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Regulation on the new Competition Law

Presidential Decree No. 240/218

4/12/2018

On 12 October last, the Competition Act Regulation was finally published, in the form of Presidential Decree No. 240/18, which aims to complete the rules and procedures established by the Competition Act, approved this year.

As we have had occasion to mention in our comment to the Competition Act - Law No. 5/18 -, the Regulation now approved came to materialise some of the principles established by it, beginning with defining the concepts of "undertaking", "economic unity" and "professional association", relevant to determine the scope of the entities to which the competition rules can be applied and the consequent sanctioning policy enacted by the Competition Act.

Of the several novelties introduced by this Regulation, it is perhaps worth mentioning, in terms of restrictive practices, the establishment of a presumption of the existence of a dominant position where the share held by an undertaking in a given market is equal to or greater than 50%. and that presumption may be disregarded on the basis of evidence to the contrary relating to market conditions conducive to the emergence of competition. The Competition Authority (Autoridade Reguladora da Concorrência, "ARC"), on the other hand, may consider a dominant position regardless of market shares, where the relevant market has significant barriers to the entry of new competitors (such as fixed costs are high, where limited number of administrative licenses are required, etc.).

As regards concentration of undertakings, the Regulation, apart from clarifying the type of operations which are not considered to be subject to merger control, establishes that transactions meeting one the following criteria are subject to mandatory prior notification to the ARC:

(i)  A market share of 50% or more is acquired, created or reinforced;

(ii) A market share of between 30% and 50% is acquired, reinforced or reinforced, and the individual turnover achieved in Angola in the last year by at least two companies exceeded Kwanzas 450,000,000.00 (approximately USD 1,450,000 / EUR 1,275,000 at the exchange rate of Angolan National Bank); or

(iii) In the last financial year, the group of companies participating in the merger had a turnover of more than 3,500,000,000.00 Kwanzas (approximately USD 11,275,000 / EUR 9,930,000 at the exchange rate of Angolan National Bank).

It should be noted in this respect that the Regulation lays down criteria for the determination of market shares and turnover in merger cases, including the turnover of all undertakings, directly or indirectly, under the control of undertakings which participate in the concentration. The Regulation also creates special rules for credit institutions and financial companies and insurance undertakings.

Prior notification must be made by completing a specific form and jointly present it to ARC by the parties acquiring joint control or individually by the acquirer in the case of acquisition of sole control.

ARC must publish, within a period of 20 days, the essential elements of the operation in the newspaper of greatest national circulation, to allow for comments by any interested parties. ARC shall rule on the notified operations within 120 days or, in the case of in-depth, 2nd phase investigations, 180 days.

With this Regulation, many of the points we have previously raised are now addressed. There remains, however, the question of what organic nature ARC will effectively assume, with the enacting of the inherent legal diploma that will formally set it up expected to happen anytime soon.

It is therefore time for companies in Angola to start analyzing and verifying their practices and contracts to confirm their legality with the rules of competition law. In particular, those considering mergers and acquisitions' operations need to be aware of these new rules and henceforth determine whether such transactions may be subject to mandatory prior notification to the ARC.

Authors

 Picture of Filipa Tavares Lima
Filipa lima
Partner
Luanda