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Companies disregarding competition laws

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Some mergers which are taking place in the market may be illegal following findings by the Competition and Fair Trading Commission (CFTC) that some companies are conducting mergers or acquisitions without filing relevant notification papers.

The laws of Malawi under the Competition and Fair Trading Act (CFTA) provide for notification of all mergers with the Commission. Section 36 of the Act stipulates that any person may apply to the Commission for authorisation of a merger, whether one or both parties submit the notification.

The Commission says it will investigate any merger or acquisition for possible violation of the Act if the transaction is not voluntarily notified.

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CFTC has warned that companies that overlook this provision risk paying huge penalties or even prosecution.

“All persons who may have entered into a merger transaction without seeking authorisation from the Commission or those intending to enter into a merger transaction should seek authorisation from the CFTC. This will enable the Commission undertake a thorough assessment to determine whether the merger or acquisition is likely to result in substantial lessening of competition,” reads a public notice entitled Consumating Mergers Without Authorisation and signed by CFTC Director of Consumer Welfare and Education, Lewis Kulisewa.

CFTC regulates mergers in the country to prevent concentration of power and protect consumers from possible abuse of market power.

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In an earlier interview, CFTC Executive Director Charlotte Wezi Malonda said unlike in other competition jurisdictions, Malawi’s CFTA does not provide for a minimum threshold that qualifies a merger to be notified to the Commission.

This essentially means that all mergers, as long as they meet the definition of a merger as set out in the Act, have to be notified to the Commission.

According to Malonda, the assessment of the impact of a particular merger rests with the Commission, which, after review, may authorise the merger with or without conditions or reject it altogether.

“The Commission will give conditions to avoid competitive damage if a merger is deemed to be uncompetitive,” she said.

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