MERGER NOTIFICATION UNDER THE CEMAC COMPETITION LAW REGIME
The competition law regime of the Central African Economic and Monetary Community (CEMAC) is a regional competition law regime, which has recently become more active from a merger control perspective. While many aspects of the regime are untested at this stage and may still evolve, certain challenges that it presents for merging parties include the fact that (i) the regime is suspensory and the legislated review period is up to six months; and (ii) the filing fees payable are based on a percentage of the merging parties’ turnover, and are not capped, such that the filing fees are potentially extremely high,
While an advantage to a CEMAC notification would appear to be that the regime contemplates a ‘one-stop-shop’ for merger control in the region, at this stage it appears that a CEMAC notification excludes only a Cameroonian filing, as other CEMAC Member States do not yet have actively enforced merger control regimes.
The objectives of CEMAC and its competition law regime
As a regional organization, CEMAC’s main objective is to develop a common market by encouraging and facilitating trade amongst its six member states, namely Cameroon, the Central African Republic, Chad, Republic of Congo, Equatorial Guinea and Gabon. Together these Member States form an economic and monetary union and make use of the XAF or CAF (the Central African Franc) as their single currency.
The primary competition legislation, Regulation N. 06/19-UEAC-639-CM-33 of 7 April 2019 (Regulations), replaced the former 1999 regulations. The Regulations recognise the need to define common rules on competition, with the objective of promoting free competition and controlling or eliminating anti-competitive practices which have the object or effect of prejudicing trade within CEMAC, as well as the development of CEMAC and the welfare of consumers.
The CEMAC Commission (Commission) is tasked with enforcing the Regulations, with the assistance of the Community Competitiveness Council (CCC). From a merger control perspective, the Regulations apply to domestic as well as foreign-to-foreign transactions, as they apply to all Community-wide ‘concentration operations’, regardless of the location of the head office of the undertakings concerned.
Obligations to notify ‘concentration operations’
In terms of the Regulations, a ‘concentration operation’ is carried out:
(i) when two or more formerly independent enterprises merge;
(ii) where one or more undertakings acquire directly or indirectly, whether by way of equity, contract or any other means, the control of all or parts of one or more other enterprises; or
(iii) when a joint venture, which constitutes in a sustainable way an autonomous entity, is established.
Notification of a concentration operation to the CCC is required if the concentration has a ‘community dimension’. The ‘community dimension’ test is met when the undertakings involved in the concentration operation (i) exceed turnover in the Common Market of more than 10 billion CFA (approx. USD 18 100 000) (excluding tax), or (ii) together hold more than 30% of the market. The concentration operation must also be likely to have an effect in at least two CEMAC member states.
On a plain reading of the Regulations, it appears that the financial threshold could be met by a target firm alone, and that the market share threshold does not necessarily require any accretion in market shares in order for the thresholds to be triggered. The ‘effects’ requirement appears to be broadly interpreted, such that a transaction is regarded as having a ‘community dimension’ even if the acquiring entity is active in one CEMAC Member State and the target entity is active in a separate CEMAC Member State.
The Regulations make provision for CEMAC to be a ‘one-stop-shop’ for merger control, by providing that ‘concentration operations’ with a ‘community dimension’ fall within the exclusive competence of the Commission under the supervision of the Community Court of Justice (Court). The Regulations also provide that where a concentration operation is in a Member State which does not have national competition legislation and/or a national competition authority, the Commission has ‘responsibility’. Notably, however, the Regulations do not address the thresholds that would apply in such circumstances, in order to identify whether an obligation to notify the Commission arises.
While a joint notification is submitted in practice, the Regulations provide that it is the responsibility of the acquirer (the natural or legal entity acquiring control) to notify the CCC of a ‘concentration operation’.
The Regulations provide for the CCC to conduct its review of the ‘concentration operation’ notified and to find that the transaction in question is compatible with the Regulations and free competition; or is compatible with the Regulations and free competition subject to a commitment from the parties; or is not compatible with the Regulations and free competition and should be prohibited.
However, where it appears that a concentration will significantly affect competition in the Common Market or a significant part of it, the Commission, based on a recommendation from the CCC, may approve the ‘concentration operation’ if (a) the harm to competition will be offset by (i) technological progress being contributed; or (i) a competitive gain; or (b) the transaction can be justified on grounds of public interest likely to offset the harm to competition.
