Legislation and jurisdictionRelevant legislation and regulators
What is the relevant legislation and who enforces it?
Algerian merger control rules are set forth in Chapter III of Ordinance No. 03-03 dated 19 July 2003 relating to competition, as amended by Law No. 08-12 dated 25 June 2008 and Law No. 10-05 dated 15 August 2010 (Ordinance 03-03). The Executive Decree No. 05-219, dated 22 June 2005 (Decree 05-219) specifies the conditions of merger control notifications.
The competent authority is the Algerian National Competition Council (the Competition Council).
The Competition Council was reactivated on 29 January 2013 following a freeze of its activities for almost 10 years.
The Competition Council, as an administrative authority assigned to the Trade Minister, is entrusted with the following tasks:
- to sanction anticompetitive practices, such as concerted practices, cartels and abuses of a dominant position;
- to control concentrations, in particular to prevent the strengthening of dominant positions and the abuses that may derive from it; and
- to advise companies and associations at the request of public authorities or on its own initiative.
After a period of time to process the files left by the former Competition Council and train its members in the context of a twinning programme with the European Commission, the Competition Council now focuses notably on increasing the economic operators’ awareness on the merger control framework.
The government and the Ministry of Trade retain residual powers regarding merger control. For example, the Competition Council shall seek the opinion of the Minister of Trade and the Minister in charge of the sector concerned by the concentration, before authorising or rejecting, by motivated decision, the concentration.
The government is entitled to authorise a concentration rejected by the Competition Council on the basis of public interest reasons.Scope of legislation
What kinds of mergers are caught?
Pursuant to article 15 of Ordinance 03-03, there is a concentration when:
- two or more previously independent undertakings merge;
- one or more natural persons already controlling at least one undertaking, or one or several undertakings, acquire directly or indirectly, whether by acquisition of an equity stake or by purchase of assets, by contract or by any other means, the control of the whole or of parts of one or several undertakings; or
- a joint-venture performing on a lasting basis all the functions of an autonomous economic entity is created.
What types of joint ventures are caught?
Joint ventures performing on a lasting basis all the functions of an autonomous economic entity are caught by the Algerian merger control regime.
Is there a definition of ‘control’ and are minority and other interests less than control caught?
The control, used to appraise the existence of concentrations, results from contractual rights or any other means that either separately or jointly, and having regard to the considerations of fact or law involved, give the possibility to exercise a decisive and lasting influence over the activity of an undertaking. In particular such control results from:
- ownership rights or rights to use all or part of the assets of an undertaking; and
- rights or contracts that confer decisive influence over the composition, deliberations or decisions of the corporate bodies of an undertaking.
What are the jurisdictional thresholds for notification and are there circumstances in which transactions falling below these thresholds may be investigated?
Concentrations that may impact competition by reinforcing, for example, the dominant position of an undertaking on a given market shall be notified to the Competition Council.
Such notification is automatically required when the concentration aims at achieving a threshold in excess of 40 per cent of the sales or purchases made on a given market.
Even in the hypothesis that the market share threshold of 40 per cent is not met, the referral to the Competition Council might be required when the concentration has an impact on the competition.
Is the filing mandatory or voluntary? If mandatory, do any exceptions exist?
The filing is mandatory and not voluntary. No exceptions exist.
Do foreign-to-foreign mergers have to be notified and is there a local effects or nexus test?
Foreign-to-foreign mergers must be notified to the Competition Council whenever the conditions set forth by Ordinance 03-03 are met, that is, the relevant transaction is characterised as a concentration and the concentration impedes competition on a relevant market (which is the case when the 40 per cent threshold is reached).
Are there also rules on foreign investment, special sectors or other relevant approvals?
Algeria has adopted a new Investment Law in 2016, which repeals most of the provisions of Ordinance No. 01-03 on the development of investment and provides for significant changes to the legal framework governing investments. Six executive decrees dated March 2017 complete this new set of legal rules.
Foreign investments are merely subject to a prior registration with the National Agency for Investment Development. The approval of the National Council for Investment is no longer required, except with regard to the exceptional advantages granted by the Investment Law.
Among the rules applicable to foreign investments, it is worth noting that the exercise in Algeria by foreign investors of activities in the sectors of production of goods, services and importation can only be conducted through a company in which 51 per cent of the share capital is held by one or several Algerian national residents. As a consequence, the level of foreign ownership in the capital of an Algerian company operating in these sectors cannot exceed 49 per cent of the share capital.
