Merger Control

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1       Relevant Authorities and Legislation

1.1       Who is/are the relevant merger authority(ies)?

     The relevant merger authority is enforced by the Prime minister and by the Competition Council (Conseil de la Concurrence).

 

1.2       What is the merger legislation?

The Moroccan merger control rules are set out in Law No. 06-99 on “liberty of prices and competition” of 5 June 2000, and enacted by Dahir published in the Official Bulletin of 6 July 2000.This law came into force exactly one year thereafter. It has been completed by a Decree dated 17 September 2001, and published in the Official Bulletin of 4 October 2001.

 

1.3       Is there any other relevant legislation for foreign mergers?

No

1.4       Is there any other relevant legislation for mergers in particular sectors?

No

2       Transactions Caught by Merger Control Legislation

2.1       Which types of transaction are caught – in particular, how is the concept of "control" defined?

The legislation applies to concentrations in general. The term ‘concentration’ includes any kind of merger between two or more undertakings.

More specifically, the legislation applies to concentrations, which may occur when, pursuant to an act, whatever its form:

-  there is a transfer of ownership or use over all or part of the goods, rights, liens of an undertaking; or

- one or a group of undertakings exercise, directly or indirectly, a decisive influence over one or several undertakings.

There is no specific definition of control and minority in the legislation, except that control would be constituted by rights, contracts or other means that confer the possibility of exercising decisive influence on undertakings.

2.2       Can the acquisition of a minority shareholding amount to a "merger"?

No, please see response 2.4 below

2.3       Are joint ventures subject to merger control?

Joint ventures are caught, provided that they fall within the conditions described under question 2.1

2.4       What are the jurisdictional thresholds for application of merger control?

Moroccan merger control applies where all the undertakings that are party to the concentration act, or concerned with or economically linked to the parties, together completed during the previous financial year more than 40 per cent of the sales, purchases or other transactions over a national market of goods, products or services of similar nature or substitutes, or over a substantial part thereof.

2.5       Does merger control apply in the absence of a substantive overlap?

Yes, it does. However, competition concerns in such cases are

usually less likely than in other merger operations.

2.6       In what circumstances is it likely that transactions between parties outside [country] ("foreign to foreign" transactions) would be caught by your merger control legislation?

Foreign-to-foreign mergers are caught under the Moroccan Competition legislation to the extent they affect the relevant market or a substantial part thereof within the national territory. Even if the undertakings concerned do not have their headquarters or local subsidiaries in Morocco, the transaction could still be subject to the provisions of the Moroccan competition legislation, if the goods or services of such undertakings are sold in Morocco and, therefore, have effects on the relevant Moroccan market or a substantial part thereof.

 

2.7       Please describe any mechanisms whereby the operation of the jurisdictional thresholds may be overridden by other provisions.

Moroccan merger control regulation does not contain any such

provisions.

2.8       Where a merger takes place in stages, what principles are applied in order to identify whether the various stages constitute a single transaction or a series of transactions? 

There are no particular principles in this regard.

3       Notification and its Impact on the Transaction Timetable

3.1       Where the jurisdictional thresholds are met, is notification compulsory and is there a deadline for notification?

Filing is mandatory. There is no exception to this rule.

The obligation to notify is not framed within any particular time limit. Filing may be made at any time once the parties are in a position to give notification of a project that is sufficiently well advanced, and in particular when they have entered into a gentlemen’s agreement or signed a letter of intent.

3.2       Please describe any exceptions where, even though the jurisdictional thresholds are met, clearance is not required.

There are no exceptions.

3.3       Where a merger technically requires notification and clearance, what are the risks of not filing?  Are there any formal sanctions?

     The obligation to notify is not framed within any particular time limit. Filing may be made at any time once the parties are in a position to give notification of a project that is sufficiently well advanced, and in particular when they have entered into a gentlemen’s agreement or signed a letter of intent.

The pecuniary sanctions for not filing are as follows:

-for undertakings: 2 per cent to 5 per cent of their pre-tax turnover in Morocco from the previous financial year (if the undertakings operate in different sectors, the turnover to retain is the one relating to the sector of activity in which the offence has been committed);

-for individuals: 200,000 dirhams to 2 million dirhams.

     In addition to the pecuniary sanctions, the Prime minister is authorised to take all necessary measures to terminate the transaction, to remove all de facto legal consequences of every action that has been taken unlawfully, to return all shares and assets, if possible, to the places or persons where or who owned these shares or assets before the transaction or to impose particular measures.

 

3.4       Is it possible to carve out local completion of a merger to avoid delaying global completion?

No.

3.5       At what stage in the transaction timetable can the notification be filed?

The obligation to notify is not framed within any particular time limit. Filing may be made at any time once the parties are in a position to give notification of a project that is sufficiently well advanced, and in particular when they have entered into a gentlemen’s agreement or signed a letter of intent.

3.6       What is the timeframe for scrutiny of the merger by the merger authority? What are the main stages in the regulatory process?  Can the timeframe be suspended by the authority?

Filing has a suspensive effect: a concentration may not be completed before approval has been obtained from the Prime minister.

