NIGERIA Law and Practice Contributed by: Chiagozie Hilary-Nwokonko, Chukwuyere Ebere Izuogu and Priscilla Bidemi Ben-Okoh, Streamsowers & Köhn
• elimination of competition between the parties in the joint venture’s field of activity through this contribution; and • the relative permanence of the joint business activ - ity. Where these basic criteria are met, the joint venture will be brought within the general scope of merger review if its creation typically involves the transfer of voting equity or assets and by reference to the underlying combination of previously independent businesses. In addition, a full-function joint venture must be noti - fied to the FCCPC if the value of its assets or turnover exceeds the turnover threshold. A full-function joint venture operates on a lasting basis with all the func - tions of an autonomous economic entity, competes with other undertakings in a relevant market, and has sufficient resources and staff to operate independent - ly in the relevant market. 2.11 Power of Authorities to Investigate a Transaction Section 95 (3) of the FCCPA authorises the FCCPC to require the parties to a merger that falls below the applicable jurisdictional thresholds to notify the Com - mission of the merger transaction in the prescribed manner and form. This power may be exercised where the FCCPC is of the opinion that the merger may sub - stantially prevent or lessen competition. The FCCPC must exercise this power within six months from the date the merger is implemented. 2.12 Requirement for Clearance Before Implementation According to Section 93 (1) of the FCCPA, a proposed merger shall not be implemented unless it is first noti - fied to and approved by the FCCPC. Specifically, Reg - ulation 13 (2) of the Merger Review Regulations 2020 (MRR) requires the merging parties to ensure that they take no steps and undertake no activities before and during the notification period that may be deemed co- ordination or integration of their businesses or their competitive conduct in any of the following respects: • the exchange of commercially sensitive informa - tion;
• the nature of contractual clauses governing the relationship; and • the activities of the parties before and during the notification of the merger. To do otherwise would increase their risk of engaging in gun-jumping conduct, which could expose them to fines from the FCCPC. Paragraph 3.61 of the MRG cites the following examples of gun-jumping: • co-ordination between merging parties on prices or terms to be offered to customers for sales prior to closing the merger; • allocating customers for sales to be made prior to closing; and • if, prior to closing, merging firms co-ordinate their negotiations with customers for sales to be made after the merger closes (eg, negotiations of long- term contracts). For mergers that do not meet the jurisdictional thresh - old for notification, which are notified to the FCCPC post-transaction, the merger parties are not required to take further steps to integrate the respective busi - nesses. 2.13 Penalties for the Implementation of a Transaction Before Clearance Under the Federal Competition and Consumer Pro - tection Commission (Administrative Penalties) Regu - lations 2020, the base penalty for gun jumping, ie, implementing a notifiable merger without the FCCPC’s approval, is set at 2% of the turnover of the merger parties in the preceding year. However, the final administrative penalty is determined through a structured methodology that begins with the calculation of a base penalty, which is set at 2% of the annual turnover of the merger parties. This base amount constitutes the starting point for the overall computation and reflects the initial assessment of the infringement. The second step adjusts the base pen - alty to account for the duration of the violation. This is done by applying a time-related factor, calculated as the proportion of the number of months of non- compliance over a 12-month period, multiplied by the base penalty. The resulting amount, which reflects the additional penalty for the length of the violation, is
457 CHAMBERS.COM
Powered by FlippingBook