMESA’s notified M&A deals have seen erratic ups & downs.  Not surprising, perhaps, if one considers the exquisite confusion that has reigned since the inception of the young antitrust authority about filing thresholds and fees.

The current ebb in notified deals (despite the record set in January) reflects, in our view, the impending end of the current “zero-threshold” regime in COMESA, which was foreshadowed by The CCC’s head of mergers, Willard Mwemba, back in late February 2014.  Quite understandably, parties to ongoing transactions are willing to risk “flying under the radar” if the agency has de facto admitted that the zero-dollar filing threshold is unworkable in practice.

We are curious to see what impact the vacuum of the pending revision to the COMESA merger rules will have on filing statistics going forward, until a more sensible threshold is set by the agency.  For now, with the latest notification #4/2014 (fertilizer and industrial products acquisition by Yara International ASA of OFD Holdings Inc.*) the stats look like this:

* we note that in the notice, the CCC erroneously set the deadline for public comment prior to the notice date itself, namely as “Friday, 28th February, 2014.”

competition law antitrust Africa

COMESA CCC M&A filing statistics as of March 2014

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agriculture, Botswana, COMESA, jurisdiction, Kenya, Mauritius, merger documentation, mergers, Mozambique, notification, Uganda, Zambia

COMESA merger stats: January ’14 outperforms first 6 months of 2013

COMESA Competition Commission logo
Three merger notifications in one month set new record for COMESA Competition Commission.

After commenting on the rather lackluster statistics of the first 11 months A.D. 2013, we observed that some deal-making parties might be “flying under the radar” and asked the question:

Combine Point 4 above (low filing statistics) with the zero-threshold and low nexus requirements that trigger a COMESA merger notification, and the following question inevitably comes to mind: With such low thresholds, and the certain existence of commercial deal activity going on in the COMESA zone, why are there so few notifications?

Well, the young agency’s stats have picked up some steam in 2014, it would seem: based on a review of its online document repository, the CC has received a whopping three notifications in January alone.  They are, in chronological order:

  1. Mail & courier services: FedEx / SupaSwift – a transaction involving the acquisition of a South African courier with operations in multiple COMESA member states, Botswana, Malawi, Mozambique, Namibia, Swaziland and Zambia.
  2. Agricultural distribution and financial services: AgriGroupe / AFGRI Ltd. – Mauritian SPV AgriGroupe seems to be taking AFGRI (listed on the JSE) private.  The target has operations in multiple COMESA countries.
  3. Generic pharmaceuticals: CFR Inversiones SPA / Adcock Ingram Holdings Ltd. – Chilean CFR is buying all of South African off-patent pharmaceuticals manufacturer Adcock’s shares. Notably, the buyer has no COMESA activities; target is active in Kenya, Malawi, Rwanda, Sudan, Swaziland, Uganda and Zimbabwe.
(c) AAT

Merger notification stats for COMESA as of Feb. 2014

Take-aways:

  • Activity has increased dramatically.  Is it a coincidence & a statistically irrelevant blip on the radar screen?  This remains to be seen. The parties are – unlike last year’s – not “repeat parties” and therefore the increase in notifications seems to be natural/organic growth, if you will, rather than a case of the same bear falling into the same honey-trap multiple times…
  • The Competition Commission has listened to its critics (including this blog). Notably, the CC now clearly identifies the affected member-state jurisdictions in the published notice – a commendable practice that it did not follow in all previous instances, and which AAT welcomes.

Post-scriptum: Adding up the total 2013 tally of notifications, the Tractor & Grader Supplies Ltd / Torre Industrial Holdings transaction (notified after our prior statistics post in November 2013) brought the sum-total of COMESA merger filings to 11 for FY2013.

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COMESA, fees, legislation, merger documentation, mergers, new regime, notification, personnel

COMESA merger rules to change in April 2014 at the earliest

COMESA Competition Commission logo

Breaking news: A senior source at the COMESA Competition Commission (“CCC”), has confirmed that the CCC is currently finalising proposed amendments to the Regulations.

The amendments being debated seek to change, crucially, the applicable thresholds for merger notifications to the CCC and to clarify the definition and (potentially lower?) amount of the administrative notification fees.

