Merger Control Developments | Mozambique | Africa Competition Guide

Have any notified transactions been prohibited by the competition authority in your jurisdiction since January 2021? If so, on what basis?

Local counsel are not aware of any transaction having been prohibited by the Competition Regulatory Authority thus far.

Are there official proposals to amend merger filing fees and/or monetary thresholds or have such amendments been affected?

The merger filing fees were amended in August 2021 by means of Ministerial Diploma No. 77/2021, of 16 August 2021. The current filing fees are set at 0.11% of the turnover of the previous year with a maximum limit of MZN 2,250 (approx. USD 35).

Further, the monetary thresholds for notification purposes were recently amended by Decree No. 101/2021, of 31 December 2021. At present, a concentration operation is subject to prior notification where one of the following conditions are met:

(i) acquisition, creation or reinforcement of a market share equal or higher than 50%;

(ii) creation or reinforcement of a market share ranging between 30% and 50%, provided that the turnover generated in Mozambique of at least two companies participating in the concentration is higher than MZN 105 million net (roughly approx. to USD 1.65 million) in the previous financial year;

(iii) the aggregate turnover (in the previous financial year) of the companies participating in the concentration is higher than MZN 925 million net (roughly approx. USD 14.49 million), provided that the turnover generated in Mozambique of at least two companies participating in the concentration is higher than MZN 105 million net (roughly approx. USD 1.65 million)

Is the submission of a merger notification suspensory and mandatory in your jurisdiction? If so, has the authority brought any cases against entities accused of gun-jumping and/or prior implementation of a notifiable transaction? If so, kindly provide details.

Yes. Where applicable, a merger notification is deemed suspensory and mandatory to the extent that a prior approval or non-opposition decision issued by the Competition Regulatory Authority is required for the relevant transaction to be implemented. Failure to obtain the prior approval or non-opposition decision attracts the payment of fines and caused the underlying transaction to be deemed null and void. That being said, the Competition Regulatory Authority only began reviewing merger notifications in January 2021, following its establishment in the same month. To the best of local counsel’s knowledge, thus far, no cases have been brought against any entities for failure to comply with merger notification related requirements, including gun-jumping.

Is the submission of a merger notification non-suspensory and voluntary in your jurisdiction? If so, has the authority brought any cases against entities for failure to notify a transaction post-completion within the stipulated time period? If so, kindly provide details, including details of instances where the authority has specifically requested notification of mergers.

No. As per the above response, a merger notification is deemed suspensory and mandatory.

Please describe any cases in which the competition authority fined any entity for failing to comply with merger conditions.

To the best of local counsel’s knowledge, thus far, no fines, nor other penalties, have been applied by the Competition Regulatory Authority for failure to comply with merger conditions.

Please describe any cases in which the acquisition of shares or assets of another firm was interdicted by the competition authorities in your jurisdiction, as well as the basis for this.

To the best of local counsel’s knowledge, to date, no acquisition of shares or assets of another firm has been interdicted by the Competition Regulatory Authority.

Please describe any cases in which parties (acquirer and target) did not have physical presence in your jurisdiction and the transaction was nonetheless notified. For example, where either party makes sales and derive some turnover in your jurisdiction do not have any subsidiaries or assets in the country, what is the local nexus test /local effects test to establish merger review jurisdiction?

Local counsel are not aware of any transaction with such features being notified and/or approved thus far. In any case, the Competition Law applies to all activities / transactions carried out in-country, or which may have effects therein. Therefore, in theory, it is indeed possible for a transaction to be notified where the parties have no physical presence in-country, provided that the relevant transaction has some effects therein.

Has the authority approved any mergers subject to novel or otherwise noteworthy conditions?

Yes.

Please indicate whether the competition authority has required notification of internal restructurings (that do not involve a change in ultimate control) and, if so, on what basis.

We are not aware of any case where the Competition Regulatory Authority has required notification of internal restructurings.

Please indicate whether an obligation to notify could be triggered as a result of a change in direct control over an entity through the interposition of a new entity within the group, albeit that the restructure does not result in a change in ultimate control.

In principle, no. The Competition Regulations provide that transactions that imply a change of temporary or transition control and from which does not result an effective concentration of economic power between seller and acquirer, nor changes the structure of the market, shall not qualify as a concentration operation for merger control purposes and, as a result, shall not be subject to notification-related requirements.

However, it is stressed that the Competition Regulatory Authority only became operational in January 2021 and, therefore, the merger provisions have not yet been fully tested.

Please describe cases of mergers that have been approved subject to public interest grounds since January 2021 and kindly describe the nature of these public interest grounds.

