Since 2000, Moroccan merger control has existed through Law No. 06-99 of 5 June 2000 (Dahir No. 01-00-225) on free pricing and competition, and its Enforcement Decree No. 2-00-854 (the former legal framework), under which the mergers are notified to the Chief of Government. The Competition Council, which was reactivated in 2008, has a consultative role when the notified concentration is likely to infringe competition.
A reform of the Moroccan merger control rules was launched in 2014 with the adoption of Law No. 104-12 of 30 June 2014 (Dahir No. 1-14-116) on free pricing and competition, and its Enforcement Decree No. 2-14-652 of 1 December 2014 and Law No. 20-13, relating to the Competition Council of 30 June 2014 (Dahir No. 1-14-117) and its Enforcement Decree No. 2-15-109 of 4 June 2015 (the new legal framework), which transferred the merger control function to the Moroccan Competition Council. Under this new legal framework, only residual powers will be retained by the Chief of Government (in particular, an evocation power on the decisions of the Competition Council for matters of public interest).
However, the provisions of the new legal framework are still not applicable as the new members of the Competition Council have not been appointed. These appointments are expected to occur in 2016. In the meantime, the former legal framework is still applicable, and the Chief of Government remains the competent authority.
Under the Moroccan merger control, a merger must be notified when a concentration meets the notification thresholds.
Under the new legal framework, a concentration occurs where:
- a two or more previously independent undertakings merge;
- b one or more persons, already controlling at least one undertaking, acquire, directly or indirectly, whether by purchase of securities or assets, by contract or by any other means, control of the whole or parts of one or more undertakings; and
- c one or more undertakings acquire, directly or indirectly, whether by purchase of securities or assets, by contract or by any other means, control of the whole or parts of one other or more other undertakings.
The creation of a joint venture performing all the functions of an economic entity on a lasting basis shall also constitute a concentration within the meaning of the new legal framework.
The notion of ‘control’ is defined as resulting from rights, contracts or any other means that confer, either separately or in combination, having regard to the considerations of fact or law involved, the possibility to exercise a decisive influence on the activity of an undertaking and, notably:
- a ownership rights or rights of use over all or parts of the assets of an undertaking; or
- b rights or contracts that confer decisive influence on the composition, voting or decisions of the organs of an undertaking.
As regards the notification thresholds, the former legal framework provides that a concentration must be notified when the undertakings that are parties to the concentration, or which are the subject of the concentration, or the undertakings that are economically linked to them, have generated altogether, during the previous calendar year, more than 40 per cent of the sales, purchases or other transactions on a national market of identical or substitutable goods, products or services, or on a significant part of such market.
Additional turnover thresholds have been introduced in the new legal framework and, according to Law No. 104-12 of 30 June 2014 and its Enforcement Decree, such that the notification of a concentration should take place when one of the following conditions is fulfilled:
- a the combined aggregate worldwide pre-tax turnover of all of the undertakings or groups of natural or legal persons parties to the concentration is equal to or more than 750 million dirhams;
- b the aggregate Moroccan-wide pre-tax turnover of at least two of the undertakings or groups of natural or legal persons concerned by the concentration is equal to or more than 250 million dirhams; or
- c the undertakings that are parties to the concentration, or that are the subject of the concentration, or the undertakings that are economically linked to them, have generated altogether, during the previous calendar year, more than 40 per cent of the sales, purchases or other transactions on a national market of identical or substitutable goods, products or services, or on a significant part of such market.
Aside from these standard thresholds, specific turnover thresholds may be fixed by decree for certain sectors or geographic areas.
