March 19, 2019
The Global Transaction Forecast (Report) issued by Baker Mckenzie and Oxford Economics predicts that merger and acquisition (M & A) transactions in Nigeria will continue to rise. Based on the Report, in 2017, M&A transactions in Nigeria amounted to $469m and rose to $2.7bn in 2018. In 2019, it is projected that deals around $2.9bn will be completed, dropping to $2.5bn in 2020. In 2021, M & A deals in Nigeria are projected to rise to about $3bn.
Previously, the Securities and Exchange Commission(SEC) was saddled with the regulation of all merger transactions in Nigeria. However, this responsibility now lies with the Federal Competition and Consumer Protection Commission (the Commission) given the recent signing into law of the Federal Competition and
Consumer Protection Bill by President Muhammadu Buhari on 5th February 2019. With the repeal of relevant provisions of the Investment and Securities Act (ISA) on mergers, the new Federal Competition and Consumer Protection Act (Act) has introduced a change in the regulatory framework for merger transactions in Nigeria and companies seeking to merge would be required to undergo a new procedure different from the one under the ISA.
There will be a transition period of about 3 months before the Commission will become operational. During this period, SEC will still entertain ongoing applications till its completion. However, companies and other business entities seeking to file new merger applications will need to wait until the Commission resumes duties. This piece examines the new Act and discusses key provisions / implications in the Act that are relevant to merger transactions in Nigeria.
The Act aims at promoting a competitive market and protecting consumer rights in Nigeria. Prior to the enactment of the Act, there was no single piece of legislation regulating competition in Nigeria. Thus provisions of laws regulating competition were found in various legislation such as the ISA; the Nigerian Communications Act 2003; the Electric Power Sector Reform Act 2005 amongst other laws. However, the new Act applies to all businesses in Nigeria and supersedes all laws on competition and consumer protection, except the Constitution of the Federal Republic of Nigeria 1999.
The Act prohibits unfair business practices or abuse of dominant market position by any company, as well as any agreement to restrain competition such as agreements for price fixing, price rigging, collusive tendering etc. To regulate and facilitate competition, the President may from time to time, by order published in the Federal Gazette, declare that prices for goods and services specified in the order shall be controlled in accordance with the provisions of the Act.
In addition, the Act mandates the Commission to administer the provisions of the Act as well as set up the Competition and Consumer Protection Tribunal to adjudicate over conducts prohibited by the Act and exercise jurisdiction in accordance with the Act.