30 mergers and takeovers in 2018—CFTC
The Competitions and Fair Trading Commission (CFTC) has said it assessed 30 applications for mergers and acquisitions (M&As) and takeovers in 2018.
Out of the 30, the commission authorised three local mergers while it reviewed 27 merger transactions notified through the Common Market for Eastern and Southern Africa (Comesa) Competition Commission (CCC).
Responding to a questionnaire, CFTC executive director Wezi Malonda said locally, the commission handled the takeover of Crown Poultry by Central Poultry Limited, the acquisition of OIBM by FMB and Ursa Security International Ltd by Garda World.
“An assessment of all the local mergers received showed that the transactions would create efficiencies that were beneficial to consumers and the economy albeit some concerns which were identified about the transactions,” said Malonda.
She said the commission found that the resultant efficiencies would outweigh any anti-competitive effects that transaction would create; as a result, all the transactions were authorised.
However, Malonda said the parties made undertakings to put in place measures to remedy the concerns that were identified by CFTC and other stakeholders.
She said according to international best practice only mergers whose negative effects cannot be remedied by undertakings are rejected by the regulator.
“In the case of Malawi, all mergers whose assessment showed that they would negatively affect competition were found to have remediable effects. Hence, the mergers were authorised subject to the parties making undertakings to address the identified negative effects,” she explained.
Apart from the local merger transactions, in the year, CFTC recommended for authorisation to Comesa Competition Commission the acquisition of Simba Net (Mw) Ltd by Synergy Communications (Mauritius) Limited, Afcarme (Zimbabwe) Ltd by FMB, among others.
Quashing fears that mergers are creating a negative impact on competition, Malonda said most mergers create benefits for consumers and the economy in general.
“For example, some mergers create efficiencies which may, among other things, result in low prices for consumers or enabling the merged entity to increase export of its products, which is good for Malawi. Mergers also help to save failing firms from closure and are a form of investment into the economy,” she explained.
She said the commission conducts thorough analyses to ensure that only mergers that benefit consumers and the country as a whole are authorised and have legal effects in Malawi
Malonda however explained that other mergers result in anti-competitive effects through creation of market conditions, which are unfavourable for competition such as increasing market concentration and monopoly.
In an earlier interview, Comesa Competion Commission head of mergers and acquisitions Willard Mwemba said most mergers in the bloc include construction, alcoholic beverages, transport, banking and financial sectors. n
