Business mergers worth US $3.1 million transacted in COMESA

 

THE COMESA Competition Commission received over US $3.1 million in merger filing fees between December 2015 and October 2016, says chief executive officer George Lipimile. Mr Lipimile said out of that amount, over US $1.5 million would not be allocated to relevant competition authorities in designated member states. According to the commission’s performance brief presented to the Council of Minister meeting in Madagascar, the commission assessed 24 merger cases as at July 2016. He said more than 70 percent of the mergers received were in the financial services sector with the rest in construction, insurance, telecommunications, energy and agriculture. In a press statement, Mr Lipimile said the majority of the mergers assessed in 2016 affected Kenya, Zambia, Mauritius, Zimbabwe and Uganda. “The case of Zambia and Kenya may be explained by the fact that their economies are relatively large and have outward looking policies which provides a conducive environment for business, including attracting foreign direct investment,” said Mr Lipimile. With regard to Mauritius, most of the firms operating in the Common Market have their holding parents in Mauritius. Egypt and Ethiopia are among the largest economies in COMESA, despite recording relatively less cross-border mergers affecting them.  This could be attributed to their economies being generally in-ward looking with robust local firms which merge amongst themselves. He explained that the prominence of mergers in the service sector could be attributed to the diversification efforts of the Common Market in moving from the traditional trade in goods towards trade in services. It may also be attributed to the emergence of a middle class in most of the economies in the COMESA region. He said the commission retains 50 percent of the Common Market merger filing fees and distributes the remaining 50 percent among the relevant competition authorities in the designated member states. Mr Lipimile said the share of the Common Market merger filing fees for each relevant competition authority in the designated member state was proportional to the value of the turnover in each state relative to the total value of the turnover in the Common Market. The commission intends to intensify its technical assistance and capacity building in member states with particular focus on the training of the national competition authorities on the enforcement of the regulations. “Our focus in 2017 shall be on advocacy in order to sensitize national governments and other stakeholders on the provisions of the regulations and the need for domestication of the COMESA treaty and regulations,” he said.

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