Comesa seeks states’ input to review regional antitrust laws

Attoney-General Githu Muigai who wrote to Comesa earlier this year stating that the government retained the primary jurisdiction over local mergers and acquisitions.  NATION MEDIA GROUP

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Regional antitrust laws

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A regional body that guards against unfair business practices has caved in under pressure from national authorities and is now reviewing some of its controversial rules and regulations.

In a notice published on its website on Monday, the Common Market for East and South Africa (Comesa) Competition Commission called on consultants to submit proposals for the review of the region’s antitrust rules and regulations.

The regional commission started operations in January but has faced opposition as regulatory bodies and business lobbies in member states question its credibility and scope of its mandate.

“Member states national competition authorities (NCAs) which had commenced the process of harmonising their national competition laws with the regulations also raised issues with some provisions,” read the notice in part.

Comesa is a regional economic bloc whose 20 member states include Kenya, Egypt and Rwanda. These regulations give the Competition Commission wide-ranging powers to vet mergers and acquisitions carried out by companies that have operations or derive turnover from at least two Comesa member states.

Fundamentally, the regulations have been found wanting partly because they were drafted nearly 10 years ago when Comesa countries first passed regional anti-trust laws.

Now that the commission to implement the laws has finally been operationalised, officials find themselves grappling with provisions that are relatively out-dated.

“The review is also an acknowledgement of the fact that the regulations were drafted about 10 years ago and there are many developments that have taken place within the competition law regime throughout the world that need to be factored,” said the Competition Commission.

Since it was operationalised in January, the commission has found itself at logger-heads with state bodies that are mandated to be competition watchdogs at a national level. 

In a symptom of these turf wars, the Competition Authority of Kenya (CAK), with the backing of Attorney-General Githu Muigai, wrote to the Comesa earlier this year warning that Kenyan government and its agencies retained primary jurisdiction over local mergers and acquisitions.

The planned review of Comesa’s competition regulations is expected to clarify the relationship between regional and national competition laws.

Most expensive

Further, the review will respond to calls from lawyers and businesses to address the high costs that businesses will have to incur in complying with the regulations.

Currently, the laws stipulate that companies can pay up to Sh43.7 million ($500,000) in order to have their mergers and acquisition scrutinised by the body.

In a February briefing to its clients, London-based law firm Clifford Chance noted that this amount was significantly higher that the most expensive global regime — the United States which charges a Sh24.5 million ($280,000) fee on deals that involve assets exceeding  Sh61.7 billion ( $709.1 million).

“A cost of this magnitude is likely to be a significant proportion of overall costs of M&A given the typical size of deals in the region,” said the law firm.

Some of the proposed changes to the regulations would make a provision for a firm to consult with the Competition Commission on whether a merger falls under its mandate without necessarily incurring the fee. Additionally, the body says it wants to ensure that fees do not become a burden to businesses operating in Comesa.

Another bone of contention has been the notification threshold. Currently, all companies carrying out mergers with “appreciable impact” on more than two Comesa countries have to notify the Commission of their intentions.

It has been argued that this provision casts the net too widely and could become bothersome for very small businesses or to companies with marginal links to the 20 member-states of the common market.