The Federal Competition and Consumer Protection Commission (FCCPC or the Commission), pursuant to its powers under Sections 17, 18 and 163 of the Federal Competition and Consumer Protection Act, has issued its Merger Review Regulations 2020 (the Regulations).
The key highlights of the Regulations are as follows:
- Definition of a merger: A merger is deemed to occur where any of the following happens:
- A direct or indirect acquisition of an undertaking by another
- An undertaking establishes a direct or indirect control over the whole or part of the business of another undertaking by way of acquisition of either shares or assets
- An undertaking is involved in an amalgamation or other combination with another undertaking or is the product of that amalgamation or combination between the undertakings
- An undertaking enters into a joint venture with another undertaking or is the product of an understanding to create a joint venture between two or more undertakings
- Determination of control: Minimum “control” that may trigger a merger entails the exercise of ‘material influence” which could be demonstrated by control of the board of directors, acquisition of 25% voting right, influence by significant creditors, mandatory provision of services, control of production and ownership of know-how, amongst others.
- Pre-merger consultation: Parties who are uncertain about the requirement for approval may consult FCCPC for clearance
- Requirement for approval: Generally, while large mergers require FCCPC’s approval prior to its implementation, small mergers do not. Although small mergers are not generally notifiable to FCCPC, where parties to the transaction or FCCPC itself considers that such a merger will lessen competition, merger notification to the Commission may become necessary.
- Exceptions to obtaining approval: Internal restructuring of affiliated businesses, which does not result in a change of control, do not require FCCPC notification or approval. In the same vein, ownership of 15% of voting rights will largely not trigger a ‘merger situation’. It is important to note that the determination of “material influence” is based on the peculiar transaction and other criteria in the Regulations and FCCPC may require approval in such situation irrespective of the “material influence” threshold.
- Stages of review: Subject to the payment of appropriate fees, the review by the Commission may be in one or two stages. The Commission may, upon either the first or the second review, conditionally or unconditionally approve or prohibit a merger. A first detailed review will be used to determine whether a merger will substantially prevent or reduce competition. Where required, FCCPC may conduct a second detailed review on the effects of the merger on competition. Alternatively, rather than going through the detailed review processes, parties may apply to FCCPC for a less detailed merger review procedure where they believe that the merger will not prevent competition.
- Approval of the merger: FCCPC would publish all merger approvals in the gazette. In addition, for large mergers, the Commission would also publish its approval in two national newspapers.
- Meetings and hearings: Meetings and hearings of the Commission may be conducted physically or virtually.
- Foreign transactions: Foreign mergers involving a Nigerian entity will still require FCCPC approval and it is immaterial that the transaction was implemented offshore.
The issuance of the Regulations is a welcome development as it provides certainty to the market on the merger approval process. Companies are advised to review the Regulations and how it may impact their operations going forward.
 Large mergers according to the FCCPC merger notice threshold, would be a combined turnover of NGN1 billion and above (for the acquirer and target undertaking) or the annual turnover of NGN500 million for only the target undertaking. Any other merger is a small merger.