These thresholds raise some uncertainties:
- a about the application of the merger control rules to a merger where the parties’ aggregate worldwide turnover exceeds the 750 million dirhams threshold but where the Moroccan turnover threshold and the market share threshold are not met; the Competition Council shall confirm the alternative nature of these criteria when it will be operational; and
- b as to the necessity to notify a transaction when only one of the merger parties has a market share exceeding 40 per cent in Morocco, and when the contemplated transaction will not result in additional market shares. However, the notification of such a merger is strongly recommended insofar as the Competition Council has already examined concentrations where the acquirer was not present in the same sector than the target company in Morocco (Opinion No. 36/13 relating to the acquisition of 6 per cent of the capital of CMA CGM by the Strategic Investment Fund) and where only the target company was active in Morocco (Opinion of November 2011 relating to the acquisition by CCPL of Ono Packaging Maghreb and Opinion No. 37/13 relating to the acquisition of 49 per cent of the shares and voting rights of Terminal Link by China Merchants).
II YEAR IN REVIEW
Between 2009 and 2013, the Competition Council annually published several consultative opinions relating to merger cases.
However, as previously mentioned, the Competition Council has been paralysed since 2013. As a result, no opinion, decision or annual report has been published by the Competition Council over the past two years.
While waiting for the appointment of the Competition Council’s members and the entry into effect of the new legal framework, the transactions are notified to the Chief of Government.
To the best of our knowledge, the last significant merger case examined by the Moroccan Chief of Government was the merger between Lafarge and Holcim, which obtained conditional clearance in 2014, with implementation starting in 2016 in Morocco.
III THE MERGER CONTROL REGIME
i Deadline for filing
A merger must be notified before its completion and as soon as the parties concerned are able to present a ‘sufficiently concrete’ file to allow the investigation of the case, in particular when the project is formalised by an agreement in principle or a signed letter of intent, or when it follows the announcement of a public offer.
ii Suspensive effect
Under the former legal framework, the filing has a suspensive effect and the parties are therefore not entitled to implement the planned transaction before the authorisation of the Chief of Government. No derogation to this rule is provided.
Under the new legal framework, the suspensive effect of the filing obliges the parties to wait for the authorisation of the Competition Council (or the administration) to implement the contemplated merger. However, the Competition Council may grant the parties an exemption to this suspensive effect and allow them to complete all or part of the transaction without waiting for an authorisation decision in case of duly motivated need.
iii Sanctions upon failure to notify and closing before clearance
Under the former legal framework, upon failure to notify, the Chief of Government may bring the case in front of the King’s Prosecutor at the relevant first instance court for prosecution. A fine amounting to 2–5 per cent of the pre-tax turnover made in Morocco during the last fully closed financial year, for legal entities, and of 200,000–2 million dirhams, for natural persons, may be imposed. Conservatory measures ordering the undertakings involved to revert to the situation that existed prior to the transaction may also be adopted by the Chief of Government.
Under the new legal framework, the sanctions for not filing and closing before clearance are the following:
- a for legal entities responsible for filing: a fine amounting to a maximum of 5 per cent of the pre-tax turnover made in Morocco during the last fully closed financial year, increased, when applicable, by the turnover made in Morocco during the same period by the acquired company; and
- b for natural persons responsible for filing: a fine of a maximum amount of 5 million dirhams.
The Competition Council may also compel the parties that failed to notify, subject to a daily penalty payment, to notify the operation, unless they revert to the previous state of affairs.
iv Waiting periods and time frames:
Under the former legal framework
The Chief of Government has a maximum period of six months upon receipt of full notification to deliver its decision authorising (with or without conditions) or prohibiting the merger. There are two main phases in this regulatory process.
During the first phase of a maximum period of two months, the Chief of Government may either:
- a authorise the transaction without remedies or with the sole remedies offered by the notifying parties, if any; or
- b request the opinion of the Competition Council when the merger is likely to infringe competition rules, particularly by creating or strengthening a dominant position (which leads to the second phase).
Should the Chief of Government remain silent for two months after having received the full notification, the tacit approval of the transaction and of the remedies offered by the parties, if any, shall be deemed granted.
During the second phase of four months, the Competition Council, whose opinion has been requested by the Chief of Government, assesses whether the transaction provides a sufficient contribution to the economic progress to outweigh its restrictions on competition. The Competition Council takes into account the competitiveness of the involved undertakings in the context of international competition.