     However, in the absence of any notification of the Prime minister’s decision to the parties, during a period of two months, or six months if the Prime minister submits the case to the Competition Council, the decision is deemed to have been tacitly approved.

 

3.7       Is there any prohibition on completing the transaction before clearance is received or any compulsory waiting period has ended?  What are the risks in completing before clearance is received?

If a concentration is closed before clearance, the substantive test is the major issue for determination of the consequences. If it transpires that the transaction creates or strengthens a dominant position and significantly lessens competition in any relevant product market, the undertakings concerned will be subject to fines and other sanctions stated under question 8.

3.8       Where notification is required, is there a prescribed format?

Notification is required before the Prime Minister. There is no prescribed format.

3.9       Is there a short form or accelerated procedure for any types of mergers?

No

3.10     Who is responsible for making the notification and are there any filing fees?

In principle, those subject to an obligation to notify are undertakings concerned by the project of concentration. Nevertheless, we can assume that filing made by either of the parties to the transaction shall also be valid, but in such a case the filing party should notify the other party of the filing. There are no filing fees imposed by the legislation.

4       Substantive Assessment of the Merger and Outcome of the Process

4.1       What is the substantive test against which a merger will be assessed?

The substantive test for clearance is whether the transaction significantly lessens competition, especially by creating or strengthening a dominant position and whether it makes a sufficient contribution to economic progress to offset the damage to competition.

4.2       What is the scope for the involvement of third parties (or complainants)

Third parties such as customers and competitors are not directly involved in the review process. However, if need be, the Competition Council may ask to hear them. Moreover, “consumer associations, the chambers of commerce, of industry, of agriculture and of services” and “professional organisations” may inform the Prime minister of any concentration transaction concluded in breach of the legislation.he regulatory scrutiny process?

 

4.3       What information gathering powers does the regulator enjoy in relation to the scrutiny of a merger?

The Authority may impose fines on the notifying parties in case of

failure to supply information or provision of incomplete or

misleading information.

4.4       During the regulatory process, what provision is there for the protection of commercially sensitive information?

There are no particular provisions in this regard. However, the notifying parties should indicate if the need be in their notification what

information constitutes business secrets in order for such

information to be treated as strictly confidential

5       The End of the Process: Remedies, Appeals and Enforcement

5.1       How does the regulatory process end?

Upon its preliminary review of the notification following the filing, the Prime minister decides whether to refer the case to the Competition Council. In such a situation, the Prime minister will notify the parties.

     The president of the Competition Council designates a reporter member for the study and the follow up of the case. Inquiries and appraisals may be conducted. The reporter member can hear the involved parties. Third parties do not have access to the file. A report has to be prepared, which is notified to the parties for their comments and replies, within two months. Moreover, the parties can ask for a hearing.

The Prime minister may, by means of an injunction, restore the parties to their pre-concentration position, by ordering divestiture or altering the transaction. Failure to observe an injunction is punishable by fines and other sanctions stated under question 8.

The legislation gives the Prime minister discretion as to the conditions he may impose on the applicant in a merger transaction to remedy the competition issues in relation to a merger.

5.2       Where competition problems are identified, is it possible to negotiate "remedies" which are acceptable to the parties?

Yes. The legislation gives the Prime minister discretion as to the conditions he may impose on the applicant in a merger transaction to remedy the competition issues in relation to a merger.

5.3       At what stage in the process can the negotiation of remedies be commenced?

At any stage.

5.4       If a divestment remedy is required, does the merger authority have a standard approach to the terms and conditions to be applied to the divestment?

No, but even if it is not stated expressly in the legislation, we can assume that between filing and the final decision of the Prime minister, the parties to the transaction may propose amendments to remedy competition issues.

5.5       Can the parties complete the merger before the remedies have been complied with?

Filing has a suspensive effect: a concentration may not be completed before approval has been obtained from the Prime minister.

     However, in the absence of any notification of the Prime minister’s decision to the parties, during a period of two months, or six months if the Prime minister submits the case to the Competition Council, the decision is deemed to have been tacitly approved.

 

5.6       How are any negotiated remedies enforced?

Companies must comply with their commitments; to this end, they must inform the Authority about their completion.

Whenever the Authority considers the parties have not compliedwith the remedies they proposed, it can retract the decision authorising the operation.

5.7       Will a clearance decision cover ancillary restrictions?

It is theorically possible.

• Can a decision on merger clearance be appealed?

Decisions of the Prime minister may be reviewed by the competent administrative Court.

 

The legislation makes no provision for a time frame within which a party should appeal to the Court. An appeal to the Administrative Court against the decision of the Prime minister should be made within 60 days.

5.9       Is there a time limit for enforcement of merger control legislation?

Not expressly mentioned on the law.

6       Miscellaneous

6.1       To what extent does the merger authority in [country] liaise with those in other jurisdictions?

The merger authority (Conseil de la Concurrence) has been recently reactivated.It is now trying to liaise with other similar foreign authorities, such as the German one.

Contributor:

Rachid Benzakour

Avocat

Benzakour Law Firm

Casablanca,Morocco

Tel: + 212 661 09 05 79

URL: http:// www.cbllawfirm.com