In our earlier blog post (http://www.acas-law.com/resource/blog/The_New_Merger_Regime_-_SEC_and_FCCPC_Issue_Joint_Notice_on_Merger_Transactions), we highlighted, inter alia, the powers of the Federal Competition and Consumer Protection Commission (the “FCCPC”) to regulate mergers, acquisitions and other business combinations and to determine the thresholds for such transactions.
Specifically, Section 93(2) of the Federal Competition and Consumer Protection Act, 2018 (the “FCCPA”) provides that the FCCPC shall determine a threshold of annual turnover for the purpose of determining a small or large merger and a method for the calculation of annual turnover. Prior to making any merger notification threshold, the FCCPA (Section 93(3)) mandates the FCCPC to publish a notice in the Federal Gazette setting out the proposed threshold and the annual turnover calculation method and invite written submissions in respect of its proposal.
In satisfaction of the statutory duty placed on it, the FCCPC recently issued a Notice for Pre-Merger Notification dated 10 July 2019 (the “Notice”). By the Notice, the FCCPC informed the general public of its intention to determine the threshold requirements for mergers.
Pursuant to the Notice, the FCCPC proposed that a merger will be notifiable to the FCCPC prior to its implementation if in the financial year preceding the proposed merger:
a. the combined annual turnover of the acquiring and target undertakings in, into or from Nigeria equals or exceeds N1,000,000,000 (one billion Naira); or
b. the annual turnover of the target undertaking equals or exceeds N500,000,000 (five hundred million Naira).
In relation to the calculation of annual turnover, the FCCPC proposed that:
a. all monies received or otherwise receivable either as cash or on an accrual basis, including monies received not necessarily in exchange for goods or services, or as sales but including injections for the purpose of the business, shall be considered in calculating the turnover;
b. no amount of money in (a) above, including sums that may be otherwise deductible as a matter of law or any mutual agreement with respect to splits or fund sharing shall be excluded;
c. financial years that do not cover a full 12-month period shall be converted to a full 12-month period based on the average turnover of the recorded months;
d. turnover in foreign currencies shall be converted to Naira; and
e. turnover calculation shall be in accordance with generally accepted accounting principles applicable in Nigeria under the Financial Reporting Council of Nigeria Act (2011) and as is consistent with International Financial Reporting Standards.
Consistent with the requirements of the FCCPA, members of the general public were invited to make their submissions on the FCCPC’s proposals. The timeframe for making such submissions was pegged at within 60 (sixty) days of the Notice. From our calculation, the notice period expired on 8 September 2019.
It is not certain if the FCCPC received any comments in respect of its proposals. If no comments were received, the next stage as provided in the FCCPA is for the FCCPC to publish a final notice in the Federal Gazette setting out the merger threshold, the method of annual turnover calculation and the effective date of the threshold.
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Adepetun Caxton-Martins Agbor & Segun
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