The Competition Act, 2022, provides a landmark development in the Lesotho commercial landscape and it brings the Kingdom of Lesotho within touching distance of neighbouring South Africa in respect of the way business transactions are scrutinised for anti-competitive behaviour. One such aspect is the scrutiny placed on mergers to ensure that a competitive market is maintained.
As of the current date, there has been no formal notice confirming the promulgation of the Act. Therefore, this article serves as general information, offering insights into the anticipated changes and implications once the Act is officially enacted.
Under the Act, a merger is not confined to the merging or amalgamation of two companies as in the Companies Act, 2011 (the “Companies Act”), but goes beyond the scope of the Companies Act to include instances where “one or more enterprises directly or indirectly acquire or establish direct or indirect control over the whole or part of the business of another enterprise”.
The Act attempts to protect competition by placing a restriction on the implementation of mergers in Lesotho unless one of the following three conditions have been met:
- the merger has been approved by the Commission and is implemented in accordance with any conditions attached to the approval;
- no determination has been made by the Commission within the prescribed time limit, following notification of the proposed merger; or
- the merger falls below the prescribed threshold and has not been reviewed as a merger subject to review under section 36.
As is evident from the above, the Act designates two categories of mergers which are subject to review and approval by the Commission – those above the prescribed threshold and those mergers subject to review under section 36 of the Act.
Where a review is conducted or notification of the merger is required, the implementation of the merger cannot take place until the Commission has granted it approval or the time limit following notification has expired.
Where no time limit has been published by the Minister through regulations, the Commission is required to use its best endeavours to make a determination on the merger in an expeditious way but no default time limit shall be applicable.
For further information or advice contact the Webber Newdigate Commercial Department, here.
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