An investor at the NSE trading floor during the opening of the Exchange Building in Westlands. FILE PHOTO | DIANA NGILA |
NATION MEDIA GROUP
Firms carrying out cross-border mergers and acquisitions in East
and Southern Africa will now be required to pay a fee of up to Sh44
million in new rules expected to enhance fair competition.
The
guidelines released by the Competition Commission of the Common Market
for Eastern and Southern Africa (Comesa), also require companies to give
notice of such transactions within 30 days of entering a legally
binding agreement.
The framework has been developed
with the aid of the International Finance Corporation, and will affect
companies operating in any of the 19 member-states of the trading bloc.
Deals
that are subject to Comesa commission are, however, only those
involving firms with a turnover of at least $5 million in each of the
countries where they operate.
Transactions involving
companies with smaller turnovers will be left to the national
competition regulators such as the Competition Authority of Kenya.
This
cools a simmering tussle between the over-arching regional competition
commission and national rivalry watchdogs over which of the pair has the
authority to approve or disapprove mergers and acquisitions.
“The
purpose of the guidelines is to set forth framework to be applied by
the commission when determining whether a merger is likely to
substantially prevent or lessen competition.
“The
guidelines are as a result of broader consultation with various
stakeholders in the region and internationally,” Mr Willard Mwemba, head
of mergers and acquisitions at the Comesa Competition Commission said.
ACCELERATE COMPETITION
Under
the new rules, the competition commission will take 120 calendar days
to assess a planned merger and acquisition and if deemed impossible to
complete the scrutiny within the time frame, it can seek an extension of
up to 30 days.
According to Ms Catherine Masinde, head
of the East and Southern Africa investment climate at the IFC, mergers
and acquisitions will accelerate competition in export markets and
enhance regional integration by opening new markets.
“We are confident that opening up of markets will reduce prices for national consumers by making prices competitive,” she said.
They
spoke on Monday on the sidelines of a workshop on merger assessment
guidelines organised by the Comesa Competition Commission.
The
rules were approved by the Comesa council in 2004 but the competition
commission commenced their implementation in January last year.
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