Certain sectors are regulated and require specific approvals. Such sectors include:
- the oil and gas sector supervised by the Ministry of Energy, the Hydrocarbons Regulatory Authority and the Hydrocarbons Resources Valuation National Agency;
- the medical and pharmaceutical sector supervised by the Ministry of Health;
- the banking sector supervised by the Banking Commission (within the Central Bank);
- the insurance sector supervised by the Insurance Supervisory Commission;
- the automotive sector supervised by the Ministry of Industry and Mines; and
- the telecommunication sector supervised by the Post and Telecommunications Regulatory Authority.
In terms of the merger control regime, the Competition Council seeks the opinion of the Minister in charge of the sector concerned with the concentration, before authorising or rejecting the concentration, by motivated decision.
Notification and clearance timetableFiling formalities
What are the deadlines for filing? Are there sanctions for not filing and are they applied in practice?
No specific deadlines are provided for filing. The only obligation is to obtain a clearance from the Competition Council prior to closing the transaction. Given the level of details requested by the Competition Council as part of the filing, the transaction should be referred to the Competition Council as soon as it has become sufficiently advanced and certain.
In this sense, it is worth noting that the upcoming reform of Ordinance 03-03 provides that the notification shall be made when the project is sufficiently advanced to enable the file to be examined, in particular when the parties have reached an in-principle agreement or signed a letter of intent.
The absence of filing is sanctioned by Ordinance 03-03 when a referable transaction is closed without the clearance of the Competition Council (see question 12).
Which parties are responsible for filing and are filing fees required?
When the concentration takes the form of a merger or the creation of a full-function joint venture, it shall be jointly notified by the parties to the concentration.
When the concentration takes the form of a takeover, the acquirer is responsible for the notification.
No filing fees apply.
What are the waiting periods and does implementation of the transaction have to be suspended prior to clearance?
The Competition Council shall render its decision within three months of the filing.
During the timeline required for the decision of the Competition Council, the authors of the concentration operation shall not take any measure rendering the concentration irreversible. In other words, the filing has a suspensory effect.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?
The sanction incurred in case of a concentration closed without prior clearance consists of a maximum fine of 7 per cent of the turnover realised during the last fiscal year in Algeria by the parties to the concentration or by the undertaking resulting from the concentration (article 61 of Ordinance 03-03).
Ordinance 03-03 and Decree 05-219 do not expressly provide for the dismantling of the concentration in Algeria (and cancellation of the effects of the concentration) in case the latter is closed without the prior clearance by the Competition Council.
Are sanctions applied in cases involving closing before clearance in foreign-to-foreign mergers?
The sanctions described in question 12 apply where a referable transaction is closed before clearance by the Competition Council, regardless of whether the transaction is foreign-to-foreign.
What solutions might be acceptable to permit closing before clearance in a foreign-to-foreign merger?
Ordinance 03-03 and Decree 05-219 do not provide for specific solutions to permit closing of foreign-to-foreign mergers before clearance.Public takeovers
Are there any special merger control rules applicable to public takeover bids?
The Algerian competition legislation does not provide for any special merger control regime applicable to public takeover bids. General rules should therefore be applied.
The upcoming reform of Ordinance 03-03 provides for a special provision whereby notification of a merger in the context of a takeover bid shall take place at the time of the announcement of the offer.Documentation
What is the level of detail required in the preparation of a filing, and are there sanctions for supplying wrong or missing information?
Decree 05-219 specifies the content of the file to be submitted to the Competition Council regarding the application for the authorisation of a concentration, which is fairly detailed.
The main documents and information to be provided consist of:
- the application form (according to Annex 1 of Decree 05-219) dated and signed by the ‘concerned undertakings’ (or their representatives duly authorised) indicating:
- identity of the applicants;
- identity of the other participants to the filing;
- subject matter of the application; and
- statement from the applicants whereby they declare that the information and documents provided to the Competition Council are sincere and conform to the facts, and that the estimates, figures and assessments are indicated in a manner as close as possible to the reality; and
- the information form (according to Annex 2 of Decree 05-219) providing for:
- activity concerned by the notification;
- turnover generated by the concerned activity;
- share capital structure of each undertaking;
- nature of the concentration;
- economic and financial structure of the concentration;
- market data (alternative markets of the products or services; geographical zone where the concerned undertakings offer their products or services); and
- impact of the concentration on the concerned market of products or services (markets impacted by the concentration, structure of the concerned market of products or services, existence of barriers to entry into such market, extent of the impact of the concentration on the competition, measures to mitigate the effects of the concentration on the competition).
The Competition Council may ask for any other documents or information it deems necessary (it can even order the seizure of any documents it deems necessary).
The Decree 05-219 does not provide any sanctions for supplying wrong or missing information. The general rule of article 59 of the Ordinance 03-03 should therefore be applied.Investigation phases and timetable
What are the typical steps and different phases of the investigation?