For the amendments to come into force, they require approval from the COMESA Council of Ministers.  The Council convenes once a year, now likely in February.  The source adds that, as the amendments will only be finalised toward the end of February, an extraordinary session of the Council of Ministers will likely need to be convened to consider the amendments to the Regulations.  Such an extraordinary session may take place in April 2014.  The amended Regulations will only become enforceable upon approval by the Council.

That is, the way things are looking today, any change to the COMESA merger rules will occur in half a year at the earliest

In practical terms, this means that the dual dilemma of the “zero-threshold contagion” and the inordinately high filing fees currently affecting the CCC’s merger-control regime (and resulting in rather low merger-notification statistics of less than one per month) will continue to hamper the young agency and its customers for the foreseeable near-term future.

We will report back once we have additional details on the precise language of the proposed amendments.

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COMESA, Egypt, fees, merger documentation, mergers, new regime, notification

Some COMESA Merger-Control Musings on the Latest Notification

COMESA Competition Commission logo

It’s been a little while since we last published a note on COMESA.  When there is little substantive news to report, statistics often yield a topic to write about.  And so it is with COMESA.  The statistic at hand: On Monday, 18. November 2013, the Competition Commission announced that it had received its tenth merger notification.

Here are a few observations on the deal (Total Egypt LLC/Chevron Egypt SAE & Total/Beltone Capital Holdings) that spring to mind:

  1. Geography: While the recitals fail to mention any common-market dimension of the transaction, it seems to be centered on COMESA member state Egypt.  On the face of it, this appears to be an Egyptian deal, and as we have become accustomed to, it is hard to infer from the published information what the nexus to the common market is.
  2. Repeat party: The notified deal involves a repeat customer of the CCC, namely the oil & energy company Total.  A different Total subsidiary had filed for (and has since obtained) approval of another transaction in March: the previous Total/Shell deal, also centered on Egypt, was notified in July.  To our knowledge, Total is the first repeat COMESA-notifying party in the CCC’s history.  This may well be a positive sign for the CCC.
  3. Two-for-One, please! The CCC observes in its November 18th notice that it actually received one single notification for de facto two transactions: the Chevron and the Beltone deal.  But the parties were quick to point out – smartly so, some would say – that the deals were closely “interrelated” and therefore should be treated as one transaction for purposes of COMESA review.  Bottom line: only one notification = only one merger filing fee (!) to pay, which can, as we know, easily hit the half-million dollar mark.  In the end, the CCC bought the argument and allowed the parties to make only one single notification.
  4. Overall statistics: 11 months and 10 merger notifications.  That equals less than 1 filing per month.  With such a low number, the CCC is certainly not on track to beat other young competition-law enforcers’ merger stats (such as India’s Competition Commission, which has received an average of over 5 notifications per month since its inception two years ago).
  5. Flying under the radar: Combine Point 4 above (low filing statistics) with the zero-threshold and low nexus requirements that trigger a COMESA merger notification, and the following question inevitably comes to mind: With such low thresholds, and the certain existence of commercial deal activity going on in the COMESA zone, why are there so few notifications?  Are parties simply ignoring the notification mandate?  And if so, what is the CCC — an enforcement agency, after all — doing about this?
  6. Cute or lax? As with other official documents on the CCC’s web site, even this mere 2-pager contains what appears to be an unintended inclusion of internal CCC notes that the agency failed to delete prior to publication.  It reads as follows: “[these abbreviations are not explained anywhere above].”  Someone forgot to review the [short] notice, which has been up for 3 days now, and which does diminish the appearance of professionalism.  More importantly, it calls into question the ability of the agency to edit its own documents carefully, redact properly, and thus its capability to maintain the confidentiality of party or non-party submissions.  Quoth the Raven: “I wish to assure you that all the information you will make available to the Commission shall be treated with the strictest confidentiality and will only be used for the purpose of this inquiry,” as the standard closing CCC paragraph goes…
In conclusion, the most important practical tip for parties contemplating deals in the COMESA region is perhaps the upshot of Point 3 above: Get a package deal! There is now precedent that the CCC permits such combined notifications, which should allow parties to wrap multiple transactions into one lower-cost filing, thereby avoiding what I am calling in an upcoming article the CCC’s “(Pricey) Tollbooth on the African Merger Interstate“…
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