The new Moroccan merger control framework (Law n°104-12 and implementing decree) has fully entered into force following the appointment of the members and the President of the Moroccan Competition Council ("the Council") respectively on November and December 2018.
The Competition Council issued in 2019 and 2020 more than a hundred merger decisions (more than 50 decisions each year), among them;
- 11 decisions concluding to the absence of a reportable concentration;
- 92 clearance decisions without commitments; and
- 3 decisions to open an in-depth investigation.
Since the adoption of Law n°104-12 and even before the reactivation of the Council, our firm has set up a mixed team that combines the in-depth technical expertise in competition law of the Brussels office with that of the Casablanca office. The team has been involved in many of these transactions notified to the Competition Council on behalf of Moroccan operators, European and non-EU such as US groups alike.
We have summarized below the main findings that can be drawn from these decisions and our experience so far, in particular concerning:
- The scope of the Council's competence and the potential exceptions that may apply;
- Procedural questions such as timing and publicity;
- The standstill principle and any possible exception.
1.COMPETENCE OF THE COUNCIL
The Moroccan merger control regime covers mergers, acquisitions of control (sole or joint) and creation of joint ventures which perform on a lasting basis all the functions of an autonomous economic entity.
Pursuant to Article 12 of Law n°104-12, the Moroccan merger control regime covers transactions that achieve one of the following thresholds:
- combined worldwide turnover of the Parties exceeding MAD 750 million (approximately 70 million euros) ("worldwide threshold"); or
- turnover in Morocco of at least two parties exceeding MAD 250 million (approximately 23 million euros) ("Moroccan threshold"); or
- combined market share in Morocco, or a substantial part of Morocco, exceeding 40% ("market share threshold").
Please note that these thresholds are alternative which means that if one of them is met, a prior notification is in principle required.
Based on the jurisprudence, it appears that the Moroccan threshold is considered by the Council to be met if at two parties at least together exceed the threshold of MAD 250 million; i.e. it can be met by one party achieving MAD 245 million and the other achieving MAD 5 million for example.
1.2 Three possible exceptions accepted so far
(i) Non full function joint venture
The Council confirmed in a few recent decisions that only full function ventures, i.e. joint venture operating autonomously on a market constitute a concentration and therefore trigger a notification requirement.
The decisional practice of the Council provides guidance on how the "full functionality" criteria is assessed, in particular in the energy sector:
- In a Decision n°77/D/191, the Council concluded that the joint venture was not full-function since its sales were exclusively directed to one of its parent company and that no prior notification was required;
- In a Decision n°101/D/192, the Competition Council concluded that two joint ventures did not operate as independent economic market players since the sales of the first joint venture were exclusively directed to one of its parent company and the second joint venture did not provide its services to third parties and had therefore an auxiliary function to its parent companies' business activities.
(ii) Internal restructuring
The Council also confirmed in a Decision n°01/D193 that internal re-organisations or restructuring were not subject to merger control since they did not imply a change of the structure of control over an entity which would remain within the same group after the transaction.
A few other decisions in 2020 also confirmed this analysis
(iii) Absence of activity of the target in Morocco subject to conditions
The Council has concluded that transactions were not subject to merger filing requirement relying on Article 1(1) of Law n°104-12 which states that the Law applies to transactions which may have an object or effect on competition in Morocco (or a substantial part thereof), thereby narrowing down its jurisdiction with respect to foreign-to-foreign transactions.
So far, this exception has only been accepted in the following limited circumstances: 4
- the target did not achieve any revenues, had no presence in Morocco and had no plans to expand in Morocco; and
- the acquirer (s) were not active in Morocco (including via their subsidiaries and controlling stakes) on the same sector as the target and did not have any further development plans on this market in Morocco.
The Council’s review is split into two phases (Phase I and Phase II). Transactions not raising competition concerns would be expected to be cleared during Phase I.
The deadline for a Phase 1 clearance decision without commitment is maximum 60 calendar days after receipt of a complete file.
The review process and timing for a clearance decision in Phase 1 without commitments is in principle and so far as follows:
- There are so far in Morocco no pre-notification, i.e. the formal notification is directly filed to the Moroccan Competition Council;.
