Competition laws are being enforced in most African countries. In the past year, several new national and regional competition regulators became operational, and plans are underway for the African Continental Free Trade Agreement (AfCFTA) to harmonise competition law across the continent. While these are positive developments to promote fair markets, the impact on mergers and acquisitions (M&A), particularly those involving foreign investment, is complex. The flurry of new competition regulators (national, regional and continental) may bring more convenience and consistency to the merger filing process, but there are also concerns about political tensions, overlapping jurisdictions and high merger filing fees.
There have been some regulatory developments in 2024, including the AfCFTA Competition Protocol being published. The protocol aims to establish a continental regulator who will assess merger transactions with a 'continental dimension'. The AfCFTA will apply to the whole continent, not just certain member states. Regulations setting out merger thresholds are expected to be finalised soon.
The ECOWAS Regional Competition Authority (ERCA) became fully operational in October 2024. The ERCA must be notified of mergers involving parties that meet certain financial thresholds. The ECOWAS region comprises 15 Western African member states, including, Gambia, Guinea, Guinea-Bissau, and Togo. Military coups in member states such as Burkina Faso, Mali and Niger, which have led to their withdrawal from ECOWAS, also undermine the political stability of ECOWAS.
The publication of draft COMESA Competition Commission (CCC) regulations proposes that the CCC enforce a suspensory merger control regime. This shift from the current suspensory regime, which allows parties to implement their transaction before CCC merger approval, means that merger parties must now first obtain approval from the CCC before implementation. The COMESA region covers 21 African member states, including Egypt, Ethiopia, Kenya, Malawi, Mauritius, Uganda, Zambia and Zimbabwe.
The East African Community Competition Authority is expected to begin accepting merger filings soon. The East African Community (EAC) region covers eight member states, including the Democratic Republic of Congo, Kenya, Rwanda, Tanzania, and Uganda.
From a national perspective, the Uganda Competition Act 2024 became effective, and merger thresholds are expected to be published this year. The Malawi merger control regime changed its voluntary merger notification requirement to a mandatory requirement. Egypt also introduced a new merger control regime requiring that mergers be submitted to the national competition regulator for approval before implementation.
However, many complications arise due to the proliferation of regional regulators, in contrast to the European Union (EU), where only the European Commission (EC) regulates competition law across the continent, with national competition regulators across the EU recognising the EC's jurisdiction.
In Africa, several overlapping countries exist amongst regional regulators, and most AfCFTA member states also belong to a regional competition regulator. For example, Kenya, Uganda and Rwanda are common member states across both COMESA and the EAC – with all their member states also falling under the AfCFTA competition law regime. These overlaps may introduce conflicts when regulators exercise jurisdiction. This has been the case with the Egyptian Competition Authority and the Ethiopian Trade, Competition and Consumer Protection Authority, who have taken the approach that merger parties should submit merger filings to it separately, even if a merger is submitted to the CCC. This approach could result in increased transactional costs through duplication, from both a timing and resources perspective, including the possibility of paying merger filing fees to multiple competition regulators.
The ECOWAS merger thresholds are also relatively low. Compared to the CCC combined turnover thresholds of the merger parties, which is USD 50 million, the ECOWAS thresholds are almost half at approximately USD 25 million. Reduced thresholds will lead to an increase in merger filings where there may not be an impact on competition that requires regulatory scrutiny.
Increased competition law enforcement in Africa has potential positive developments for M&A transactions. In some instances, submitting merger filings to a regional regulator addresses the issue of navigating uncertain competition law processes in individual jurisdictions. For example, most Francophone countries in Africa have newly established competition law regimes or no competition law. From a deal planning perspective, this also means that merger parties will ideally pay one merger filing fee to the regional (or continental) regulator and have more certainty on review timelines when planning towards closing transactions.
However, some regional competition regulators, such as the CCC, allow member states to call for national review of transactions. The ability of national regulators to exercise concurrent jurisdiction can create deal uncertainty. This has recently been seen in the Canal+ proposed acquisition of Multichoice, wherein the Competition Commission of Mauritius requested a referral of the merger to it, and in the CCC's approval of a merger involving Access Bank Plc and National Bank of Kenya Limited, which was referred to the Competition Authority of Kenya for approval, separately to the CCC's determination.
It will be necessary for the various competition regulators to align their approaches. African competition regulators, both nationally and regionally, are increasingly demonstrating continental integration and an ability to learn from each other. Newer competition regulators should learn from the best practices of more established regulators. For example, the ECOWAS competition regulator is encouraged to adopt a similar approach to the CCC with regard to merger filing fees. While the merger filing fees in COMESA and ECOWAS are 0.1% of the merging parties' combined annual turnover or assets in the common market, COMESA has capped the fee at USD 200,000. In contrast, the ECOWAS filing fee is uncapped. This may raise serious concerns for merger parties with substantial turnover across the ECOWAS member states.
Addressing these complexities requires a coordinated effort to strengthen legal frameworks, enhance regional integration, and build the capacity of competition regulators across Africa without losing sight of the need for increased investment and economic growth.
