On the 2nd December 2019, the new Competition Act (“the Act”) and Regulations came into effect in Botswana introducing a wealth of developments within competition law. Amongst these developments, the Act established the Competition and Consumer Protection Board, the Competition and Consumer Authority (“the Authority”) and the Competition and Consumer Tribunal. The Authority is responsible for ensuring the prevention of anti- competitive practices in the market..Under the Act, certain types of mergers are required to be controlled/regulated by the Authority. This essentially means that where a transaction is recognized as a merger (on the occurrence of an acquisition of control) and where the annual turnover /value of the assets in Botswana of the enterprise(s) being taken over exceeds the threshold of BWP 10 million, the Authority must be notified of the merger in order for an assessment to be undertaken to determine whether or not the said transaction would result in the prevention or substantial lessening of competition, or restrict trade or the provision of any service or endanger the continuity of supplied or services in Botswana. It is, further, important to note that the Act requires all merger notices to be accompanied by a merger filing fee of 0.01 per cent of the merging enterprises combined turnover or assets in Botswana, whichever is higher..Parties are only allowed to proceed with a transaction upon receiving an approval, be it conditional or not, from the Authority on the proposed merger. The question that then begs clarification is what type of transaction qualifies as a controlled merger.The Act does not provide a definition of a merger, but instead describes a merger to have occurred when:“one or more enterprises directly or indirectly acquires or establishes direct or indirect control over the whole or part of the business of another enterprise”This is a broad description of what a merger would entail and indicates that the acquisition of control over part or whole of business may be achieved in any manner, including the purchase of shares, an interest, or assets of the other enterprise as clearly stipulated in section 45 (2) of the Act. In other words, a sale of an asset of an enterprise, including immovable property such as land, could constitute a controlled merger depending on whether or not that asset on its own constitutes a business and it’s turn over/asset value exceeds BWP 10 million..Consequently, when selling assets out of an enterprise consideration must be given to the possibility that such a sale could be a merger for the purpose of the Act and require Competition Authority approval. Whether such a transaction qualifies as a merger under the Act is a question of fact and depends on whether the said asset constitutes a business.
On the 2nd December 2019, the new Competition Act (“the Act”) and Regulations came into effect in Botswana introducing a wealth of developments within competition law. Amongst these developments, the Act established the Competition and Consumer Protection Board, the Competition and Consumer Authority (“the Authority”) and the Competition and Consumer Tribunal. The Authority is responsible for ensuring the prevention of anti- competitive practices in the market..Under the Act, certain types of mergers are required to be controlled/regulated by the Authority. This essentially means that where a transaction is recognized as a merger (on the occurrence of an acquisition of control) and where the annual turnover /value of the assets in Botswana of the enterprise(s) being taken over exceeds the threshold of BWP 10 million, the Authority must be notified of the merger in order for an assessment to be undertaken to determine whether or not the said transaction would result in the prevention or substantial lessening of competition, or restrict trade or the provision of any service or endanger the continuity of supplied or services in Botswana. It is, further, important to note that the Act requires all merger notices to be accompanied by a merger filing fee of 0.01 per cent of the merging enterprises combined turnover or assets in Botswana, whichever is higher..Parties are only allowed to proceed with a transaction upon receiving an approval, be it conditional or not, from the Authority on the proposed merger. The question that then begs clarification is what type of transaction qualifies as a controlled merger.The Act does not provide a definition of a merger, but instead describes a merger to have occurred when:“one or more enterprises directly or indirectly acquires or establishes direct or indirect control over the whole or part of the business of another enterprise”This is a broad description of what a merger would entail and indicates that the acquisition of control over part or whole of business may be achieved in any manner, including the purchase of shares, an interest, or assets of the other enterprise as clearly stipulated in section 45 (2) of the Act. In other words, a sale of an asset of an enterprise, including immovable property such as land, could constitute a controlled merger depending on whether or not that asset on its own constitutes a business and it’s turn over/asset value exceeds BWP 10 million..Consequently, when selling assets out of an enterprise consideration must be given to the possibility that such a sale could be a merger for the purpose of the Act and require Competition Authority approval. Whether such a transaction qualifies as a merger under the Act is a question of fact and depends on whether the said asset constitutes a business.