Africa: Regulators Get to Grips with Mergers & Acquisitions

There has recently been a great deal of hype regarding the opportunity that Africa presents to foreign investors seeking high returns no longer available in more developed markets.


Part of the attraction is often based on the assumption that the regulatory environments of African countries are unsophisticated or non-existent meaning that deals are easier to implement from a regulatory perspective. While it is true that there was a time when doing business in Africa was relatively easy from a regulatory perspective, this situation is rapidly changing, particularly in the area of competition law and, more specifically, merger control.


Over the past few years there has been a proliferation of national and regional competition law and merger control regimes across the African continent. The majority of African countries now have some kind of competition law and merger control regime in place, the most recent additions being Botswana (2010), Namibia (2008) and Swaziland (2007).


Too often merger control implications in Africa go unappreciated or are simply ignored. Foreign investors do this at some risk as the consequences can be severe and include not only administrative penalties (typically calculated as a percentage of annual turnover) but also in some cases criminal penalties. In Kenya, for example, failure to notify a merger may result in imprisonment for five years or a fine of ten million Kenyan Shillings or both.


Foreign investors are therefore well advised to consider the impact of increased merger control in Africa as this is likely to have significant cost and timing implications for doing business in Africa.


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