When assessing whether a merger is likely to substantially lessen competition, the Commission will consider the recommendations and findings of the CCC, as well as other available evidence, including that provided by market participants.
Filing fees and sanctions for failure to notify
Merger notifications are subject to a filing fee of 0.25% of the merging parties’ turnover generated from the Common Market. No cap is provided, potentially making filing fees prohibitively high. The potentially high filing fees may also be entirely disproportionate to a transaction as an acquiring firm may still be liable for high filing fees regardless of the size or value of the target.
Penalties may be imposed for pre-implementation or for failure to notify a notifiable ‘concentration operation’. Financial penalties may not exceed either (i) 10% of worldwide sales of all the parties to the merger; or (ii) 20% of the sales of the parties in the Common Market, during the last financial year (excluding taxes).
Where a merger which is incompatible with the Common Market has been implemented, the Commission may order the separation of the joint ventures or assets, the termination of control, or any other appropriate remedy, to restore effective competition where it is appropriate to do so.
Suspensory and lengthy review period
A notable change introduced by the Regulations is that the merger notification regime established is now suspensory and, as such, a merger may only be implemented in CEMAC once the Commission has unanimously voted in favour of the transaction and the President of the Commission has officially approved the merger. The legislated six month review period may be extended by up to one month where the merging parties provide remedies during the course of the review.
If the Commission has not made a decision within the prescribed period, the merger will be deemed to have been approved six months from the date of notification.
Issues to be resolved
As the CEMAC regime is still relatively new, the Regulations are largely untested and the Commission’s application of the Regulations and approach in practice remains to be seen. However, the potential for excessive filing fees and lengthy reviews is discouraging to parties doing business, or contemplating doing business, in the region.
It is hoped that the percentage of filing fees to be paid will be adjusted and that a cap will be introduced. The Commission would also be encouraged to conduct its reviews swiftly, particularly in non-contentious transactions, to allow merging parties to proceed within a commercially feasible timetable, as a six month review period (particularly in the context of foreign-to-foreign transactions) is onerous.
In order for the regime to gain credibility, the Commission will need to resolve these issues, which may otherwise have the unintended consequence of disincentivizing investment and, in turn, prejudicing the development of CEMAC and the welfare of its consumers.
 CEMAC is the French acronym for Communauté économique et monétaire de l'Afrique centrale. The CEMAC Member States are Cameroon, the Central African Republic, Chad, Equatorial Guinea and Gabon.
 Initially the CEMAC headquarters were in Bangui, in the Central African Republic, which has been subject to significant political crises. The headquarters were relocated to Malabo, in Equatorial Guinea, during the course of 2018 and this relocation appears to have been the turning point for more active enforcement.
 Gabon has competition legislation in place but it does not appear to be actively enforced as at the time of writing. There are no national competition law regimes in place in the Republic of Congo, Equatorial Guinea, Chad or the Central African Republic as at the time of writing. However, the United Nations Conference on Trade and Development (UNCTAD) has embarked on a project aimed at strengthening competition and consumer protection for CEMAC, funded by the European Union within the wider Trade and Economic Integration Programme (PACIE), focusing on Cameroon, the Central African Republic, Chad, the Democratic Republic of the Congo, Gabon, the Republic of the Congo, Equatorial Guinea and São Tome and Principe. See: https://unctad.org/news/unctad-receives-one-million-euros-strengthen-competition-laws-central-african-countries
 Regulation No. 1/99 UEAC-CM-639 of 25 June 1999 and Regulation No. 4/99-UEAC-639 of 18 August 1999 and Regulation No. 12-05-UEAC-639 U-CM-SE of 25 June 2005.
 Article 2 of the Regulations.
 Article 57 of the Regulations.
 Article 58 of the Regulations.
 Article 59 of the Regulations.
 Article 64 of the Regulations.
 See: Article 67 of the Regulations.
 See: Article 68 of the Regulations.
 Provision is made for the filing fees in separate procedural regulations.
 Article 73 of the Regulations.
 Article 75 of the Regulations.
 Under Article 9 of the former (repealed) Regulations, implementation of a merger was permitted before clearance, provided that the concentration had been notified. This is no longer the case under the prevailing Regulations.
 Article 62 of the Regulations.
 Article 69 of the Regulations.