By Kayode Lawrence-Omole
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Introduction
The enactment of the Federal Competition and Consumer Protection Act (FCCPA) in 2018 marked a significant change in Nigeria’s corporate regulatory landscape. For the first time, Nigeria established a comprehensive legal framework for merger control, aligning itself with global best practices. The Federal Competition and Consumer Protection Commission (FCCPC), as the primary competition regulator, now plays a central role in assessing whether proposed mergers or acquisitions would substantially prevent or lessen competition in the Nigerian market.
This article provides a practical overview of the competition law regime governing M&A transactions in Nigeria. It outlines the key legal instruments, notification thresholds, procedural requirements, and enforcement considerations that parties and their advisers must navigate to ensure successful deal execution and regulatory approval.
Legal Framework
The legal foundation for merger control in Nigeria is principally derived from the FCCPA 2018. Under the FCCPA, the FCCPC is empowered to regulate all mergers, whether horizontal, vertical, or conglomerate, and to prevent transactions that may substantially lessen competition, create or strengthen a dominant position, or otherwise harm consumer welfare. The Act applies to all sectors of the economy and to all undertakings engaged in commercial activities in Nigeria, regardless of whether the merger occurs within or outside the country, provided it has a local economic effect.
In support of its statutory functions, the FCCPC has issued several subsidiary instruments, including:
- Merger Review Guidelines, 2020 – outlining the FCCPC’s approach to merger assessment and key factors considered in its competitive analysis.
- The Notice of Threshold for Merger Notification 2019 – establishing financial thresholds for determining notifiable mergers.
- Guidelines on Simplified Process for Foreign-to-Foreign Mergers with Nigerian Component – clarifying the application of the FCCPA to transactions outside Nigeria with local effects.
Additionally, the FCCPC frequently coordinates with sector-specific regulators, such as the Securities and Exchange Commission (SEC), the Central Bank of Nigeria (CBN), and the Nigerian Communications Commission (NCC), particularly in regulated sectors like capital markets, banking, and telecommunications. While the FCCPC retains final authority on competition aspects, these regulators may be consulted on sectoral concerns or licensing implications.
Types of Mergers and Notification Requirements
The FCCPA classifies mergers into two broad categories based on the combined turnover or asset value of the merging parties: small and large mergers. This classification determines whether a transaction must be notified to the FCCPC and the level of regulatory scrutiny applied.
Small mergers are defined as transactions where the combined annual turnover or asset value of the merging entities is below the threshold prescribed by the FCCPC (currently ₦1 billion). These mergers are not subject to mandatory notification, although the Commission reserves the right to investigate them post-completion if there are competition concerns. On the other hand, large mergers involve transactions with combined turnover or asset value amounting to or exceeding ₦1 billion.[1] These mergers require mandatory pre-merger notification and typically attract a more comprehensive assessment due to their potential impact on market structure and consumer welfare.
It is worth noting that failure to notify the FCCPC of a notifiable merger prior to implementation is a breach of the FCCPA and may attract administrative penalties, including fines and potential invalidation of the transaction.
Merger Notification Process
The merger notification process under the FCCPA is structured to ensure that proposed transactions are reviewed and approved by the FCCPC before they are implemented. The process is designed to assess whether a transaction is likely to result in a substantial lessening of competition or otherwise harm consumer welfare.
- Pre-notification Considerations
Before submitting a notification, parties are advised to conduct a preliminary self-assessment to determine whether the transaction meets the financial thresholds for notification. Where necessary, parties may seek informal guidance or pre-notification consultations with the FCCPC, particularly in complex or novel transactions.
- Filing Requirements
Where a merger is notifiable, parties are required to file a joint merger notification with the FCCPC, accompanied by the relevant documents including:
- A duly completed notification form;
- Transaction documents (e.g., sale and purchase agreement, board resolutions);
- Corporate and financial information on the merging parties;
- A competition assessment, detailing the relevant market, competitors, customers, and potential anti-competitive effects;
- Proof of payment of the applicable filing fees
- Review Timelines
The FCCPC’s review timeline commences upon confirmation that a complete filing has been submitted. Statutorily, the FCCPC has 20 business days (extendable by 20 additional business days) for small mergers,[2] and 60 business days (extendable by 60 more) for large mergers.[3] During this period, the FCCPC may request additional information, consult third parties (such as competitors and customers), and conduct market testing.
- FCCPC Approval
If the FCCPC is satisfied that the merger is unlikely to harm competition, it issues a letter authorising the parties to proceed with the transaction. Approval may be unconditional or subject to conditions or undertakings, including remedies where necessary to address identified concerns.
Practical Considerations for Legal and Transaction Advisors
Successfully navigating Nigeria’s merger control regime requires strategic planning and close attention to regulatory nuances. Legal and transaction advisors play a critical role in ensuring that mergers and acquisitions are not only legally compliant but also structured to minimise delay and regulatory pressure.
- Early Competition Law Assessment
Advisors should conduct a competition risk assessment early in the transaction timeline, ideally at the term sheet or due diligence stage. This includes analysing whether the transaction meets notification thresholds, the potential for regulatory concern or market dominance, and any prior enforcement actions in the relevant sector. Early engagement allows parties to plan for possible risks and manage timelines.
- Timely Notification and Engagement with the FCCPC
Timely filing for mergers is essential. Advisors should prepare a complete and accurate notification file and respond promptly to FCCPC queries or information requests. Also, where needed, initiate pre-notification consultations with the FCCPC to clarify regulatory demands that may apply to the merger or discuss potential remedies. Such engagement can help streamline the review process and build rapport with the regulator, especially for complex or cross-border transactions.
- Managing Transaction Timelines
The merger control process should be factored into the transaction timeline, including deal signing and closing conditions. Advisors should avoid tight closing windows that do not allow for regulatory review and include regulatory approval as a condition precedent in the transaction documents.
- Navigating Sector-Specific Oversight
In regulated sectors such as telecommunications, banking, energy, and capital markets, merger control compliance often involves coordination with sector-specific regulators, including the NCC and the CBN. Advisors should map out all required approvals and ensure that filings are aligned to avoid duplication.
- Preserving Confidentiality
Given the commercial sensitivity of M&A transactions, advisors should take steps to ensure confidential treatment of documents filed with the FCCPC. This includes marking sensitive information clearly in submissions, requesting confidentiality protections under FCCPC rules, and preparing a non-confidential summary where required.
- Post-Merger Compliance
Following approval, parties must comply with any conditions or undertakings imposed by the FCCPC. Advisors should assist clients in establishing monitoring mechanisms and ensuring timely compliance reporting.
Conclusion
As Nigeria’s economy continues to grow and diversify, the role of competition law in regulating mergers and acquisitions has become increasingly pivotal. The FCCPC has established itself as an active and independent regulator, with a clear mandate to scrutinize transactions that may harm market dynamics or consumer welfare. For merging parties, this means that merger control compliance must now be integrated into every stage of the transaction lifecycle, from deal structuring and due diligence to signing, closing, and post-merger integration. Legal and transaction advisors have a major role to play in ensuring that transactions are compliant and executed efficiently.
Kayode Lawrence-Omole, Risk and Compliance Expert
Email: olukayode.lawrence-omole@dentons.com, Tel: +2348077771670
[1] Section 1(1)(a) and (b) of the Notice of threshold for merger Notification
[2] See section 95(6) FCCPA 2018
[3] Ibid, Section 97
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