COMESA Member States Provide Greater Clarity with New Guidelines

Member states of the Common Market for East & Southern Africa (COMESA) have finalised a draft document entitled “Merger Guidelines”, after a validation workshop held on July 1-2, 2014. It has now been tabled for approval by the board of commissioners in August of this year.

Aimed at providing merger guidance for companies within the common market, the guidelines have been prepared in response to calls for greater clarity and legal certainty in the supranational merger control regime of the regional competition law dubbed COMESA Competition Regulations. The enforcement of said law was announced in January 2013, following its ratification by the council of ministers established under the treaty that established the common market, according to the guidelines document.

The regulation has established a separate entity, named the COMESA Competition Commission, which has the power to apply the part of the regulation that deals with trade between member states and promotes competition within the common market. The commission has a board as its supreme policy body. Launched in December 2008, the commission officially commenced operations on January 14, 2013. It is composed of the secretariat, headed by a director, which is responsible for investigation; the Committee of Initial Determination (CID), responsible for making initial determinations on notification and complaints, and a Board of Commissioners also mandated with the adjudicative functions.

The board shall consist of not less than nine and not more than 13 Commissioners appointed by the council of ministers of the common market on the recommendation of the secretary general. The first board was appointed in the year 2011.

It was through this commission that  the current guideline was prepared with financial assistance from the International Finance Corporation (IFC) of the World Bank (WB).

The first draft of the guideline was publicised in April 2013, in order to collect  comments from stakeholders. The draft is designed to clarify parts of the COMESA competition regulations, in force since 2004, which deal with mergers and acquisitions.

Following the submission of the initial deliverables by the consultants, which included the revised draft merger control guideline, the Commission, in collaboration with the IFC, organised a regional workshop, which took place in April 2014, in Johannesburg, South Africa. Here, the Member States deliberated on the guidelines produced by the Consultants.  Since then, the consultants, in collaboration with a steering committee, have been working to perfect the document taking into account inputs from the member states and other stakeholders.

The draft was finalised last week during a workshop organised by the commission in collaboration with the Ethiopian Trade Practices & Consumer Protection Commission (TPCPC). The draft has now been sent to be approved by the supreme policy organ of the commission, the board of commissioners, who are scheduled to meet in August this year, according to George K. Lipimile, director and chief executive officer (CEO) of the Commission.

In addition to the representatives from the national competition authorities of the COMESA member states, the workshop was attended by a cross section of competition law experts and practitioners from the region and beyond, according to Lipimile.

“The merger control guideline is expected to be in line with international best practices and should meet the expectations of the users,” he said.

Among the detailed clarification on the regulations provision concerning merger is the meaning attached to merger control by the regulation. Accordingly, the merger control mandate of the commission – based in Lilongwe, Malawi – concerns those mergers capable of having a regional dimension, with an appreciable effect on trade and which restricts competition.

It also provided much more detailed clarifications on the control of merger, notification of a proposed merger, merger proceedings and considerations of a merger, which are generally provided in the competition regulations. Further detail clarifications and explanations are made under the guideline on the matter of what constitutes a merger to territorial nexus; from pre-notification consultation and comfort letters to the notification process; from assessment of the merger and merger assessment considerations to analytical approaches and methodologies.


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