Tobenna Nnamani
Punuka Attorneys & Solicitors, Laos
t.nnamani@punuka.com

Introduction

The Federal Competition and Consumer Protection Act (the ‘Act’) has been the principal legislation governing M&A in Nigeria since its enactment in 2019. The Act has essentially established the framework for the regulation of competition and antitrust issues in Nigeria under the supervision of the Federal Competition and Consumer Protection Commission (the ‘Commission’).

The Commission, pursuant to the powers contained in the Act, has established rules and regulations for foreign mergers in Nigeria.

Foreign mergers in Nigeria

Section 92 of the Act defines ‘merger’ as when one or more undertakings directly or indirectly acquire or establish direct or indirect control over the whole or part of the business of another undertaking, which may be achieved in any manner, including the purchase of shares, assets or a joint venture.

A merger shall be notifiable before implementation if, in the financial year preceding the merger, the combined annual turnover of the acquiring undertaking and the target undertaking (combined figure) in, into or from Nigeria equals or exceeds NGN1bn, or the annual turnover of the target undertaking in, into or from Nigeria equals or exceeds NGN500m. Where the turnover is in foreign currency, it shall be converted into Nigerian naira at the prevailing official exchange rate determined by the Central Bank of Nigeria for the corresponding period, at year end.

By virtue of sections 95 and 96 of the Act, mergers are classified into small or large mergers. However, parties to small mergers are not required to notify the Commission and may implement small mergers without approval unless the Commission expressly requires them to do so. For large mergers, a party is obligated to notify the Commission of the proposed merger before implementation.

The notification of the merger is published within five days after receipt by the Commission. Within 60 business days after the parties have fulfilled all the notification requirements, the Commission may extend the period in which it has to consider the proposed merger to 120 business days and issue an extension notice to that effect. Where the Commission has not issued an extension upon the expiry of the 60-business-day period, the merger shall be regarded as having been approved subject to instances where the documents submitted contain incorrect information or the parties fail to implement the merger within 12 months after it was deemed approved.

Worthy of note is that where the approval is pivotal to multiple filings in other jurisdictions, the Commission may in the interest of transactional efficiency adopt an expedited procedure, where it conducts a review under the simplified procedure. Where the foreign party seeks the Commission’s discretion to adopt the simplified procedure, it shall pay the expedited procedure fee and provide an executive non-confidential summary of the transaction and an explanation of why the merger qualifies for the simplified treatment, for instance, identifying the extraterritorial nature of the merger with multiple filing obligations in other jurisdictions.

By virtue of section 96 of the Act, an undertaking that violates the provision of notification commits an offence and is liable on conviction to a fine not exceeding ten per cent of the turnover of the undertaking in the business year preceding the date of the commission of the offence, or another percentage as the court may determine having regard to the specific circumstances of the case.

Conclusion

The Act recognises that mergers are an integral element of competition policy and the Commission’s priority is to identify in a timely manner the proposed mergers that could constitute a threat to the Nigerian market and to allow those that don’t pose a threat to proceed as expeditiously as possible.

The content of this article is the view of the author and not necessarily that of the firm, and intended to provide a general guide on the subject matter. Specialist advice should be sought about your specific circumstances.