Merger Control Developments | Zambia | Africa Competition Guide

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

No. All notified transactions are approved subject to conditions.

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

There are official proposals to adjust the notification thresholds upwards to allow firms particularly in the bracket of SMEs to merge without the burden of regulatory oversight. Additionally, there are proposals to reduce merger filling fees.

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.

The merger control regime in Zambia is suspensory and mandatory pursuant to section 26 of the CCP Act.

A transaction requires notification to the CCPC, where the combined turnover or assets, whichever is higher, in Zambia of the merging parties is at least 50 million fee units in the merging parties’ most recent financial year in which these figures are available. 50 million fee units is equivalent to 15 million kwacha (approx. USD 903,615)

The CCPC has dealt with several cases involving implementation of mergers without authorisation, with recent cases being in the media/advertising sector and the construction sector, respectively. The cases were investigated as an infringement of section 37 of the CCP Act and appropriate sanctions were meted out for failure to notify. The parties were directed to formally notify the transactions for clearance by the CCPC.

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.

The merger regime in Zambia is suspensory and mandatory.

There are circumstances, however, in which transactions falling below the above thresholds may be notifiable and investigated. The CCPC may, where it has reasonable grounds to believe that a merger falls below the prescribed threshold, review the merger if the following factors exist:

the merger is likely to create a position of dominance in a localised product or geographical market;
the merger is likely to contribute to the creation of a dominant position through a series of acquisitions that are not individually subject to prior notification;
the merger may substantially prevent or lessen competition;
the merger is concluded outside Zambia and has consequences in Zambia that require further consideration; or
as a result of the merger there are, or are likely to be, competition and public interest factors that must be considered.

A merger implemented without the approval of the CCPC will be considered void, and no rights or obligations imposed on the participating parties can be legally enforced in Zambia.

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

Failure to comply with merger conditions constitute an offence pursuant to section 37 of the CCP Act. The CCPC has, in the past, fined entities for failure to comply with merger conditions. Examples of such cases include the fining of Puma Energy 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.

The CCPC has, in the past, prohibited the acquisitions of assets of another firm. Such prohibitions were based on potential competition concerns. For example, one transaction prohibited by the CCPC involved the acquisition of mobile towers (passive infrastructure) by a dominant Tower company, which held 30.53% market shares from a Mobile Network Operator, which had a market share of 40.32% of the passive infrastructure. The tower market, prior to this acquisition, was highly concentrated with CR3 of 92%, and the transaction would result in the acquirer assuming 70.85% of a market with no import substitutes and high barriers to entry.

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?

There have been no such cases. Only cases where there is a local nexus, and which lead to a change of control in a local subsidiary are captured.

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

The CCPC has, in the past, approved mergers subject to novel conditions. Examples include the Zambia National Broadcasting (ZNBC) merger with Hantex, also known as TopStar. The fully functional Joint Venture established after a loan facility from Hantex was approved on condition that the Joint Venture between ZNBC and Hantex should cease to exist immediately once the loan is fully paid and all equipment should be handed over to ZNBC.

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.

The CCPC has not, and does not consider, notification of transactions that involve internal restructurings that do not result in a change in ultimate control.

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.

If the new entity taking over direct control is from within the group and the ultimate control does not change, then such a transaction will not trigger notification.

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.

All cases approved are subjected to public interest considerations by the CCPC. Such public interest considerations, pursuant to section 31 of the CCP Act, include the extent of promotion of technical or economic progress, the potential transfer to skills or the improvement of the production or distribution process. Other considerations include whether the transaction involves the saving of a failing firm, as the case was in the 1999 takeover of Northern Breweries by Zambian Breweries. Then Northern Breweries was a failing firm and despite the transaction being a merger to dominance, the transaction was approved to save jobs on the Copperbelt province of Zambia.

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

The CCPC has yet to prohibit any merger based on public interest considerations. The blocking of mergers has been on competition concerns and not on public interest 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.

Greenfield mergers are not subject to merger review in Zambia. Further, not all Joint Ventures are subject to merger review. The CCPC distinguishes between full function Joint Ventures and auxiliary Joint Ventures. For example, auxiliary Joint Ventures fulfil a specific purpose for their parent company. Such a Joint Venture will not be considered as a merger subject to review.

The CCPC handled a case regarding a Joint Venture, which had been established to acquire shares in an already existing and fully operational entity in the energy sector. The Joint Venture, at the time of acquisition, was already performing functions of an autonomous economic entity, was competing with other entities, and had sufficient staff and resources.

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.

Instances in which non-controlling minority share acquisitions have triggered merger notifications are when such transactions established indirect control by the minority shareholder. For instance, if by virtue of the minority stake, the acquirer will be able to veto a strategic decision or materially influence the policy. For examples, in 2021 the CCPC handled a transaction involving a Zambian Government owned Holding Company’s acquisition of minority shareholding in a reinsurance company. Despite being a minority shareholder, post transaction, the acquirer would have had influence on the strategic direction of the company, as well as on board composition.

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

In practice, the CCPC takes approximately 45 days to approve a non-complex merger (Phase 1 mergers). The period allowed for the investigation of a proposed merger is up to 90 calendar days from the date of notification, with the possibility of an extension of 30 days if prior notice is given 14 days before the expiry of the 90-day period.

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.

Yes. The CCPC can “stop the clock” for the review of a merger, in instances where (i) one or both of the parties to the transaction have pending court proceedings against them, which may have a bearing on the transaction; or (ii) the parties have not provided the CCPC with all necessary and required information to process the transaction.

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.

In practice, the CCPC would allow for “hold separate arrangements”. However, such a need within COMESA is unlikely to happen, as the notifications are done and processed by the COMESA Competition Commission. Only in circumstances where the transaction disproportionally affects Zambia can Zambia request to review the case separately and independently which may result in the transaction getting an approval except in Zambia. Outside the COMESA region, cases would have to be notified per country and one country’s approval would not affect the process in other countries. Currently, all regional cases are COMESA related and hence the CCPC does not have a case where a hold separate arrangement was required.

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.

There is no such requirement.

Africa Competition Guide

Zambia

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