Earlier this week, the Common Market for Eastern and Southern Africa (“COMESA”) Competition Commission issued a press release confirming the first instance of a fine being levied against merging parties for failure to notify a merger within the prescribed period of time .
In the ordinary course of business, parties are often concerned with identifying jurisdictions where merger filing notifications are a requirement before a transaction can be implemented. What is, however, often overlooked, is whether there are any specific timeframes within which filings must be submitted to a competent regulatory authority, such as the COMESA Competition Commission.
While in certain instances merging parties left the preparation of COMESA filings till after the conclusion and signing of the transaction agreements , recent experience in the Helios Towers acquisition of Madagascar Towers SA and Malawi Towers Limited demonstrates that one should always bear in mind the timing provisions for filing transactions in different jurisdictions on the continent.
In the Helios transaction, the parties did not fail to file the transaction with the COMESA Competition Commission, but rather failed to file it timeously. The provisions of the COMESA Competition Regulations state that a party to a notifiable merger must file a merger with the COMESA Competition Commission within 30 days of the parties’ decision to merge. Ordinarily, the COMESA Competition Commission considers the date on which the transaction agreement documents are concluded to be the relevant date on which the parties agreed to merge.
The COMESA Competition Commission found that the parties in the Helios transaction signed the Share Sale and Purchase Agreement documents on 23 March 2021, while the merger was only notified to the COMESA Competition Commission on 2 July 2021. In this respect, the COMESA Competition Commission noted that in terms of its regulations, the parties were meant to have completed their notification by 22 April 2021 (i.e., 30 calendar days from signature).
As a result of this finding the COMESA Competition Commission fined the parties 0.05% of their combined turnover in the Common Market for the 2020 financial year. While the COMESA Competition Commission could have fined the parties up to 10% of their combined turnover, they noted a number of mitigating factors including that (i) there was no loss or harm to the market, (ii) the parties cooperated with the Commission and (iii) there was no previous record of the parties having contravened the COMESA regulations.
It appears that the fine issued by the COMESA Competition Commission would amount to approximately US$101 700. This fine, which is equivalent to approximately R1.5 million, shows the importance of ensuring complete compliance with the provisions of the COMESA Competition Commission’s regulations.
The Registrar of the COMESA Competition Commission, Ms. Meti Disasa was quoted as stating that “the fine was the first of a kind for breach of the Regulations. The Commission therefore wishes to remind Undertakings in the Common Market to be cautious of the prescribed timeline for notifying mergers in under Article 24 (1) of the Regulations.”
Nortons Inc is recognized as a leading competition law practice and actively represents parties before regulators on the African continent.