Since its reactivation, the Competition Council is sparsely seized of concentration cases. Except for the indications provided by Algerian law (as described herein), it is difficult at this stage to rely on an outstanding practice from the Competition Council to describe the typical steps in an investigation.
What is the statutory timetable for clearance? Can it be speeded up?
Ordinance 03-03 provides that the overall process from the filing until the decision by the Competition Council shall not exceed three months. No detailed procedure or timetable per phase is provided by Algerian law.
The Algerian competition legislation does not provide for any accelerated procedure.
Substantive assessmentSubstantive test
What is the substantive test for clearance?
The substantive test for clearance is whether the transaction impacts competition on a relevant market, by strengthening notably a dominant position. A referral to the Competition Council is automatic when the concentration aims at achieving a threshold in excess of 40 per cent of the sales or purchases made on a given market.
Is there a special substantive test for joint ventures?
Algerian law does not provide for a special substantive test for joint ventures.Theories of harm
What are the ‘theories of harm’ that the authorities will investigate?
As a preliminary step, the Competition Council shall define precisely the relevant product markets and their geographical scope.
When assessing the impact of the concentration on competition, the Competition Council will analyse the various effects that the transaction might have, such as:
- horizontal effects (horizontal overlap resulting in the creation or strengthening of a dominant position);
- vertical effects (input foreclosure or customer foreclosure);
- coordinated effects (coordination of behaviour post-merger); and
- conglomerate effects (portfolio effects).
To what extent are non-competition issues relevant in the review process?
The concerned parties shall submit to the Competition Council, as part of the filing, the purpose of the concentration as well as the economic sectors concerned by the merger.
Once the review process has been completed and the Competition Council has made its decision, the government may authorise for general interest reasons, upon a report of the Minister of Trade and the Minister responsible for the sector concerned by the concentration, a concentration rejected by the Competition Council.
Moreover, the Algerian mergers control authorises mergers when they are resulting from the application of legislative or regulatory text.Economic efficiencies
To what extent does the authority take into account economic efficiencies in the review process?
Concentrations that improve the competitiveness, help to develop employment or enable small and medium-sized enterprises to consolidate their competitive position in the market are not subject to the 40 per cent threshold. Such efficiencies are assessed by the Competition Council as part of the review process.
Remedies and ancillary restraintsRegulatory powers
What powers do the authorities have to prohibit or otherwise interfere with a transaction?
The Competition Council is entitled, after consultation with the Minister of Trade and the Minister responsible for the sector concerned by the concentration, to reject the merger by reasoned decision.
Article 21 of Ordinance 03-03 entitles the Algerian government to authorise, on the basis of a report of the Trade Minister and the Minister in charge of the sector concerned by the concentration (at its own initiative or upon the request of the parties), a concentration rejected by the Competition Council, provided that public interest reasons justify such authorisation.Remedies and conditions
Is it possible to remedy competition issues, for example by giving divestment undertakings or behavioural remedies?
The Competition Council can authorise the concentration with prescriptions aimed at mitigating the effects of the concentration on the competition. The parties to the concentration could also by themselves undertake certain commitments aimed at mitigating the effects of the concentration on the competition.
In the case of non-compliance with the prescriptions or commitments, the Competition Council may impose a fine of up to 5 per cent of the turnover excluding taxes realised in Algeria during the last financial year by each undertaking that is a party to the concentration, or by the undertaking resulting from the concentration.
What are the basic conditions and timing issues applicable to a divestment or other remedy?
The parties are entitled to suggest, by themselves, commitments along with the notification file. Indeed, the parties shall indicate in the notification of the concentration the nature of measures to be taken to mitigate the effects of the concentration on competition (if applicable).
Nothing prevents the parties from proposing commitments during the review process of the filing by the Competition Council.
What is the track record of the authority in requiring remedies in foreign-to-foreign mergers?
To our best knowledge, the Competition Council has not yet required remedies in foreign-to-foreign merges since its reactivation in 2013.Ancillary restrictions
In what circumstances will the clearance decision cover related arrangements (ancillary restrictions)?
Ordinance 03-03 remains silent on the issue of ancillary restrictions. The decisional practice of the Competition Council would likely clarify this issue in the future.
Involvement of other parties or authoritiesThird-party involvement and rights
Are customers and competitors involved in the review process and what rights do complainants have?
Customers and competitors might be involved in the review process of the concentration, as the Competition Council is authorised to seek the advice of any expert or hear any person who may inform it. The Competition Council may collect any information it deems necessary for its investigation from the companies or any other person.Publicity and confidentiality
What publicity is given to the process and how do you protect commercial information, including business secrets, from disclosure?
