SPOTLIGHT ON NAMIBIAN COMPETITION LAW
Amendments to merger thresholds
Recently, amended merger control thresholds have been published, attracting the attention of firms with interests or activities in Namibia, given that the effect of the revised thresholds will be to increase the number of notifiable mergers.
A Namibian Government Gazette notice of 24 December 2012 withdrew the prior Government Notice of 7 December 2012, which set out merger notification thresholds for the first time. The new Government Notice articulates the merger notification thresholds differently and changes the application of the thresholds.
In particular, the new Government Notice provides that the Namibian Competition Act does not apply to a merger if the value of that merger equals or does not exceed the values set out in subparagraphs (a) to (f):
The combined annual turnover in, into or from Namibia of the acquiring undertaking and target undertaking is equal to or valued below N$20 million;
The combined assets in Namibia of the acquiring undertaking and target undertaking are equal to or valued below N$20 million;
The annual turnover in, into or from Namibia of the acquiring undertaking plus the assets in Namibia of the target undertaking are equal to or valued below N$20 million;
The annual turnover in, into or from Namibia of the target undertaking plus the assets in Namibia of the acquiring undertaking is equal to or valued below N$20 million;
The annual turnover in, into or from Namibia, of the target undertaking are equal to or valued below N$10 million; and
The asset value of the target undertaking is equal to or valued below N$10 million.
The Namibian Competition Commission (the “Namibian Commission”) has confirmed that its approach to the threshold test is that if any one of the values referred to in (a) to (f) is exceeded, the notification thresholds are triggered. On a strict approach, this leads to undesirable consequences and a large number of mergers will be caught in this net. For example, that where an acquiring firm’s asset value is more than N$20 million in Namibia, the notification thresholds are triggered even if a target firm is situated in Kenya and has no turnover or assets in Namibia.
Namibian mergers subject to ministerial review
While the Namibian Competition Act is very similar in parts to the South African Competition Act, 89 of 1998 (the “South African Competition Act”), there are also notable differences between the two regimes.
Unlike the South African Competition Act, section 49 of the Namibian Competition Act expressly provides that any decision imposed by the Namibian Commission on mergers may be taken on ministerial review. In this regard, the Namibian Minister of Trade and Industry (the “Minister”) plays a role akin to that of the Competition Tribunal in South Africa. As a result, in Namibia, the Minister, part of the executive arm of the state, is tasked with the judicial role of applying competition law. In this way, the Namibian Competition Act allows for extensive government involvement in the merger review process and in the outcome of merger decisions.
However, although the prospect of government intervention within the merger review process is regarded by many as undesirable, this is tempered by the fact that the Minister must consider and apply the factors specified in section 2 and section 47(2) of the Namibian Competition Act for the assessment of mergers. These factors include the extent to which the proposed merger will prevent or lessen competition and the effect of the proposed merger on a particular industrial sector, the levels of employment and the ability of national industries to compete in international markets. The Minister is required to consider the extent to which a merger will affect the ability of small undertakings, especially those owned or controlled by historically disadvantaged persons, to gain access to or to be competitive in any market. The Minister must also assess and consider any benefits likely to be derived from the merger relating to research and development, technical efficiency, increased production, efficient distribution of goods or provision of services and access to markets.
The Namibian Supreme Court’s remarks regarding section 49 of the Namibian Competition Act and ministerial review in the Massmart/Walmart case are worth noting. Acting Judge of Appeal, O’Regan stated that section 49 contemplates an important role for the Minister in determining whether mergers should be approved or prohibited. In the Supreme Court’s view, the Namibian Competition Act makes it clear that the Minister is not only empowered to confirm or overturn a decision of the Namibian Commission, but is also empowered to amend a decision by ordering restrictions or including conditions to the approval of the proposed merger. Judge O’Regan noted that a court does not bear any special competence that enables it to balance the competing interests in the Namibian Competition Act nor is this task assigned to a court. Rather, the legislation reserves this task first for the Namibian Commission and then for the Minister
The judgment confirms that, in circumstances where the manner in which the section 2 and section 47(2) factors and considerations have been balanced is contested, a court will require the ministerial review process to be exhausted before it will consider an application for relief. Further, it would not permit a party to approach it where the issue is one that the Minister is empowered to resolve during the ministerial review process. It is clear from the Supreme Court judgment that merging parties cannot avoid ministerial review if they wish to contest a decision of the Namibian Competition Commission.
Although the concept of ministerial review may appear to raise uncertainty and the potential of political bias, the legislation is structured in such a way that the fate of merging parties is not left to political factors.
When properly considered, the effect of section 49 of the Namibian Competition Act is not very different from the regime in countries like South Africa, where the competition authorities are separate from the govern- ment but in certain cases merger review has been influenced by government, particularly where government departments have applied to intervene in merger proceedings.