NAMIBIA Law and Practice Contributed by: James Smith and Daneale Beukes, Engling, Stritter & Partners
2.4 Definition of “Control” Section 42 of the Competition Act provides that a merger occurs when one or more undertakings directly or indirectly acquire or establish direct or indirect con - trol over the whole or part of the business of another undertaking. This control can be acquired through various means, such as purchasing or leasing shares, interests or assets, or through an amalgamation or another form of combination. Section 42 (3) of the Competition Act provides a list of instances in which a person will be deemed to have acquired control over an undertaking. Namely, it pro - vides that “[a] person controls an undertaking if that person – (a) beneficially owns more than one half of the issued share capital of the undertaking; (b) is entitled to vote a majority of the votes that may be cast at a general meeting of the undertaking, or has the ability to control the voting of a majority of those votes, either directly or through a controlled entity of that undertaking; (c) is able to appoint, or to veto the appointment, of a majority of the directors of the undertaking; (d) is a holding company, and the undertaking is a subsidiary of that company; (e) in the case of the undertaking being a trust, has the ability to control the majority of the votes of the trustees or to appoint the majority of the trustees or to appoint or change the majority of the beneficiaries of the trust; (f) in the case of the undertaking being a close corpo - ration, owns the majority of the members’ interest or controls directly or has the right to control the majority of members’ votes in the close corporation; or (g) has the ability to materially influence the policy of the undertaking in a manner comparable to a person who, in ordinary commercial practice, can exercise an element of control referred to in paragraphs (a) to (f).”
The NaCC has repeatedly stated in advisory opinions that Section 42 (3), which sets out examples of “con - trol”, “only provides guidance on instances of con - trol, which are not exhaustive of the circumstances in which control arises. The acquisition of control may extend to any circumstances satisfying the definition of a merger in section 42 (1).” As a comparison, the South African Competition Tri - bunal held in a matter that the instances of control identified in Section 12 (2)(a) to (f) of the South African Competition Act (the equivalent provisions to Section 42 (3)(a) to (f) of the Namibian Competition Act) consti - tute “bright lines” that, if crossed, constitute an acqui - sition of control without the need for detailed analysis. An assessment of when control is acquired will always involve a fact-based analysis and, as a comparison, this has been stressed by both the European and South African competition authorities. The question is always whether or not the relevant transaction gives rise to an acquisition of control. In other words, it is not simply the fact that, after the implementation of the transaction, an entity will be able to exercise joint or sole control (for the purposes of Section 42 (1) as read with Section 42 (3) of the Competition Act), but the question is whether the rel - evant entity has acquired control as a result of the proposed transaction. Paragraphs 3.6 to 3.9 of the NaCC Merger Guidelines, reflecting the catch-all provision in Section 42 (3)(g) of the Competition Act, specifically include minority shareholdings that provide the ability to exert mate - rial or decisive influence. This influence can involve vetoing strategic commercial decisions, such as those relating to budgets, business plans, major investments, senior management appointments, or rights specific to certain markets, including technol - ogy choices where technology is a key aspect of the merged undertaking. 2.5 Jurisdictional Thresholds Step 1: If the value of (i) the target’s assets in Namibia and (ii) its turnover in, into or from Namibia are each less than or equal to NAD15 million (approximately USD832,870 (see Note 1 below)), the transaction does
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