After the Competition Council has issued its consultative opinion, the Chief of Government may either:
- a authorise the merger;
- b order the parties not to implement the planned transaction and, if needs be, to revert to the situation which existed prior to the transaction; or
- c order the parties to modify or complete the transaction or take any measures that will ensure or establish sufficient competition.
The implementation of the planned transaction may also be subject to compliance with instructions aimed at providing a sufficient contribution to economic and social progress to outweigh the restrictions to competition.
No possibility is provided to suspend or accelerate this time frame.
Under the new legal framework
During the first phase, the Competition Council must rule on the transaction within a 60-day period after the receipt of the complete notification file. In case commitments are offered by the parties, this 60-day period is extended by 20 days. In case of particular necessity, such as the finalisation of the commitments, the parties may ask the Competition Council to suspend the deadline for a maximum of 20 days.
The Competition Council may, at the end of the first phase, either:
- a decide that the notified transaction does not fall under the scope of the merger control;
- b authorise the operation subject, where applicable, to the effective implementation of the remedies proposed by the notifying parties;
- c open an in-depth analysis of the transaction (which leads to the opening of the second phase) if it finds that serious doubts remain as to the risk of infringing competition; or
- d refrain from adopting any of the above decisions.
The governmental authority in charge of competition may ask the Council to open a second-phase investigation within a 20-day period after having received a copy of the decision, or having been informed of it by the Competition Council. At the end of the 20 days, the authorisation is deemed granted.
During the second phase, the Competition Council must assess within 90 days whether the transaction is likely to infringe competition, notably by creating or strengthening a dominant position or a buying power that places suppliers in a position of economic dependency, and whether the contemplated transaction brings a sufficient contribution to economic progress to offset the competition infringements. In case commitments are offered by the notifying parties to remedy the anticompetitive effects of the transaction less than 30 days before the end of the 90-day period, the deadline will then expire 30 days after the reception of the commitments. The 90-day period may be suspended for up to 30 days at the parties’ request in case of particular necessity, in particular to finalise their commitments. The Competition Council can also suspend the 90-day period in particular when the notifying parties have failed to provide it with the requested information, or to inform it of the occurrence of a new material event. The time limit resumes when the cause of the suspension has been addressed.
At the end of the second phase, the Competition Council may either:
- a authorise the operation subject to, where applicable, the effective implementation of commitments offered by the notifying parties;
- b authorise the operation, while requiring the parties to take all appropriate measures to ensure sufficient competition or to comply with instructions destined to provide a sufficient contribution to economic progress to offset the competition infringements; or
- c prohibit the concentration and require the parties, when applicable, to take all appropriate measures to re-establish sufficient competition.
Within 30 days upon receiving a copy of the decision or being informed of it by the Competition Council, the Chief of Government or the delegated governmental authority may exert their power and issue a decision on the transaction for reasons of public interest (such as industrial development, competitiveness of the companies within the international context or job creation).
At the end of these 30 days, the authorisation is deemed to be granted.
No accelerated procedure is provided.
v Third-party involvement and access to files
Under the former legal framework, no involvement of the third parties to the merger control process is organised.
However, the competition authorities can hear or request information from any third parties who may enable them to assess the impact of the transaction, such as competitors, suppliers or customers.
Moreover, the decisions of the Chief of Government are, in principle, published in the Official Bulletin together with the opinion of the Competition Council (in this regard, it should be noted that the president of the Competition Council is prohibited from communicating any document involving business secrets, unless the communication or the consultation of those is necessary to the proceeding or the exercise of rights of defence of the involved parties).
Under the new legal framework, upon receipt of a notification file, a press release will be published by the Competition Council, which indicates the name of the concerned parties, the nature of the transaction, the concerned economic sectors, a non-confidential summary of the transaction provided by the parties and the time frame in which interested third parties are invited to make observations
A third party that would be in a position to contribute to its information may also be heard by the Competition Council.
The merger decisions of the Competition Council and of the governmental authority in charge of competition will be published in the Official Bulletin and available on their websites (however, business secrets are in principle reserved to the Competition Council and the government commissioner).
vi Appeals and judicial review
Under the former legal framework, an appeal may be lodged before the administrative court having jurisdiction, in principle within 60 days from the date of the publication or of the notification of the decision.