- Approximately 3-4 weeks following the formal filling, a meeting (videoconference in the context of COVID-19) takes place with the case handler appointed to the file to discuss the completeness of the file;
- Only after that meeting (or video conference) and after the additional information has been sent to the case handler, as the case may be, a declaration of completeness is issued. It is only the date of that declaration of completeness which formally triggers the 60 days review period (even if the notification was complete on the date of its notification);
- During the 60 days period, the Moroccan Competition Council can send other questionnaires and / ort invite the Parties for a meeting to discuss the Parties' products, market definitions, or potential issues raised as a result of the market investigation.
Subject to the Government’s right to intervene (see below), if the Council does not issue a decision within the 60 days review period either clearing the transaction, considering that it is not competent or opening a Phase 2, the transaction is deemed approved.
The administration may, within 20 calendar days of the Council’s Phase I decision or expiry of the Phase I waiting period, intervene to request the Council initiate a Phase II review.
To our knowledge, this right has never been used so far by the administration and the Council has always adopted decisions before the expiry of the 60 days period (there has not been any tacit authorization we are aware of yet).
According to Article 13 of Law 104-12 and the relevant decree the publication of a summary of the transaction shall intervene within 5 days following the receipt of the notification on the council's website and official legal journal.
This summary, prepared by the parties in Arabic and French, is submitted together with the filing.
In practice, so far, it is published on the Council's website and in a local newspaper ("Le Matin") only after the file has been declared complete and the declaration of completeness has been issued (i.e. a few weeks after the notification). (see section above)
This publication triggers a 10 days period for potential third party comments.
3. SUSPENSION PRINCIPLE
Pursuant to Article 14 of Law n°104-12, the parties are not entitled to implement their concentration plan as long as the Council (or the administration, if it takes on the case) has not cleared the transaction ("suspension principle"').
Any party with a notification obligation is liable to fines for failure to notify or gun jumping (up to 5% of the Moroccan turnover of the undertaking’s most recently completed financial year).
Article 14 adds that in case of "duly motivated need", the parties can apply for an exemption to the standstill obligation, allowing them to actually implement all or part of the transaction without waiting for the decision of the Competition Council.
To our knowledge this exemption has to date only been granted once by the Council in the context of the acquisition of companies in financial distress.5
Law n°104-12 does not provide for an exemption to the standstill obligation in the context of public takeover bids. Guidance could however be expected on this question in the near future.
The Competition Council has proven to be a very active authority since its reactivation with many decisions adopted pursuant to merger control rules.
It has opened phase 2 proceedings and regularly receives complaints or third party comments on transactions notified to it.
It will be interesting to continue analyzing its merger control decisions notably with respect to market definitions and competition analysis, pending the publication of guidelines which could be soon published on these matters.
(1) Decision of 12 September 2019 on the cration of a joint venture between Nareva Enel Green Power Morocco and ONEE.
(2) Decision of 26 December 2019 on the creation of two joint ventures respectively by EDF Renouvelables / Masdar / Green of Africa Investment and EDF Renouvelables / Masdar / Masen Capital.
(3) Decision of 30 January 2019 on the merger between Al Omrane Meknès and Al Omrane Fès.
(4) See notably Décision n°100/D/19 of 24 December 2019 on the acquisition by Caisse des dépôts et consignations and Total Quadran of joint control of JMB Solar Nogara and Quadran Nogara; Decision n°102/D19 of 26 December 2019 on the creation of a joint venture between Saudi Aramco Development Company and Korea Shipbuilding & Offshore Engineering; Decision n°91/D/19 of 25 November 2019 on the acquisition by Caisse des dépôts et consignations of 77% in La Poste et indirect sole control in CNP Assurances.
(5) Decision of 31 August 2020 on the acquisition by Delfingen Industries S.A »,of sole control of Schlemmer Iberica S.A. U., Schlemmer Romania S.r.l., Schlemmer Russland, Schlemmer Italia S.r.l., Schlemmer Maroc SARL and Schlemmer Tunisie SARL and of the assets of Schlemmer Holding GmbH, Schlemmer GmbH and Schlemmer Münchingen GmbH & Co KG.