Most of the African countries have enacted competition law legislations in order to improve market conditions and attract investors. These regimes are very different from one country to another, depending in particular on the history of the country, its culture and whether its legal system is common law or civil law based. It should also be noted that while most of the African competition regimes contain rules addressing anticompetitive practices (e.g., concerted practices, abuse of dominance, State aids), they do not always provide for a merger control regime.

Most of these competition regimes are quite recent and have generally developed as from the very end of the 20th century, some of them still being at the early development stage and requiring improvements, implementing acts or institutions in order to be fully effective.

As in the European Union, several African countries have recently formed regional communities which also have, among their other supranational tasks (e.g., promotion of free trade areas, monetary unions), the power to control concentrations taking place within the territory of their Member States.

In particular, CEMAC[1], COMESA[2], UEMOA[3] and CEDEAO[4] are four regional organizations in Africa which have been instrumental in promoting the development of a merger control framework between their Member States. However, as a result of the different legal cultures of their respective Member States, the merger control regimes enacted by these organizations have very different scopes and are based on diverging concepts, both from a procedural (e.g., voluntary or mandatory control, regional authorities and courts[5] in charge of the control, prior or subsequent control of concentrations) and substantive point of view (e.g., thresholds, control criteria, remedies, sanctions). It should also be noted that, even within one and the same regional organization, the national merger control legislations of its Member States may be based on totally different concepts.

The purpose of the following comments is to point out some of the key characteristics of such regional merger control regimes of interest to companies involved in M&A deals in Africa, it being noted that each of them contains detailed provisions and raises specific issues that are not being addressed in this short Bulletin.

1. CEMAC

CEMAC Regulation No.1/99/UEAC-CM-639 of June 25, 1999 provides that concentrations of a community dimension must be subject to a prior notification and merger control review carried out by the CEMAC Organe de Surveillance de la Concurrence (« OSC »). Only concentrations meeting one of the following alternative thresholds[6] are considered as being of a community dimension: at least two of the undertakings involved each have a turnover above CFA Francs 1 billion in the Common Market or both undertakings have an aggregate 30% market share in the Common Market.

The Regulation details the applicable review procedure and states in particular that the CEMAC Regional Council is to issue a provisional decision within two months from the notification date and a final decision within five months.

Like in the European Union for instance, the Regulation provides that a concentration of a community dimension must exclusively be reviewed at the CEMAC level, thereby clearly indicating that Member States do not have the authority to review concentrations meeting the regional thresholds.

2. COMESA

COMESA Regulation of December 2004 also provides for a mandatory merger control procedure applying to all concentrations having an appreciable effect on trade between Member States and which restrict competition in the Common Market. It should however be noted that the Regulation does not apply to conduct expressly exempted by national legislation.

Two cumulative conditions trigger the requirement to notify a concentration with the COMESA Commission: both the acquiring firm and the target firm or either the acquiring firm or target firm operate in two or more Member States and the threshold of combined annual turnover or assets prescribed by the COMESA Board is exceeded.

The procedure is detailed in the Regulation and the Commission must make a decision within 120 days from the notification date and may inform the parties and seek an extension from the Board if a longer review period is necessary.

The Commission may also require the parties to a non-notifiable merger to file a notification if it appears that the merger is likely to substantially prevent or lessen competition or is likely to be contrary to public interest.

To our knowledge, the COMESA enforcement institutional framework is not entirely operational yet and additional implementing measures[7] are still awaited in order for this regional merger control to be fully effective.

3. UEMOA

As opposed to the above-mentioned regional merger control regimes, UEMOA legislation (in particular Regulation No.02/2002/CM/UEMOA of May 23, 2002) does not contain any procedure for the prior control of merger transactions, but Article 4§1 of Regulation No.02/2002 provides that concentrations are assimilated to abuses of dominant positions where they create or reinforce a dominant position leading to a significant hindrance of effective competition within the Common Market. When a concentration comparable to an abuse of dominant position comes to the UEMOA Commission's knowledge, the latter can order the parties involved to stop the transaction (if it has not been executed/closed) or to re-adopt the status they had before the transaction (i.e., equivalent of an order of "de-concentration"), or to modify or to fill out the transaction or to take any necessary measure to ensure or re-establish sufficient competition.

