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Sunday November 29, 2020 / 11:50 AM / by FCCPC / Header Image
Credit: FCCPC
Introduction
Pursuant to Section 17,18 and 163 The Federal
Competition and Consumer Protection Commission hereby issues the Merger Review
Regulations 2020 with ancillary instruments to govern the notification and
review of mergers under Part XII of the Federal Competition and Consumer
Protection Act 2018
Merger Review Guidelines
The Federal Competition and Consumer Protection
Commission (the Commission) is the regulatory authority responsible for, among
other things, the administration and enforcement of the Federal Competition and
Consumer Protection Act 2018 (the Act). The Commission contributes to the
economic development of Nigeria by protecting and promoting competitive markets
and enabling informed consumer choices.
These guidelines describe the Commission's general
approach to administering the Act's merger review process applicable to
proposed transactions that are the subject of a merger notification.
Overview
Legal review of mergers is an essential element of
competition policy. For Nigeria's market economy to function optimally, and
benefit citizens, rules are required to ensure mergers and combinations do not
result in adverse effects on competition. Effective competition brings benefits
to consumers, such as low prices, high quality products, a wide selection of
goods and services, and innovation. Through its control of mergers, the
Commission prevents mergers that would be likely to deprive customers of these
benefits by significantly increasing the market power of firms.
The Commission recognises that majority of mergers do
not present competition concerns and, indeed, may enhance efficiency.
Nonetheless, periodically, certain transactions could potentially substantially
prevent or lessen competition, thereby having a negative impact on consumers,
businesses and the overall competitiveness of the economy. The Commission
reviews these transactions with a view to fulfilling its mandate to protect and
promote competitive markets. In discharging its merger review obligations under
the Act, the Commission's priority is to identify proposed mergers that could
constitute a threat to competitive markets and to allow those that do not, to
proceed as expeditiously as possible.
Preserving competition in merger review, as in all
areas of competition policy, is not, however, an end in itself. The ultimate
goal is the promotion of economic performance, and in particular protection of
consumer welfare. By seeking to preserve the competitive process, merger review
plays an important role in guaranteeing efficiency in production, in preserving
the incentive for enterprises to innovate, and in ensuring the optimal
allocation of resources within the economy. Consumers are the beneficiaries of
a properly conducted enforcement policy, enjoying fair prices and a wider
choice of products and services as a result.
These guidelines outline the general principles
guiding the Commission's merger analysis under Part XII of the Federal
Competition and Consumer Act 2018 (the Act) (and hereinafter referred to as the
"Guidelines").
The Guidelines expand on the procedural and
substantive framework under the Merger Review Regulations 2020, expounding the
principal analytical techniques, practices, and the enforcement policy of the
Commission with respect to mergers.
With these Guidelines, the Commission seeks to
identify the bases upon which it would challenge competitively harmful mergers
while avoiding needless intervention with mergers that are either competitively
beneficial or neutral. Most merger analysis is necessarily predictive,
requiring an assessment of what will likely happen if a merger proceeds as
compared to what will likely happen if it does not. Given this inherent need
for prediction, these Guidelines reflect the legislative intent that merger
enforcement should check competitive problems in their nascency.
The approach to merger assessment has been developed
to outline the considerations that guide the Commission's merger review as well
as the statutory factors relevant to the assessment. There is also an emphasis
on the competitive theories of harm and the effect of constraints, which
facilitates a more integrated analysis.
The Commission will continue to assess each merger on
its merits according to the specific nature of the transaction, the industry
and the particular competitive impact likely to result in each case. The
general principles set out in these guidelines provide a framework within which
mergers will be reviewed. Importantly, the application of those principles to
different facts and situations may give rise to different results. Where these
Guidelines provide examples, they are illustrative and do not exhaust the
applications of the relevant principle.
These Guidelines also describe the main types of
evidence upon which the Commission usually relies to predict whether a merger
may substantially prevent or lessen competition. These Guidelines should
provide an enhanced level of predictability and certainty to merger parties,
their advisers, the business community and the public, by increasing the transparency
of the analytical process underlying the Commission's enforcement decisions.
They may also assist the adjudicatory process in developing an appropriate
framework for interpreting and applying competition laws in the merger review
arena.
It is not possible for these Guidelines to cover every
issue or circumstance that may arise in a merger review. In practice,
individual mergers involve a great variety of facts and situations, and the
analysis of particular issues may need to be tailored to the specific
circumstances of a merger or deal with competition issues not specifically
considered in these guidelines. Accordingly, the Commission proposes to apply
the Guidelines flexibly.
The unifying theme of these Guidelines is to interpret
legislative intent that mergers should not be permitted to create, enhance, or
entrench market power or to facilitate its exercise.
These Guidelines reflect the views of the Commission
at the time of publication. Markets, economic theory, legal thinking and best
practice evolve; the Commission may revise the Guidelines from time to time to
reflect developments and may publish new or supplemental guidance. The latest
version of the Merger Review Guidelines is always that appearing on the FCCPC's
website
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