FCCPC Releases Guidance on Merger Notification Process and other Competition issues During COVID-19 Pandemic
The aim of the Guidance is to ease and simplify merger notification processes especially for transactions necessitated or impacted by the outbreak of COVID -19.
Guidance on Merger Notification
In response to the COVID-19 Pandemic, the FCCPC on April 28, 2020 released a Guidance on Merger Notifications Process and Interpretation of the Law on other Competition Issues under the Federal Competition and Consumer Protection Act (FCCPA); During COVID -19 Pandemic (the Guidance).
Review of COVID-19 Related Merger Transactions
The Guidance provides that during this period, the FCCPC will accept remote filing/electronic notifications for COVID-19 related merger applications for review in the following circumstances:
- Where there is a possibility or imminent failure of the business of a merging party, unless the combination is urgently considered;
- Where there is a host jurisdiction other than Nigeria, where there are time limitations but requiring notification and determination by the FCCPC prior to the conclusion of underlying transactions;
- Other time sensitive situations such as where other regulatory or similar approvals may expire or lapse, or such approvals were conditioned upon presenting a notification to the FCCPC within a specific period.
A notifying party, to whom any of the above listed circumstances is applicable, is expected to title its notification as an “Extenuating Circumstantial Notification” (ECN) and indicate which of the circumstances is applicable with explanation and supporting documents demonstrating the applicable circumstance.
Electronic Notification Process
A notifying party with a notification envisaged under this guideline is required to send the notification with relevant attachments by email to MergerNotification@fccpc.gov.ng. Where the attachment is larger than 25MB, the documents can be zipped or uploaded to a cloud storage, and the link provided with the notification by email. While the electronic filing process is provided as an option, a notifying party may opt for the submission of the usual hard copy submission.
Guidance on Other Competition Issues
The Guidance on Business Co-operation seeks to address anti-competitive practices of individuals and businesses during the COVID-19 outbreak like restrictive agreements, co-operation or collaborations to fix prices or wages, rig bids, limit production, engage in collusive tendering or allocation of markets. Though these agreements and practices are typically prohibited under Section 59 of the FCCPA, the FCCPC has granted exemptions for certain agreements or practices which may be necessary in view of the difficulties occasioned as a consequence of the COVID-19.
The exempted activities hitherto prohibited under Section 59 of the FCCPA include:
- companies exchanging commercial sensitive information with their competitors on future pricing which is necessary to meet the needs of the current situation;
- retailers excluding smaller rivals from any efforts to collaborate in order to achieve security of supply;
- abuse of dominant position conferred by the peculiar situation of the Pandemic to raise prices above normal competitive levels;
- collusion between companies that seek to mitigate the commercial consequences of a fall in demand by keeping prices high.
The categories of agreements and practices exempted by the Guidance on Business Co-operation includes amongst others the following response to COVID-19 Pandemic undertaken solely for the purpose of:
- promoting concerted conduct to prevent the escalation of the pandemic;
- enabling companies to co-operate on effecting the supply and distribution of essential products and services;
- co-operation between health and relief efforts which might be limited to entrusting a trade association, independent advisor, independent service provider or public body to undertake the following:
i.) co-ordinating joint transport for relief materials;
ii.) contribute to identifying essential medicine for which, in view of forecasted production, there are risks of shortages;
iii.) aggregate production and capacity information, without exchanging individual company information;
iv.) work on a model to predict demand on a national level, and identifying supply gaps.
- entering joint purchasing agreement amongst health providers, and other critical service and goods providers such as those designed to increase the efficiency of procurement and reduce transaction costs.
In order to enjoy the above exemption, a request for authorization is required to be submitted to the Commission by email to firstname.lastname@example.org. Applicant companies are required to further provide information on (a) the companies involved and the parameters for collaboration; (b) detailed description of collaboration (c) explanation of why the collaboration is required to meet COVID-19 objective.
The decision of the FCCPC to ease up the process of filing for notifying parties in the COVID -19 circumstances is a welcome development which shows that the Commission is a progressive government agency capable of adapting its processes to change in circumstances. Also, the FCCPC will continue to intervene and safeguard against price manipulation while also putting in place measures to deal with the disruptive impact on economic activities that may have been caused by the Pandemic.
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Partner, Corporate Commercial
Partner, Mergers & Acquisitions