There is nevertheless one possibility for the parties to seek clearance of their transaction. Indeed, through the procedure of negative clearance, parties to a concentration have the possibility to ask for the Commission's opinion on the compatibility of a concentration with the above-mentioned rules. Such a request must be filed by the relevant parties and can be initiated at any time either before or after the signing and the closing of the contemplated transaction.

The Commission has six months, as from the date of the filing, to grant the parties with the requested negative clearance, or to start a contradictory procedure by communicating objections to the parties if the transaction raises serious competition concerns. In this case, the Commission has to issue its decision within 12 months.

According to the UEMOA Treaty, the UEMOA Regulations have a direct and mandatory effect in the Member States (and this, in spite of any contrary national legislation, be it anterior or posterior), it being noted that the competence of UEMOA institutions does not seem to be limited to practices having an effect on the trade between the Member States or taking place in several Member States at the same time. This was confirmed by an opinion of the UEMOA Court of Justice of June 27, 2000. Accordingly, national authorities and courts only have subsidiary authority, mainly to assist the Commission, as far as merger control is concerned.

In practice, the lack of thresholds, real merger control procedure and identifiable case-law renders any assessment difficult and may raise serious implementation concerns in transactions involving significant operators in the UEMOA Common Market

4. CEDEAO

CEDEAO Regulation (Acte additionnel A/SA.1/06/08 of December 19, 2008) does not provide for an a priori merger control procedure or even a procedure of negative clearance as in the UEMOA. The Regulation only states that mergers, purchases, joint ventures or any other types of acquisitions of control, either horizontal, vertical or heterogeneous, are prohibited where the resulting market share in the CEDEAO Common Market or a substantial part thereof for any product, service, commercial business or activity is likely to create a position of strength having as its consequence to substantially lessen competition. Such prohibited concentrations are automatically void and without any effect within any CEDEAO Member State. The Regulation however includes a political exception as it states that prohibited concentrations may be authorized or exempted provided that the related transaction is in public's interest.

The absence of clear thresholds and the ambiguous definition of what may be considered as a prohibited concentration requires a careful assessment of any contemplated transaction in order to mitigate the risk of it being put into question post-closing.

The existence of this regional authority having merger control jurisdiction with respect to a series of Member States which are also members of UEMOA may raise jurisdiction conflicts in the future even though both regional authorities have shown willingness to cooperate to date in order to harmonize their policies.

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In addition, it is expected that the Organization for the Harmonization of Business Laws in Africa (OHADA)[8] which includes Member States being also members of one or several of the above-mentioned organizations will enact a Uniform Act relating to competition law in the future, which would certainly require the harmonization of such rules with those of the CEMAC, UEMOA and CEDEAO.

Depending on their size and the operators concerned, merger transactions taking place in the African Continent may therefore fall under the merger control legislations of several countries and/or one or several regional organizations. Although statistics are not always available in the territories concerned, various transactions (e.g., in the mining, energy and infrastructure sectors) are subject to notification requirements in Africa.

Although the creation of regional organizations has been useful in order to promote the awareness and development of competition rules in Africa, there is still room for improvements and harmonization of merger control rules both between the various organizations and inside each of those organizations. In practice, some of the rules referred to above may raise difficulties because of the diverging and/or uncertain interpretations and parties to a transaction taking place in certain territories sometimes prefer to file a notification both at the national and community level for the sake of completeness even though this may raise additional implementing delays and costs.

In any case, private companies involved in M&A deals in Africa need to take into account the constraints and requirements imposed by regional and national competition rules. Compliance with merger control rules is of the utmost importance as huge administrative and/or penal fines and other sanctions may generally be imposed on the companies involved, at the national and/or regional level, in addition to the transaction being declared void in the case of non-compliance.