Notification and clearance timetable

Filing formalities

What are the deadlines for filing? Are there sanctions for not filing and are they applied in practice?

The Act does not impose deadlines for filing and the Commission has in certain instances accepted notifications made after conclusion. The Act prohibits the implementation of a merger without obtaining merger approval.

There are sanctions for implementing a merger that is reviewable by the Commission without the approval of the Commission. These sanctions include an administrative penalty not exceeding 10 per cent of the annual turnover of the enterprise. Furthermore, the implemented transaction is declared void.

Which parties are responsible for filing and are filing fees required?

Any party to the transaction or the parties’ appointed representatives can notify the Commission and pay filing fees. The parties may lodge a joint notification (which is the option preferred by the Commission), but if there are two or more independent parties intending to take over a competitor separately then each party is required to lodge a separate notification.

The notification fees for the application for authorisation of a merger in respect of notifiable mergers is 0.1 per cent of the turnover or assets, whichever is higher. The turnover or assets refers to the annual turnover or assets of all the parties to the transaction in Zambia. The annual turnover and assets of the parties to the transaction will be grouped in sets and it will be the sets that will be considered. The highest value among the figures reflected in the sets of annual turnover and assets will be considered for the calculation of the notification fee, with a ceiling of 5 million Kwacha on the filing fee. When considering the annual turnover or assets of the parties to the transaction, the concept of a single economic unit will be considered (ie, it is the position of the Commission that if a merging party has subsidiaries located in Zambia, they form a single economic unit). For parties wholly domiciled outside Zambia, the notification fee will be based on the total values of the assets or turnover generated in Zambia.

What are the waiting periods and does implementation of the transaction have to be suspended prior to clearance?

There is no prescribed waiting period, but there is an initial assessment period of 90 days for authorisation of the merger, which runs from the date of notification to the Commission for the grant of approval. The Commission may extend the assessment period by a period not exceeding 30 days after it gives notice 14 days prior to the expiry of 90 days.

If the Commission does not issue its determination regarding a proposed merger within the period specified, the proposed merger shall be deemed to be approved.

The implementation of the transaction has to be suspended while awaiting clearance.

Pre-clearance closing

What are the possible sanctions involved in closing or integrating the activities of the merging businesses before clearance and are they applied in practice?

It is an offence punishable by an administrative fine not exceeding 10 per cent of the enterprise’s annual turnover (based on the latest audited accounts), in the absence of authority from the Commission, to participate in effecting:

  • a merger that is reviewable by the Commission but has been implemented without the approval of the Commission;
  • a merger that is rejected by the Commission; or
  • a merger that fails to comply with conditions stated in a determination or with undertakings given as a condition of a merger approval.

A reviewable merger that is implemented without the Commission’s authorisation is void.

The Commission, however, accepts notifications even after the conclusion of a merger and in practice may not impose the foregoing sanctions.

Are sanctions applied in cases involving closing before clearance in foreign-to-foreign mergers?

Sanctions can be imposed in cases involving closing before clearance in foreign-to-foreign mergers if such transaction had the necessary nexus requiring notification with the Commission. This is usually the case where enterprises involved in foreign-to-foreign mergers have subsidiaries or sales in Zambia and merger approval has not been obtained from the Commission.

What solutions might be acceptable to permit closing before clearance in a foreign-to-foreign merger?

Where an initial assessment reveals no competition concerns, the Commission as a matter of course issues interim authorisations and this enables the parties to close before final clearance by the Board of the Commission (the Board). An interim authorisation is only issued when the Commission is satisfied that a notified transaction gives rise to no competition concerns and it can be reviewed before the final authorisation being granted. The Commission may also require parties to make such undertakings that, in the opinion of the Commission, may remedy any competition concerns to which a notified merger may give rise.

Public takeovers

Are there any special merger control rules applicable to public takeover bids?

The Act does not make reference to public takeover bids and consequently sets no special rules in relation to public takeover bids.

Documentation

What is the level of detail required in the preparation of a filing, and are there sanctions for supplying wrong or missing information?

The notification is required to be detailed enough for the Commission to be able to make a preliminary assessment with a view of authorising the merger. The notification is made on a prescribed Form 1 as well as a Supplementary Information Request form, which are fairly detailed. Form 1 specifies the following documents to accompany the application:

  • two copies of the latest annual report and audited accounts (including the balance sheet);
  • a copy of the agreement or other documents relating to the transaction;
  • a press release or other shareholders, board or management statement on the transaction;
  • other market or industry study reports that support the transaction; and
  • strategic plans or minutes of the board on the transaction.

Notwithstanding the above, supplementary information requests may be done prior to assessment and during assessment if need be. Further, applicants for merger approval may have pre-notification meetings with the Commission to, inter alia, determine the information actually required by the Commission and may result in a significant reduction in the information required to be submitted. The Commission may, at any time, revoke an approved merger if a party to the merger submitted materially incorrect or misleading information in support of the merger.

Investigation phases and timetable

What are the typical steps and different phases of the investigation?

There is a two-phase investigation process. The first phase is conducted by the Commission’s management during the first 35 calendar days of an investigation and starts with the review of the application, followed by third-party stakeholder consultations and, finally, a preliminary assessment report. If it is concluded at the first phase that a merger is less than likely to harm competition and that no further evidence is likely to be uncovered to revise this finding, the Sub-Technical Committee of the Board (TC) will ‘fast-track’ clearance of the merger application. The full Board may then delegate authority to the TC to issue a final authorisation of the merger by calendar day 45.

In the event that a TC Phase I clearance is rejected by the full Board, the application proceeds to Phase II of the investigation. During Phase II, the Commission will conduct further market research and analysis, culminating in a staff paper to the Board. By day 90, merging parties are informed in writing of the Board’s determination and the Board’s decision will follow thereafter.

What is the statutory timetable for clearance? Can it be speeded up?

The period allowed for assessment of a proposed merger is up to 90 calendar days from the date of application with the possibility of an extension of 30 days if prior notice is given 14 days before the expiry of the 90 days. The Commission is required to complete its assessment of a proposed merger and issue its determination within 90 days of the date of the application for authorisation, unless a party to the proposed merger fails to provide the Commission with the information required. The speed of the transaction will depend on their complexity and on whether they fall under Phase I or Phase II. Phase I transactions are concluded within 45 days, while Phase II take more than 45 days but are subject to statutory time limitations.