11 February 2013

East Africa: Comesa Sets Up Authority to Vet Companies

Kampala — The Common Market for Eastern and Southern Africa (COMESA) has set up a competition commission authority to vet companies expanding through mergers and acquisitions.

The commission became operational on January 14 and is now pursuing its mandate to monitor and investigate monopolistic behaviour within the bloc, a statement issued on the COMESA website.

It said that companies from the 20 member states will have to notify the commission of any impending mergers and acquisitions that may have regional impact at a fee of Sh43.5 million ($500,000 at current exchange rates).

The commission will then assess whether such commercial decisions could result in uncompetitive behaviour that may negatively affect free and fair trade in the region.

"This therefore means that mergers with a regional dimension that are concluded without notification of the commission shall be null, void and without legal effect," the commission's mergers and acquisitions manager, Mr Willard Mwemba, said in the statement.

There have been concerns that the commission could increase the number of bureaucratic procedures that businesses have to go through thereby making the region less attractive to investors.

The Competition Commission has the power to issue cease and desist orders to any companies it determines to be carrying out anti-competitive agreements.

It can also impose fines and sanctions for breaches of competition regulations as well as order compensation to be paid to any parties affected by anti-competitive behaviour.

Beyond ensuring that companies adhere to the principles of fair competition, the commission also has the mandate to protect consumer rights in the Comesa region.

Investigations carried out at the behest of citizens that uncover conduct that erodes consumer welfare in the region could lead to sanctions or legal proceedings at the Comesa Court of Justice.

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