Overview of the Moroccan merger control regime
Posted in Competition
The Moroccan merger control regime has been fully operational in its current form since December 2018. Parties considering mergers and acquisitions with a nexus to Morocco must take into account the potential implications of the regime, which prohibits the implementation of notifiable transactions without the approval of the Conseil de la Concurrence (CC), the Moroccan competition authority. This blog provides an overview of the key features of the Moroccan merger control regime.
While a new competition law was enacted in 2014, Morocco’s new competition regime only became fully operational in December 2018 with the appointment of the CC’s new members after a long transitional period.
The Moroccan merger control regime is suspensory and mandatory in nature. Transactions are subject to approval if one of the following thresholds are satisfied:
- where the parties’ combined global turnover is more than 750 million dirhams (approx. USD 78 million);
- where at least two of the parties have individual turnover of more than 250 million dirhams (approx. USD 26 million) in Morocco;
- the parties have a combined market share of at least 40% in Morocco.
As the three thresholds are alternative, only one of these thresholds must be met for the transaction to be subject to notification. For example, transactions are caught if they meet the global turnover threshold irrespective of the parties’ local turnover. However, there is an argument that transactions are not notifiable where parties have no presence or turnover in Morocco (local effect test).
The Moroccan merger control regime covers mergers, acquisitions of control (sole or joint) and creation of “full function” joint ventures (i.e. those which perform on a lasting basis all the functions of an autonomous economic entity), but in the absence of guidelines, it remains to be seen how the CC will interpret this concept in practice.
The acquirer (in case of an acquisition of sole control) or all of the controlling parties (in case of a merger or creation of a joint venture) must submit the filing to the CC. The filing requires the completion of the prescribed forms and supporting documentation. In addition, the parties must provide a summary of the transaction in French and Arabic for publication by the CC. Informal contacts with the CC are recommended before notification to facilitate a smooth and timely treatment of the case.
A penalty of 5 per cent of the parties’ turnover in Morocco (in the last fiscal year) may be imposed in case of failure to notify, gun jumping (except upon express authorisation to implement the transaction before clearance), failure to comply with commitments or injunctions, or incomplete or inaccurate information in the notification. To date, the CC has not imposed any fines on parties for these infringements.
The CC has full jurisdiction over mergers and acquisitions in all industry sectors with the exception of the telecommunications and financial services sectors. Transactions in the telecommunications sector must be notified to the Agence Nationale de Réglementation des Télécommunications, the sector regulator. In the case of transactions in the financial services sector, the CC must await the prior opinion of the Bank Al-Maghrib, the Moroccan central bank, before making any decision.
The merger control regime provides for a five-month period, including a two-month Phase I (60 days from the receipt of a complete notification) and a subsequent three-month Phase II (90 days). However, both phases may be extended or suspended in a number of cases (Phase I up to 120 days, and Phase II up to 180 days or more). For example, both Phase I and II review periods may be extended in the event that the parties offer commitments to remedy concerns or need additional time to finalise commitments.
In practice, the CC only considers a notification complete once the case handler has met the notifying party in person and, as the case may be, received any additional information it has requested during such meeting. As case handlers may only invite the notifying parties to such meeting several weeks after receiving notifications, it is important to ask for such meeting in advance in order to avoid any undue delay.
The Moroccan merger control regime foresees a significant role for the head of government’s office. For instance, the head of the government can require the CC to initiate a Phase II review within 20 days of a CC’s Phase I decision or if the CC has not taken any decision within the 60 days period.
In addition, the head of government’s office may assume the CC’s jurisdiction on public interest grounds. Although rarely used in certain countries in which this power exists (for example France, where it has been applied only once), this power should not be overlooked in the Moroccan regime, particularly in the case of sensitive transactions.
Under this power, within 30 days from the receipt of a Phase II decision, the head of government may take over the case (whatever the decision previously rendered by the CC) and make another decision on the transaction for reasons of general interest (other than competition reasons) such as: industrial development, the international competitiveness of the businesses in question, or the creation or maintenance of employment. This decision may be subject to commitments. No deadline is set for the head of government’s decision.
Due to the potential sanctions under the Moroccan merger control regime, parties considering mergers and acquisitions with a nexus to Morocco must take into account the potential implications of the regime. It is vital that the parties keep the merger thresholds in mind, and analyse the need for merger control notification as early as possible in the acquisition process, bearing in mind potential political aspects that may generate particular interest from the Moroccan authorities. An early and complete notification to the CC will avoid a lengthy review process.