We are proud to share the latest edition of the TerraLex Pre-Merger Notification Guide. Each of the contributors to the guide has provided information and background as to the likely application of their respective notification regimes to a proposed transaction.
How to Use: You can use the tools below to create bespoke reports for the jurisdiction(s) and topic(s) covered. Click into single jurisdiction for one location or use the compare tool to compare multiple jurisdictions. Select the jurisdictions and topics of interest to create your unique report. You also have the option to print or download using the ellipsis button in the top right corner.
Yes, pre-merger notification is mandatory when the merger notification threshold, as specified by the Fair Competition Commission (FCC) from time to time through order in the Gazette (Threshold for Notification of a Merger) Order 2017, is exceeded. As of February 2019 the merger threshold is Tanzania Shillings 3.5 billion (approximately US$1,489,361.70).
There is no voluntary merger notification. A merger notification is mandatory as per Section 11(2) of the Fair Competition Act 2003 (the “FCA”) if the merger involves turnover or assets over a threshold set by order in the Gazette (which as of February 2019 is TZS 3.5 billion (approximately US$1,489,361.70)). However, many firms are choosing to notify the Fair Competition Commission to avoid penalization.
A merger is defined under Section 3 of the FCA as an acquisition of shares, a business, or other assets, whether inside or outside Tanzania, resulting in the change of control of a business, part of a business or an asset of a business in Tanzania.
Any transaction falling within the above definition and that involves turnover or assets above the threshold set by order in the Gazette must be notified.
As of February 2019, the threshold as set by the FCC (Threshold for Notification of a Merger) Order 2017 is TZS 3.5 billion (approximately US$1,489,361.70). The calculation of threshold is based on the combined market value of assets of the merging firms.
A merger is defined under Section 3 of the FCA as an acquisition of shares, a business or other assets, whether inside or outside Tanzania, resulting in the change of control of a business, part of a business or an asset of a business in Tanzania.
If the Joint Venture transaction falls within the above definition and that involves turnover or assets above the threshold set by order in the Gazette then it is subject to notification.
The necessary nexus with the jurisdiction to require a filing is where the merger or take-over occurs. If the merger results in the change of control of a business, part of a business or an asset of a business in Tanzania and the necessary thresholds are met, the authorization of the FCC must be sought and obtained. Where the merger is a global one, involving multinationals that all have local branches, then local notification to the FCC is the standard practice.
The following is typically needed: - The letter of intent (from the parties or their representative) to merge or acquire;
After notifying a merger to the FCC and requesting authorization for a merger, the Chairman as per Section 71 of the FCA, is free to ask for more information or documents e.g. documents clarifying the patterns of ownership and percentages of sales accounted for by participants in the proposed merger or takeover or by other leading enterprises in the relevant sector. Therefore, the required information filing cannot be minimized as it is at the discretion of the Chairman.
Yes, the fees for filing a merger is calculated on a sliding scale and ranges between TZS 25 million to TZS 100 million, based on the combined total annual turnover of the last audited accounts of the merging entities.
Specifically, (a) firms with annual turnover ranging from TZS 3.5 billion to TZS 25 billion shall be TZS 25 million; (b) firms with annual turnover exceeding TZS 25 billion and less than TZS 100 billion shall be TZS 50 million; and (c) firms with annual turnover of TZS 100 billion or above shall be TZS 100 million.
Note: The current exchange rate is about TZS 2350 to 1 US$.
Yes, according to Section 11(5) of the FCA, a notification must be filed at least 14 days before the proposed merger.
Yes, the parties must wait until after the Minister responsible for the FCC (currently the Minister for Trade, Commerce and Industry) has authorized the merger. Usually the Commission will make a ruling within 14 days, but if it is found that the proposed merger needs to be examined further, the Commission can extend the time for 90 days and thereafter further extend for a further 30 days.
The statutory period, within which a transaction is cleared, according to Section 11 of the FCA is usually 14 days although the Commission may extend this time to a further 90 days and thereafter for a final 30 days period. Thus, the transaction can be cleared anytime within 134 days.
According to Section 60 of the FCA, failure to notify a merger in excess of the relevant thresholds is an offence which is punishable by a fine of between 5% and 10% of the annual turnover of the body corporate that fails to notify the Commission. In addition every director, manager or officer of the body corporate at the time the offence was committed may be charged jointly in the same proceedings with such body corporate and be deemed to be jointly guilty of that offence unless he proves that the offence was committed without his knowledge or that he exercised all due diligence to prevent the commission of the offence.
The Act requires the FCC to provide a response to a merger notification within a certain time frame. If this approval is obtained, there is no possibility of post-closing challenge.
The FCA requires the FCC to provide a response to a merge notification within a certain time frame. If this approval is obtained, there is no possibility of post-closing challenge.
Thus, the way to protect a transaction from a post-closing challenge is to make sure that Fair Competition Commission approval is obtained prior to closing.
The FCC is a body corporate established by statute (The Fair Competition Act 2003) with the aim of encouraging competition in the economy by prohibiting restrictive trade practices, regulating monopolies, regulating concentrations of economic power as well as prices and protection of consumers. It has wide powers in this respect, for instance it can withhold authorization for mergers and takeovers, order persons/entities to correct restrictive trade practices, fix maximum prices and make various orders in the general pursuit of its statutory goals.
The Commissioner keeps all documents marked confidential until the merger is announced. The parties need to specify which documents should remain confidential even after the merger.
N/A
Being cooperative and proactive in dealings with the Fair Competition Commission is the recommended approach.
Other than antitrust/competition reviews, there are generally no other investment controls or similar regimes to aware of.
Disclaimer: This guide contains summaries of general principles of law. It is not a substitute for specific legal advice and should not be relied upon in relation to the application of the law or subject matter covered.