Decisions rendered by the Competition Council are published in the official competition bulletin as well as on the website of the Competition Council.
Past decisions and brief summaries of pending notifications are publicly available on the Competition Council’s website.
The Competition Council members are bound by professional secrecy.
When filing a concentration to the Competition Council, the concerned undertakings can ask that certain information or documents be covered by the trade secrecy. In such case, the concerned information and documents are made available separately and shall indicate on each page ‘trade secret’.
It is worth noting that nothing prevents the Competition Council from organising a market test with respect to the concentration resulting from any transaction, and contacting the parties’ competitors and suppliers to define, for example, the relevant product markets and their geographical scope.Cross-border regulatory cooperation
Do the authorities cooperate with antitrust authorities in other jurisdictions?
Since its reactivation, the Competition Council has cooperated with the French Competition Authority, the Italian and German competition councils to elaborate its doctrine, in the frame of a cooperation programme financed by the European Commission, entitled ‘programme de jumelage entre l’Algérie et l’Union Européenne (P3A)’.
This programme involves the members of the Competition Council and the French Authority (as leader and principal partner) and the Italian and German competition councils. One of the purposes of this programme is to provide training to the Competition Council from European experts, and to assist the Competition Council in building its own doctrine.
For example, on 27 April 2017, the Competition Council with the French Competition Authority’s vice president led a workshop in Algiers, which many companies, organisations and administrations attended, to raise their awareness of competition compliance programmes.
Judicial reviewAvailable avenues
What are the opportunities for appeal or judicial review?
A decision of the Competition Council rejecting a concentration can be appealed before the Conseil d’Etat (administrative Supreme Court).
The upcoming reform clarifies the fact that decisions authorising a concentration can also be appealed before the Conseil d’Etat.Time frame
What is the usual time frame for appeal or judicial review?
Ordinance 03-03 does not provide for any appeal period.
Enforcement practice and future developmentsEnforcement record
What is the recent enforcement record and what are the current enforcement concerns of the authorities?
The Competition Council is sparsely seized of concentration cases, with around four applications since its reactivation, including one case in 2014 on the acquisition by the National Investment Fund of 51 per cent of Orascom Telecom Algérie (Djezzy) share capital, one of the leading mobile operators in Algeria. More recently, on 15 October 2017, the Competition Council has received a merger notification in the industrial gases sector between LINDE AG, a German company, and PRAXAIR INC, a US company. By a decision dated 16 January 2018, the Competition Council authorised the operation without subjecting the parties to commitments. Within the framework of the substantive assessment, the Competition Council submitted the operation to the opinion of several ministries concerned by the concentration as provided for in article 19 of Ordinance 03-03, including: the Ministry of Energy; the Ministry of Industry and Mines; and the Ministry of Trade. In an effort to address this trend, the Competition Council recently conducted an awareness campaign intended for the economic operators on the merger control framework, recalling the sanctions incurred when a notifiable concentration is realised without the Competition Council authorisation (fine up to 7 per cent of the turnover realised during the last fiscal year in Algeria by the parties to the concentration or by the undertaking resulting from the concentration). On 9 January 2018, the Competition Council published a communiqué to the economic operators concerning the authorisations of the merger operations in which it develops the conditions and the procedure of merger control notification.Reform proposals
Are there current proposals to change the legislation?
The Competition Council has announced that a draft reform of Ordinance 03-03 on competition is under preparation.
This draft reform results from an audit of the Algerian competition legal and regulatory framework led by international experts under the auspices of UNCTAD, and from the experience gained by the Competition Council over the past four years.
The reasons for this draft reform were exposed by the Competition Council in its last annual report, which include the several grey areas of the current framework.
In its notice No. 04/2016, the Competition Council details the main proposed amendments to the provisions of Ordinance 03-03.
Concerning the merger control regime, the main proposals can be summarised as follows:
- clarification of the deadline for filing (ie, when the parties concerned are in a position to submit a project sufficiently advanced to enable the file to be examined, in particular where they have reached an in-principle agreement, signed a letter of intent or announcement of a takeover bid or public offering sale);
- replace the 40 per cent market share threshold by turnover thresholds;
- total worldwide turnover excluding taxes of all the undertakings or groups of natural or legal persons involved in the concentration exceeds the amount fixed by regulation; and
- total turnover excluding taxes in Algeria by at least two of the undertakings or groups of natural or legal persons concerned exceeds the amount fixed by regulation.
Update and trendsKey developments of the past year
What were the key cases, decisions, judgments and policy and legislative developments of the past year?No updates at this time.