The Competition Act 2007 (the ‘Act’) provides for the control of merger situations by the Competition Commission. Where a merger situation is likely to result in substantial lessening of competition in any market in Mauritius, the Competition Commission is empowered to impose directions to remedy the situation, including directions to block the merger or to require divestment of assets.

Merger situation has a wide meaning under the Act and covers various forms of mergers and acquisitions. Although most mergers and acquisitions are not harmful, the Competition Commission scrutinizes such transactions to identify and remedy those transactions which can harm competition.

Parties may also seek the guidance of the Competition Commission on whether the merger situation is likely to result in substantial lessening of competition to ensure that the transaction is in conformity with the Act. Indeed, the Competition Commission encourages such application for guidance as it provides certainty to the deal and avoid costly post-merger remedies.

For more information on the Act and guidelines pertaining to merger control:

 

Applying for the guidance of the Competition Commission

Section 47 of the Act offers enterprises which are parties to a merger situation the opportunity to seek the guidance of the Competition Commission.

More information on the applications for guidance can be obtained from here.

A transaction is reviewable under the Act if:

  • it amounts to a merger situation in that it brings under common ownership and control two or more enterprises, and have a local nexus,
  • the statutory market share threshold is met: either one party to the transaction is of at least 30% or the merged enterprise will hold a market share of 30%, and
  • the transaction has or is likely to result in a substantial lessening of competition.

A merger situation is defined under the Act as the ‘the bringing together under common ownership and control of 2 or more enterprises of which one at least carries its activities, in Mauritius, or through a company incorporated in Mauritius’.

A change in control is required to establish a merger situation. Section 47(3) of the Act prescribes three levels of control, namely material influence, de facto control and controlling interest. Material influence is the lowest level of control which may be obtained in an enterprise and occurs through the ability to influence the policy of the enterprise. De facto control occurs mainly where a person or enterprise can control or exercise control over the policy of the target enterprise without having a controlling interest. Controlling interest generally occurs where the acquirer has more than 50% shareholding or voting rights.

A change from zero control to any one level of the three levels of control will amount to a merger situation under the Act. Similarly, a change from any one level of control to another level will result in a merger situation.

For more information on common control, see CC5 Guidelines on Mergers .

To calculate the market shares, the relevant market(s) which will be/are affected by the transaction has to be defined. The identification of the relevant market is a technical exercise conducted using the hypothetical monopolist test, and the market which meets the latter test is taken to be the relevant market. Generally, there are two dimensions to the relevant market, the relevant product market and the relevant geographic market.

When the relevant market has been identified, the market shares will be calculated. Market shares is normally calculated based on revenue but other indicators can also be used.

For more information on the analytical framework to define the relevant market, please see CC2 Guidelines on Market Definition and the calculation of market shares .

The analytical framework to assess a substantial lessening of competition (SLC) has been laid in the Competition Commission Guidelines on Mergers. A merger can affect the state of competition in different aspects and in different markets. There are generally three main reasons a merger may lead to SLC, namely through unilateral effects (happen mainly when the transaction involves two competitors and removes competition between them), coordinated effects (where it increases the likelihood of coordination) and vertical effects (where competition in vertically related market is hampered).  To assess whether competition will be reduced substantially with the transaction, the Competition Commission will also assess the barriers to entry and expansion that may exist in the market and whether the customers in the market have any countervailing buyer power.

For more information on the assessment of SLC, see Competition Commission Guidelines on Mergers 

The Act casts no obligation on merging parties to seek the guidance of the Competition Commission on a merger transaction. Notwithstanding, we strongly encourage parties to a merger transaction to seek the guidance of the Competition Commission to ensure that the transaction is in conformity with the Act; and more so when the players have significant turnover or assets in Mauritius.

The Competition Commission has wide ranging powers to impose remedies in relation to a merger which has been found to lead to SLC. The remedies which can be imposed can be broadly classified into behavioural remedies and structural remedies and the remedies will depend on whether the transaction is prospective or has been consummated. In relation to a prospective merger, the Competition Commission can order the parties not to consummate the transaction, divest asset or to adopt or refrain from adopting a certain behaviour. In relation to a completed merger, the Competition Commission can order the divestment of assets or to adopt or refrain from adopting a certain behaviour.

For more information on remedies, please see Section 61 of the Act, and the Competition Commission Guidelines on Remedies and Penalties.

The Competition Commission welcomes requests for pre-notification consultations from parties. For more information on pre-notification consultation, please see our Guidance note on merger notification​.