Under the new legal framework, appeals against merger decisions could be lodged by the concerned parties or the government commissioner before the administrative chamber of the Moroccan Supreme Court within 30 days from the receipt of the merger decision notification.
IV OTHER STRATEGIC CONSIDERATIONS
i Coordination with other jurisdictions
The Moroccan competition authorities have entered into several cooperation agreements with other national authorities:
- a An association between Morocco and the Member States of the European Communities was created in 2000 by the Euro-Mediterranean Agreement and Decision No. 1/2004 of the EU-Morocco Association Council of 19 April 2004. Adopting the necessary rules for the implementation of the competition rules, it has set up a mechanism of cooperation between European and Moroccan competition authorities. In particular, a twinning cooperation has been established between the Moroccan Competition Council and the German competition authority, mainly taking the form of trainings and technical assistance.
- b The Moroccan Competition Council is also a founding member and the co-president (with the Austrian Federal Competition Authority) of the coordinating committee of the Euro-Mediterranean Competition Forum, an informal regional network set up in 2012.
- c A bilateral cooperation has been developed with the Tunisian competition authority.
Therefore, the Competition Council, once operational, is very likely to cooperate with these other jurisdictions in reviewing multi-jurisdictional merger cases.
Moreover, certain specific economic sectors are regulated in Morocco by sectoral authorities: telecommunications (National Telecommunications Regulatory Authority (ANRT)), the audiovisual market (High Authority for Audiovisual Communication), banks (Bank Al Maghrib), the capital market (Financial Market Authority), insurance (Insurance and Social Security Directorate) and ports (National Ports Agency).
According to Law No. 104-12, the Competition Council will (as from a date to be defined by future regulation) exercise its jurisdiction over all economic sectors, unless the relationship between the Competition Council and the sectoral regulators is addressed in the constitutive texts of these institutions. These regulators must nevertheless be consulted by the Competition Council when the notified transaction concerns their specific sectors.
The allocation of jurisdictions between the Competition Council and these Moroccan sectoral regulators should therefore be clarified in the future and such clarification is especially important for the ANRT, who is authorised by constitutive texts to enforce merger control provisions in the telecommunications sector.
ii Specific situations
A minority ownership interest might fall under the scope of the Moroccan merger control provided that it enables a person or an undertaking to acquire control of the whole or parts of an undertaking (the ‘control’ being defined as resulting from rights, contracts or any other means that confer, either separately or in combination, having regard to the considerations of fact or law involved, the possibility to exercise a decisive influence on the activity of an undertaking, and notably ownership rights or rights of use over all or parts of the assets of an undertaking or rights or contracts that confer decisive influence on the composition, voting or decisions of the organs of an undertaking).
Moreover, no specific procedure is provided by the Moroccan merger control regarding financial distress and insolvency of the target company. However, we surmise that, in such a situation, the Competition Council may grant the parties an exemption to the suspensive effect of the merger control procedure, therefore allowing them to complete all or part of the transaction without waiting for an authorisation decision.
Finally, concerning public takeover bids, it seems that the Competition Council applies to these transactions the general rules of the Moroccan merger control legislation (as it appears from its Opinion No. 9/10 relating to the public takeover bid launched by Kraft Foods Inc over Cadbury Plc).
V OUTLOOK and CONCLUSIONS
The nominations of the Moroccan Competition Council’s members and the entry into effect of Law No. 104-12 and Law No. 20-13, which grant the Competition Council decision-making power over merger control cases, are likely to occur in 2016. The coming year is therefore expected to mark the end of the transition between the former and the new legal frameworks.
The issues raised by the new legal framework, such as the alternative or cumulative nature of the notification thresholds provided by Law No. 104-12 and its Enforcement Decree or the allocation of jurisdictions between the Competition Council and the Moroccan sectoral authorities (in particular the ANRT), shall hopefully also be clarified in the near future.
1 Corinne Khayat is a partner and Maïja Brossard is an associate at UGGC Law Firm.