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By Richard Bryce, Partner, and Nazeera Mia, Knowledge and Learning Lawyer, Bowmans
The implementation of the merger control regime in the ECOWAS Community Market is well underway. Having become fully operational in October 2024, the ECOWAS Competition Regulatory Authority (ERCA) has received notifications for at least eight transactions and has granted unconditional approval in three cases to date, with an average review period of two to three months.
ERCA has also published Guidelines on Mergers and Acquisitions, 2024 (Guidelines). The Guidelines function as a procedural framework and an analytical reference for assessing notifiable transactions under the ECOWAS Community Competition Rules (CCR).
Some key features of the Guidelines are set out below.
Broad scope of control
To allow ERCA to examine the widest possible range of potential transactions, the Guidelines adopt an expansive interpretation of mergers (encompassing takeovers, joint ventures, interconnected directorships, and other forms of business combinations). Positively, the Guidelines adopt a pragmatic approach to certain types of transactions and indicate, among other things, that:
'control' under the CCR may exist both on a direct and indirect basis, and internal restructurings within a group of companies may not constitute a notifiable transaction for purposes of the CCR
only full-function joint ventures are notifiable under the CCR. A joint venture is deemed to be full-function, and therefore a 'merger', when: (i) it is jointly controlled by at least two independent enterprises, (ii) it operates on a lasting basis, and (iii) it performs all the functions of an autonomous economic entity
Thresholds for mandatory notification
While the financial thresholds for mandatory notification are set out in our earlier newsflash, the Guidelines offer greater clarity on the methodology for calculating turnover values, including concerning joint venture transactions.
The Guidelines also explain how combined turnover values should be calculated regarding the structure of a transaction and note that intragroup turnover may be excluded. The Guidelines, however, do not address asset-based calculations, even though asset information must be considered as part of the threshold assessment and the filing fee calculation.
Review period
While the Guidelines make provision for a voluntary pre-notification engagement, the specific applicable processes and timeframes are not addressed in the Guidelines. In terms of the CCT, the maximum review period is 135 Gambian working days following submission of a 'complete' notification.
The Guidelines outline a phased review approach, with it being envisaged that a Phase 1 assessment should be completed within 30 working days. If, during Phase 1, ERCA determines that a transaction will still likely substantially prevent or lessen competition, and that remedies proposed by the parties do not address the competition issue(s) identified, the transaction will proceed to a Phase 2 assessment.
A Phase 2 assessment may be carried out by setting up a Phase 2 case team to conduct a more in-depth assessment of the transaction and may require the submission of further information by parties and market participants.
At this stage, it appears as though the ERCA Competition Council (Council) may only be meeting once a month, which may mean that even if the assessment of a transaction completes earlier, decisions are regarded as pending until the Council is able to meet.
One-stop regime
ERCA aims to operate as a one-stop shop for cross-border transactions meeting the ECOWAS thresholds for notification. ERCA expresses in the Guidelines a clear intention that, where a transaction is notified to ERCA, separate notifications to the national competition authorities (NCAs) will not be required.
Similarly, the NCAs will maintain jurisdiction over 'purely national' transactions. Where ERCA considers that a transaction notified to an NCA affects the Community Market, it may request jurisdiction from the NCA, providing written justification. However, the absence of formal cooperation agreements or memoranda of understanding between ERCA and NCAs creates uncertainty regarding enforcement coordination.
The Guidelines also reference a Cooperation Agreement between ERCA and the WAEMU Commission aimed at avoiding dual filings, although this agreement has not been published, and its terms remain unclear.
Penalties for prior implementation
The Guidelines reiterate the prohibition on implementing notifiable transactions prior to clearance. Sanctions for premature implementation may include:
orders requiring reversal of the transaction and restoration of the status quo; and/ or
mandatory notification of the transaction and the imposition of a minimum penalty of UA 500 000 (approx. EUR 630 000) per working day of non-compliance.
In addition, the Guidelines indicate that fines of up to 10% of turnover may be levied for obstructive conduct, including the submission of false or misleading information.
Legal status and application of the Guidelines
While not legally binding, ERCA has indicated that it will apply the Guidelines 'rigorously, reasonably and, where necessary, with flexibility', in line with the facts and circumstances of each case.
