COMESA – Firms carrying out cross-border mergers and acquisitions in East and Southern Africa will now be required to pay a fee of up to Sh44 million in new rules expected to enhance fair competition.
The guidelines released by the Competition Commission of the Common Market for Eastern and Southern Africa (Comesa), also require companies to give notice of such transactions within 30 days of entering a legally binding agreement.
The framework has been developed with the aid of the International Finance Corporation, and will affect companies operating in any of the 19 member-states of the trading bloc.
Deals that are subject to Comesa commission are, however, only those involving firms with a turnover of at least $5 million in each of the countries where they operate.
Transactions involving companies with smaller turnovers will be left to the national competition regulators such as the Competition Authority of Kenya.
This cools a simmering tussle between the over-arching regional competition commission and national rivalry watchdogs over which of the pair has the authority to approve or disapprove mergers and acquisitions.
“The purpose of the guidelines is to set forth framework to be applied by the commission when determining whether a merger is likely to substantially prevent or lessen competition.
“The guidelines are as a result of broader consultation with various stakeholders in the region and internationally,” Mr Willard Mwemba, head of mergers and acquisitions at the Comesa Competition Commission said.
Under the new rules, the competition commission will take 120 calendar days to assess a planned merger and acquisition and if deemed impossible to complete the scrutiny within the time frame, it can seek an extension of up to 30 days.
According to Ms Catherine Masinde, head of the East and Southern Africa investment climate at the IFC, mergers and acquisitions will accelerate competition in export markets and enhance regional integration by opening new markets.
“We are confident that opening up of markets will reduce prices for national consumers by making prices competitive,” she said.
They spoke on Monday on the sidelines of a workshop on merger assessment guidelines organised by the Comesa Competition Commission.
The rules were approved by the Comesa council in 2004 but the competition commission commenced their implementation in January last year.