Competition Authority of Kenya director general, Francis Wangombe. The authority says Kenyan law on mergers has not changed. Photo/Salaton Njau
What you need to know:
Amendments of the merger rules, subject to approval of the Comesa Council of Ministers, may include filing thresholds for mergers, replacing the current zero thresholds and clearer procedures for parties to seek advice from the Comesa Competition Commission on whether to file, without necessarily paying the filing fee.
The rules have stoked a row with the Competition Authority of Kenya over their overlapping jurisdiction.
The competition regulatory agency for the Comesa trading bloc has proposed relaxation of its recently published rules on cross-border mergers and acquisitions, which Kenya has opposed as being too stringent and expensive to implement.
The rules published by the Common Market for Eastern and Southern Africa (Comesa) Competition Commission have also stoked a row with the Competition Authority of Kenya (CAK) over their overlapping jurisdiction.
The Comesa Competition Commission (CCC) director, George Lipimile, said in an interview that the amendments would focus on notification fees payable by parties entering cross-border deals and the time taken to approve such transactions.
“We appreciate that once a merger is notified that means that the parties have got to pay the notification fees of up to $500,000. What if a notification attracts such a fee and then at the end you are told that it has got no appreciable effect? So we are considering amending the regulations to make it clearer as to when a transaction is likely to have an appreciable effect on trade between member states,” said Mr Lipimile in an interview with UK-based law firm Clifford Chance.
Amendments of the merger rules, which will be subject to approval of the Comesa Council of Ministers, may include filing thresholds for mergers, replacing the current zero thresholds and clearer procedures for parties to seek advice from CCC on whether to file, without necessarily paying the filing fee.
Mr Lipimile said that having received concerns over the amount of filing fees payable, CCC is going to look into the issue, raising the likelihood of the introduction of a lower amount that reflect the size of the notified transaction.
As it stands, the filing fee is whichever is lower between (Sh42.5 million) $500,000 or 0.5 per cent of the merging parties’ combined turnover in the Comesa region (or 0.5 per cent of their combined assets in that region, whichever is higher).
The period of review of merger applications has been another bone of contention between Comesa and the member states, with the Comesa review taking a maximum of 120 days compared to less than half that time in some member states’ jurisdictions.
To deal with this, CCC plans to introduce a review, with straightforward deals being cleared in four to six weeks, and those raising concerns being dealt with in a second track of 90 days.
CCC warned last month that companies which enter into cross-border mergers and acquisitions without its approval faced heavy penalties or reversal of the transactions, if later found to be anti-competitive.
Attorney-General Githu Muigai in March advised Kenyan companies to only seek approval for such deals from the Competition Authority of Kenya (CAK), but the Comesa agency has stood firm on its demand, causing fear among transaction advisors.
CAK insists that the Kenyan law on mergers has not changed, but said it would wait for official proposals on any changes before making a comprehensive statement.
Mr Lipimile said the changes to the regulations will be ready by the time of the next meeting of the Council of Ministers in Kinshasa in November, and that CCC feels that the changes will “make the whole process more clear and more user friendly.”
Amended draft guidelines, including guidance on the merger regime, are likely to be issued for a limited consultation period this month.
