Smart Alert | Streamlining of the Moroccan merger control law

Smart Alert |Streamlining of the Moroccan merger control law

After an initial period during which merger law existed but was not applied, and a second period during which the revived Competition Council reinvigorated merger control by imposing heavy penalties for failure to notify, as a warning to operators, a third, more balanced era is opening up in Morocco, streamlining the merger notification procedure in particular.

This is one of the reflections of recent amendments to Moroccan competition law, notably concerning merger control, contained in Law no. 40-21 of November 25, 2022 amending Law 104-12 on freedom of pricing and competition (Law 104-12), and in Decree no. 2-23-273 of May 22, 2023 amending the implementing decree of Law 104-12.

The main changes are as follows:

New merger notification thresholds

Previously, there were three alternative thresholds:

1. total worldwide turnover of over MAD 750 million generated by the companies involved in the merger,
2. total turnover of over 250 million dirhams generated in Morocco by the companies concerned,
3. a volume of more than 40% of sales, purchases or other transactions on a national market of goods, products or services carried out by the companies concerned.

These old provisions covered many transactions which had no real impact on the Moroccan market, and many operations had to be notified without operators understanding why. The legislator has now reversed this trend.

Today, the novelty does not lie in the alternative nature of the criteria, nor in the criterion relating to the volume of sales and purchases on a national market, which must always be greater than 40%.

The novelty is that the thresholds for the amount of the turnovers have been raised, and a minimum Moroccan turnover achieved by one party must be combined with Moroccan or worldwide turnover.

Henceforth, for a merger to be notified, it will be necessary for :

• “the total worldwide turnover, excluding taxes, of all the undertakings or groups of natural persons or legal entities involved in the concentration exceed MAD 1.2 billion and the turnover, excluding taxes, achieved in Morocco individually by at least one of the undertakings or groups of natural persons or legal entities involved in the concentration exceed MAD 50 million“, or that
• “the total turnover, excluding taxes, achieved in Morocco by all of the undertakings or groups of natural persons or legal entities involved in the concentration is greater than MAD 400 million and the turnover, excluding taxes, achieved in Morocco individually by at least two of the undertakings or groups of natural persons or legal entities involved in the concentration is greater than MAD 50 million; or that
• the undertakings which are parties to the merger, or which are the subject of it, or which are economically linked to it, have together achieved, during the previous calendar year, more than 40% of sales, purchases or other transactions on a national market for goods, products or services of the same kind or substitutable, or on a substantial part of it.”

Treatment of mergers between the same companies within a two-year period as a single transaction for calculating notification thresholds

This new provision is designed to prevent companies attempting to avoid merger control by splitting one transaction into several operations in order to remain below the notification thresholds.

Introduction of a fee to be paid to the Conseil de la concurrence in return for analysis of a merger notification file

As we have seen from our various merger notification files submitted to the Competition Council, the analysis of these files requires a large and qualified workforce.

To finance these resources of the Competition Council, the new text has introduced a fee to be paid by the parties to the merger, which is set at one per thousand (1/1,000) of the amount of the transaction, without the amount of the fee being less than twenty thousand (20,000) dirhams or more than one hundred and fifty thousand (150,000) dirhams. In the event of failure to declare the amount of the transaction, the parties will be required to pay the maximum amount of 150,000 dirhams.

If the parties wish to proceed by an “express” route, which would enable them to obtain a response from the Council within less than the statutory 60-day period, then the fee will be set at two per thousand (2/1,000) of the transaction amount, with a minimum of forty thousand (40,000) dirhams and a maximum of three hundred thousand (300,000) dirhams.

When the notification concerns the creation of a new company, the fee is set at twenty thousand (20,000) dirhams for the ordinary way and forty thousand (40,000) dirhams for the fast track.

Introduction of a simplified notification procedure

If, at the request of the parties, the Competition Council considers that the proposed merger may be subject to simplified notification, it will inform the parties, who will then be able to file the notification in simplified form. The Council will set out the list of transactions subject to simplified notification in its future guidelines.

Settlement of competition law infringements

The reform provides for the possibility of a settlement between the Council and a company alleged to have infringed competition law, notably when the company does not contest the reality of the grievances notified to it. In such cases, the general rapporteur may submit to the company, after approval by the Council, a settlement proposal setting the minimum and maximum amounts of the proposed fine.

This is the institutionalization of a practice we’ve already tried and tested, and its framework by a text is more than welcome.

Adoption of Competition Council guidelines

These guidelines will inform operators of the Council’s decision-making practice, particularly in terms of simplified notification, settlements, sanctions, etc. A “guidelines” section has already been created on the Competition Council website, but to date it contains no publications.

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With these new texts, Moroccan competition law is modernizing and becoming comparable to that of countries with experience in this field, notably European countries, while retaining its national uniqueness.

However, there are still a few points that could still be explored : First of all, the fact that the notification criteria are alternative rather than cumulative does not entirely prevent the inclusion of certain transactions that would not have a real impact on the Moroccan market. However, we understand that the legislator’s aim was precisely to limit the analysis of cases to mergers that could have an impact on Moroccan competition.

Moreover, although the possibility of settling with the Council is expressly provided for in the new text, the fact remains that greater transparency on how the Council determines the amount of the penalty would be appreciated and would avoid future disputes.

Finally, the law does not expressly provide for the possibility of “pre-notification” consultation of the Competition Council in order to verify whether or not a transaction is notifiable, which would have saved the Council a considerable amount of time, as it would not have had to analyze files that perhaps should not have been notified. In fact, if there is any doubt as to whether notification is required, companies have no option but to notify (in a simplified form, if possible, or in the ordinary way), since the option of requesting a pre-notification consultation is not expressly allowed by law, which is rather regrettable.

Rim Tazi (senior associate, member of the Casablanca Bar) and Romain Berthon (partner, member of the Paris Bar, legal advisor in Morocco for nearly 15 years), regularly assist their clients with preliminary opinions, notifications or litigation with the Competition Council in merger matters. To date, all the notifications they have formulated on behalf of their clients have been accepted by the Competition Council (and previously by the Prime Minister’s office), and the disputes they have handled have all resulted in settlements to the satisfaction of all parties involved. This year, Mr Ahmed Rahhou, President of the Conseil de la Concurrence, accepted LPA-CGR avocats’ invitation to speak at a conference on this subject in Paris, organized with the African Commission of the Paris Bar. LPA-CGR avocats thus benefits from unique knowledge and experience on the Moroccan market to support national and international clients in competition law matters.