ECOWAS: Another regional competition regulator becomes fully operational in Africa

There is continuous development of competition regimes on the African continent, the latest of which is the Economic Community of West African States (ECOWAS) Regional Competition Authority (ERCA) becoming fully operational in October 2024 following the swearing in of council members.

ECOWAS is a regional political and economic union comprising 12 West African Member States: Benin, Cabo Verde, Cote d’Ivoire, The Gambia, Ghana, Guinea, Guinea‑Bissau, Liberia, Nigeria, Senegal, Sierra Leone and Togo (Mali, Burkina Faso and Niger withdrew from ECOWAS on 29 January 2025).

The ECOWAS competition law regime is governed by inter alia the Community Competition Rules¹(CCR) which regulates agreements, practices, mergers and distortions caused by Member States which are likely to have an effect on trade within ECOWAS, and the merger regulations² (the Merger Regulations).

Insofar as the merger regime is concerned, a merger is defined as the acquisition of control or other business combinations, takeovers, joint ventures or interconnected directorships whether of a horizontal, vertical or conglomerate nature between enterprises.  Mandatory merger notification to the ERCA is triggered if the undertakings to the merger operate in at least two ECOWAS Member States and when one of the following two thresholds is met:

• the combined aggregate turnover (or relevant balance sheet item, whichever is higher) of all the merging entities within the Common Market in the previous financial year is more than 20 million Units of Account (approx. USD 26.24 million or EUR 25 million); or
• the aggregate Common Market‑wide turnover (or relevant balance sheet item, whichever is higher) of each of at least two of the entities engaged in the merger or acquisition concerned in the previous financial year is more than 5 million Units of Account (approximately USD 6.56 million or EUR 6.25 million).

The relatively low thresholds for mandatory notification are not the only concern for parties looking to do a transaction with an effect in ECOWAS; there is also a potentially high filing fee. The filing fee is calculated at 0.1% of the combined annual turnover or the combined value of assets of the entities in ECOWAS, whichever is higher, with no statutory cap.

Although the legislative framework does not include a conventional stand-still obligation, Article 2(1)(a) of the Merger Regulations provides that merging parties must submit a notification for prior authorisation, suggesting that the regime is suspensory.  This position is supported by recent public statements made by the Executive Director of the ERCA.  As such, parties to mergers that meet the thresholds for mandatory notification should seek approval from the ERCA prior to implementation.  

With the coming into operation of a regional authority, multiple national and regional filings become a concern for parties.  Our reading of the CCR³ is that the ERCA has exclusive jurisdiction over the enforcement of the CCR, including the assessment of mergers with a regional effect and that the ERCA's decisions, including on mergers, will be binding on enterprises, governments and national competition authorities.  We also understand that the ERCA is meant to operate as a one stop shop which would reduce the administrative burden on parties having to file in a number of ECOWAS jurisdictions.  The position of ECOWAS functioning as a one stop shop has been confirmed by the Executive Director of the ERCA in recent public statements and there has been no official indication that Member States will not accept the ERCA as a one stop shop. It, however, remains to be seen how national authorities, particularly the Federal Competition and Consumer Protection Commission of Nigeria, which is the most active competition authority in West Africa, will react in practice when mergers that would otherwise have been notified nationally are filed to ECOWAS only.  

As there is some overlap in the membership of ECOWAS and WAEMU (with Benin, Cote d’Ivoire, Guinea-Bissau, Senegal and Togo being common members), our understanding is that the two regional bodies have entered into a cooperation agreement (still to be fully executed) which is based on a single control principle intended to avoid a situation where a single transaction would be investigated by WAEMU and ECOWAS.  If finalised, this would reduce the administrative burden on parties having to file a merger to two regional competition regulators.

The commencement of a new competition regime generally adds complexity to transactions that fall to be reviewed by the new regime, especially when the regime is in the early days of becoming fully operational and the transaction falls under the jurisdiction of a number of competition authorities. Clarity on the cooperation between ECOWAS and the various other national and regional regimes in West Africa is expected as regulators start to engage with transactions that trigger mandatory notification across multiple regimes in West Africa.  We also understand that merger guidelines will be issued soon, which may offer further clarity.