There is still limited information on transactions submitted for approval of the Competition Regulatory Authority. In any case, thus far, local counsel are aware of one transaction where the Competition Regulatory Authority proposed the imposition certain conditions purportedly based on public interest grounds – specifically, for the benefit of small and medium enterprises. These conditions are, however, still under discussions and a final decision on the underlying transaction is still pending.

Please describe cases where the competition authority has prohibited a merger transaction based on public interest grounds alone.

Local counsel are not aware of any case where the Competition Regulatory Authority has prohibited a merger transaction based on public interest grounds alone.

Describe the circumstances in which ‘greenfield’ / joint ventures mergers are caught under the merger review regime, and kindly provide instances of such mergers that have been notified to and considered by the competition authority.

For the purposes herein, it is assumed that “greenfield” joint ventures are those aimed at commencing a new business activity, rather than combining existing activities of the joint venture parties.

Under the law, concentration operation is defined as follows (i) an act consisting of the merger of two or more companies that were previously independent; (ii) the acquisition of control, direct or indirect, of one company or part of one or more companies; or (iii) the creation or acquisition of one common company aimed at developing autonomous economic activities in a lasting manner.

Hence, there may be cases where a “greenfield” joint venture merger may be deemed a concentration operation subject to merger control, notably where the “greenfield” joint venture falls under item (iii) above. In such a scenario, the transaction would be subject to the merger control provisions set forth in the competition legal framework if and where the relevant thresholds pertaining to market share and turnover are met.

Please indicate whether there are any circumstances in which non-controlling minority share acquisitions that have been found to constitute a notifiable merger and the basis for this.

Subject to the market share and turnover thresholds being met, where the non-controlling minority share acquisition involves, in parallel, the acquisition of rights or the entering into agreements that grant a dominant influence on the composition or resolutions of the corporate bodies of a company, such transaction may be found to constitute a notifiable merger. This, however, should be assessed on a case-by-case basis.

On average how long does the authority in your jurisdiction take to approve a non-complex transaction? What about a complex one?

The Competition Law sets forth a statutory 60-days timeframe for the Competition Regulatory Authority to issue a decision. Further, failure to issue a decision within the referenced 60-day period is deemed to constitute a tacit approval. The referenced timeframe applies irrespective of the relevant transaction being deemed simple or complex. Local counsel are not aware of a decision being issued before said 60-days period having lapsed.

It is also stressed that the Competition Regulatory Authority takes the view that a tacit approval shall only occur in a scenario where there is a total inaction during the 60-days period referenced (i.e., no action whatsoever is carried out as from the date of submission of the notification). This understanding is, at the very least, subject to debate. In a scenario where the Competition Regulatory Authority insists on this view, some disputes between operators and the Competition Regulatory Authority may be triggered in the near future.

Kindly indicate whether the competition authority enjoys the power to “stop the clock” for the review of a merger and under what circumstances can this happen. If so, please describe cases where the authority has stopped the clock.

The Competition Regulatory Authority may “stop the clock” in case of request of additional information or documentation, provided that the request is made within the statutory timeframe of 60 days. In such cases, the 60-days period is suspended. The clock starts ticking again by effect of the law once the relevant information or documentation is provided to the Competition Regulatory Authority.

Please indicate whether, legally or in practice, your competition authority allows for “Carve out” / “hold separate” arrangements (this means that where clearance is not obtained in your jurisdiction by a specific date, the acquirer would opt not to take over the company in your jurisdiction but will implement the transaction in countries where approval has been obtained. The target in your jurisdiction may be left behind with the sellers for future disposal separately). If so, kindly describe cases where this has happened.

The competition legal framework is silent on this matter. Given that the Competition Regulatory Authority only recently became operational, there is still limited experience and/or case law. Other than that, the merger provisions in force have not yet been fully tested.

In any case, local counsel are not aware of “hold separate” arrangements being put in place. However, nothing in the law prevents any such paths.

Please indicate whether, legally or in practice, your competition authority allows for a transaction to close sequentially (for example: the shares in a target company, which triggers a filing requirement in your jurisdiction or which is active in your jurisdiction, will only be transferred after clearance in your jurisdiction has been obtained, while the shares in other companies affiliated to the target and operating in other countries thus do not trigger a filing requirement in your jurisdiction, shall be transferred as soon as clearances in those other relevant jurisdictions have been obtained (irrespectively of whether clearance in your jurisdiction has been obtained). If so, kindly describe cases where this has happened.

The competition legal framework is silent on this matter. Again, given that the Competition Regulatory Authority only recently became operational, there is still limited experience and/or case law. Other than that, the merger provisions in force have yet to be fully tested. There is no information publicly available on transactions closed sequentially. However, nothing in the law prevents such an option.

Africa Competition Guide

Mozambique

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