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Review of the guidelines issued by the FCCPC

Since its establishment in pursuance of the provisions of the Federal Competition and Consumer Protection Act 2018 (the “Act”), the Federal Competition and Consumer Protection Commission (“FCCPC”) has taken steps to implement the provisions of the Act.

For this purpose, the FCCPC has issued two guidelines (both in 2019):


  • Guidelines on Simplified Process for Foreign-to-Foreign Mergers, which provides for the process for obtaining approval for foreign-to-foreign mergers; and
  • Notice of Threshold for Merger Notification, which provides for the threshold for merger notification.


The Act, among other things, repealed sections 118-128 (excluding section 121(1)(d)) of the ISA, thereby vesting the power to approve mergers with the FCCPC in place of the Securities and Exchange Commission (“SEC”). The provisions of the Act applies to all undertakings and all commercial activities within, or having effect within, Nigeria. It also applies to conduct outside Nigeria by any person in relation to the acquisition of shares or other assets outside Nigeria resulting in the change of control of a business, part of a business or any asset of a business, in Nigeria. Therefore, any merger or acquisition that results in a change of control of a business in Nigeria will come under the FCCPC’s regulatory purview.


We examine the key provisions of the Guidelines below.


‘Guidelines on Simplified Process for Foreign–to-Foreign Mergers with Nigerian Component’


The FCCPC issued the Guidelines on 13 November 2019. The Guidelines were issued pursuant to the provisions of Section 2(3) (d) of the Act, which extended the application of the Act to “… the acquisition of shares or other assets outside Nigeria resulting in the change of control of a business, part of a business or any asset of a business, in Nigeria”. In essence, any foreign-to-foreign merger that results in a change of control of a Nigerian business will come under the FCCPC’s regulatory purview. Prior to the enactment of the Act, this was not the case.


Under the Act, a merger will have occurred where one or more undertakings directly or indirectly acquire or establish direct or indirect control over the whole or part of the business of another undertaking. It may be achieved through (i) the purchase or lease of shares, an interest or assets of an undertaking; (ii) the amalgamation or other combination with an undertaking; and (iii) a joint venture.


Key highlights of the Guidelines are as follows:


  1. The application fee is based on the turnover of the Nigerian business, as set out below:




Mergers with a combined turnover of N1,000,000,000 (about US$2,777,778).



N3,000,000 (about US$8,333) or 0.1% of the combined turnover, whichever is higher.



Mergers where the target undertaking has a turnover of up to N500,000,000 (about US$1,388,889.00) and between N1,000,000,000 (about US$2,777,778).


N2,000,000 (about US$5,555).


  1. Parties are not required to pay a processing fee in addition to the application fee, as is the case for local mergers. For local mergers, processing fees are usually a percentage of the value of the transaction.


  • The documentation requirements are less elaborate than that for local mergers. The only documents specified in the Guidelines are an information memorandum showing the effect of the transaction on the Nigerian market, the relevant agreement(s), authorisations for external representatives, financial information and a summary of the transaction for publication by the FCCPC.


  1. An expedited procedure has been introduced, by which the FCCPC is expected to conclude its review of the transaction and issue a decision within 15 business days. The expedited procedure fee is N5,000,000 (about US$13,889), which is to be paid in addition to the application fee.


  1. The parties to the transaction are required to provide a power of attorney granting authority to their external representative(s) to undertake the necessary filing/notification to the FCCPC.


  1. The parties are required to provide a non-confidential summary (of no more than 500 words) of the merger, which would be published by the FCCPC upon notification.


  • In the event that information to be disclosed is of a confidential nature or contains business secrets, the Guidelines make provision for the submission of such information under separate cover and along with acceptable reasons for non-disclosure.


  • Submissions must contain a declaration by the notifying party(ies) essentially stating that information provided in the submission is true, correct and complete.


‘Notice of Threshold for Merger Notification’


The FCCPC issued the Notice with an effective date of 9 September 2019. The Notice was issued pursuant to Section 93(4) of the Act, which vests the FCCPC with the power to determine the threshold of annual turnover for the purpose of determining what constitutes a small and large merger; and the method for the calculation of annual turnover to be applied in relation to the threshold.


The Notice prescribes that the FCCPC shall be given notice of a merger before implementation if, in the financial year preceding the merger:


  • The combined annual turnover of the acquiring undertaking and the target undertaking in, into or from Nigeria equals or exceeds N1,000,000,000 (about US$3,267,974); or


  • The annual turnover of the target undertaking in, into or from Nigeria equals or exceeds N500, 000,000 (about US$1,633,987).


It is presumed that a merger with an annual turnover below the threshold will constitute a “small merger” and those above the threshold would constitute a “large merger”. In accordance with Section 95(1) (a) of the Act, a transaction classified as a “small merger” does not require notification to the FCCPC unless, within the six-month period from implementation of the merger, the FCCPC is of the opinion that the merger may substantially prevent or lessen competition.


For the purpose of calculating the annual turnover, the FCCPC has determined that the following will be considered:


  1. all monies received or otherwise receivable either as cash or on accrual basis including:


  1. monies received but not necessarily in exchange for goods or services, or as sales;
  2. equity injections (deferred or convertible) for the purpose of the business, or similar payments or returns; and
  3. interest, royalties, rent or dividend obtained from the use by others of the undertaking’s assets.


  1. No amount of the money at (i) above, including sums that may be otherwise deductible as a matter of law or any mutual agreement with respect to splits or funds sharing, shall be excluded.


  • Financial years that do not cover a full twelve-month period shall be converted to a full twelve-month period based on the average turnover of the recorded months.


  1. Turnover in foreign currencies shall be converted into the Naira at the prevailing official exchange rate determined by the Central Bank of Nigeria.


  1. The calculation of turnover shall have regard to generally accepted accounting principles applicable in Nigeria under the Financial Reporting Council of Nigeria Act.


  1. Financial information used for calculating turnover of an undertaking must include the undertakings’ audited financial statements for the end of the preceding financial year to the notification.


  • In the event that an undertaking relevant to the threshold acquires, disposes or otherwise transfers any assets/ business or part thereof after its last audited financial statement provided to determine threshold, but prior to notification, the turnover of such business; or attributed to such asset may be considered by the FCCPC in the merger.


In addition to the above guidelines, the FCCPC is currently in the process of developing a new regulatory framework for merger transactions in Nigeria, which is expected to replace the provisions of the Investments and Securities Act, 2007 (“ISA”) and Rules and Regulations of the Securities and Exchange Commission (“SEC Rules”) relating to mergers. Until such time as new rules are issued by the FCCP and C, the SEC Rules and the above guidelines continue to apply to merger transactions subject of course to any directions given by the FCCPC.





Tiwalola Osazuwa and Damilola Ogedengbe, Senior Associates, Corporate & Commercial and M&A Practice Group at AELEX



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