Across Africa, regional regulatory bodies are playing a greater role in reviewing mergers and investigating and prosecuting anticompetitive conduct alongside national competition law authorities. The increased role played by bodies like the Common Market for Eastern and Southern Africa (Comesa), the East African Community (EAC) and the West African Economic and Monetary Union (WAEMU), is a key development for global investors into Africa. We look at the possible impact.
The increased role of regional regulatory bodies in antitrust across Africa
Regional bodies are positioning themselves to play a valuable role in combating anticompetitive conduct and concentrations across Africa. In March 2015, Comesa, amended its merger regulations to significantly reduce merger filing fees and introduce monetary thresholds for compulsory merger filings. The EAC Secretariat is also focusing on antitrust issues and is in the final stages of setting up the EAC Competition Authority to regulate competition in the Republic of Burundi, Kenya, Rwanda, United Republic of Tanzania and the Republic of Uganda. The authority is expected to come into force in August 2015 – although the thresholds for filings and the applicable filing fees have not yet been published, it has been revealed that merger notifications will be mandatory.
These new regional antitrust regulators may act as a cheaper and faster one-stop-shop for merger clearances, particularly in countries which don’t yet have a national competition authority such as the Democratic Republic of the Congo, Djibouti, Eritrea, Libya and Uganda. These bodies would also bring significant economic and technical expertise, particularly in dealing with cartels and monopolies that impact cross-border trade. African countries with insufficient resources may find it more effective to rely on antitrust enforcement by these regional authorities, rather than establish their own national authorities.
The overlap between regional and national antitrust authorities – how may this affect foreign investment?
No attempt has yet been made to clarify the relationship between national and regional authorities or between the various regional authorities, particularly in relation to merger control. Kenya, for example, belongs to both the EAC and Comesa, while Tanzania has its own local competition authority as well as belonging to the EAC. Parties wishing to acquire a business in Africa may be forced to carry out multiple filings in several jurisdictions and face increased transaction costs and possible delays as a result of the current overlap between regional and national antitrust authorities.
Protracted and costly merger reviews may make Africa seem like a less attractive destination for investment. Therefore, greater co-ordination is required among these various African regulators in order to eliminate duplication of costs and effort – for the authorities themselves and the companies they regulate.