NIGERIA Law and Practice Contributed by: Chiagozie Hilary-Nwokonko, Chukwuyere Ebere Izuogu and Priscilla Bidemi Ben-Okoh, Streamsowers & Köhn
commercial practice, can exercise the element of control referred to in the above points. According to Section 92 (3) of the FCCPA, control does not exist in either of the following circumstances: • credit institutions or other financial institutions or insurance companies acquiring securities of an undertaking in the ordinary course of business on a transitory basis or where the company is rais - ing capital, provided they do not exercise voting rights to determine the competitive behaviour of the undertaking and they dispose of the securities within one year of acquisition; and • control acquired under the law relating to liquida - tion, winding up, insolvency, cessation of pay - ments, compositions or analogous proceedings. In addition, as explained in 2.1 Notification , control is only one of the criteria used to assess whether a merger is notifiable to the FCCPC; the other is the turnover threshold. If these two criteria are met, then a merger is caught and must be notified to the FCCPC. 2.5 Jurisdictional Thresholds See 2.1 Notification . 2.6 Calculations of Jurisdictional Thresholds The jurisdictional threshold necessary to trigger a merger review involves two cumulative criteria that must be met in every case: the control element and the turnover test. Only the turnover test involves cal - culations which must be done in accordance with the Threshold Regulations. Pursuant to paragraph 1.1 of the Threshold Regulations, the turnover test is met if, in the financial year preceding the merger: • the combined annual turnover of the acquiring undertaking and the target undertaking in, into or from Nigeria equals or exceeds NGN1 billion; or • the annual turnover of the target undertaking in, into or from Nigeria equals or exceeds NGN500 million. Where the applicable turnover is in a foreign currency, the FCCPC uses the prevailing exchange rate deter - mined by the CBN at the end of the financial year preceding the notification or the date on which the
contract creating the merger came into force, which - ever is later. 2.7 Businesses/Corporate Entities Relevant for the Calculation of Jurisdictional Thresholds The businesses or corporate entities that have gen - erated turnover attributable to a business or derived from Nigeria are relevant for calculating the turnover. In addition, as explained in 2.6 Calculations of Jurisdic- tional Thresholds , turnover may be calculated on the basis of the combined annual turnover of the acquir - ing undertaking and the target undertaking or based on the annual turnover of only the target undertaking. Turnover may also be calculated group-wide, pro - vided it is attributable to and/or derived from Nigeria. According to the FCCPC’s practice, “group-wide” refers to an undertaking in which any of the merger parties has a controlling interest. Lastly, the FCCPC does not prescribe a particular procedure for changes in the business during the reference period; however, it is conceivable that discussions in this regard may be had with the FCCPC as part of the pre-notification consultation. 2.8 Foreign-to-Foreign Transactions Foreign-to-foreign transactions that have a local com - ponent are subject to merger control. According to the FCCPC, a local component exists if a foreign entity has a local nexus, such as having subsidiaries in Nige - ria, or if it satisfies the turnover test provided in the Threshold Regulations. When the target undertaking has no subsidiaries, sales, or assets in Nigeria, no turnover has been generated, and therefore, notifica - tion to the FCCPC is not required. 2.9 Market Share Jurisdictional Threshold No market share jurisdictional threshold applies in Nigeria at the time of writing. 2.10 Joint Ventures As a general rule, any joint venture must meet the following basic criteria to qualify for a merger review: • economic integration of the parties’ business activities (for example, through a contribution of productive assets to a new business undertaking);
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