In a globalised economy, companies are subject to highly intense competition, which leads them to seek strategies that enable them to create value, innovate and acquire competitive advantages over their competitors. Often, these strategies involve inter-company agreements, under which two agents (competitors or not) join together, while maintaining their autonomy, to gain a competitive advantage over the others and greater economic power for both.

In order to avoid harmful effects of anti-competitive behavior, States seek to create mechanisms that allow them to control the effects of these transactions on the economy, taking into account the constant search for development. 

For the purpose of controlling these transactions, the Mozambican Competition Law introduced the mechanism of "merger control". Mozambique passed its Competition Law in 2013, through Law No. 10/2013, of 11 April and its respective Regulation, through Decree No. 97/2014, of 31 January. Although the legislation on competition had already been in force since 2013, it was only very recently that its implementation began, with the entry into operation of the Competition Regulatory Authority ("CRA").

The Competition Law defines "merger of companies" as the "act consisting of the merger of two or more previously independent companies, the acquisition of control, direct or indirect, of a company or part of one or more companies or the creation or acquisition of a joint venture performing on a lasting basis the functions of an autonomous economic entity." Under this Law, a merger may occur with the (i) acquisition of all or part of the share capital of a company; (ii) acquisition of property rights, use or fruition over all or part of the assets of a company; and (iii) acquisition of rights or entering into contracts that confer a preponderant influence on the composition or resolutions of the bodies of a company.

The entity responsible for ensuring compliance with competition rules, including control of merger transactions, is the CRA. The CRA charter was approved in 2014 by Decree No. 37/2014, of 1 August, and subsequently partially amended by Decree No. 96/2014, of 31 December and Decree No. 6/2021, of 23 February.

Mergers of companies are subject to prior communication to the CRA when they meet certain conditions. The Mozambican legislation provides for 3 types of conditions, namely, market share, turnover and monthly billing or mixed (combination of market share and turnover and monthly billing). 

Merger transactions must be communicated within 7 (seven) days after the conclusion of the agreement or of the acquisition project which gives rise to the merger. The CRA must issue an opinion on the notification within 60 (sixty) days and, if it fails to do so, the transaction is deemed to have been tacitly approved. The transactions subject to prior notification may only be implemented after the CRA has taken a decision on the merger in question, unless the companies have obtained an authorization from the CRA to proceed with the transaction prior to the CRA taking a decision.

It should also be noted that the law allows the CRA to request that other merger transactions which do not meet the requirements for mandatory notification are nevertheless notified, provided it expressly requests such notification from the companies involved.  Such a request may be made by the CRA within 6 months after the publication of the merger transaction. In addition, the companies involved may voluntarily proceed with the communication of the transaction, even if they do not meet the conditions under which a communication is legally mandatory, whenever there are doubts. 

Pursuant to the Competition Regulation, prior notification of merger transactions is done by filling in the appropriate form, in which the relevant information is indicated and the requested documentation is attached. In this regard, the CRA recently approved the Regulation on Notification Forms for Merger Transactions, approved by Resolution no. 1/2021, published in the Official Gazette no. 76, Series III, of 22 April 2021 (we note that under the Competition Law, CRA regulations are mandatorily published on its electronic page, which we understand has not yet been created at the moment, and in Series II of the Official Gazette, and not in Series III, as occurred with this Regulation). These Regulations approved the procedures and forms for notification of the following concentration operations: (i) mergers; (ii) creation of a joint venture or acquisition of joint control; and (iii) acquisition of sole control of all or part of one or several companies.

The Regulation on Forms approved two types of forms, namely: (i) a regular one (to be submitted for notification of merger transactions that meet the conditions established by law - mandatory communications); and (ii) a simplified one (to be submitted for notification of merger transactions that are below the threshold conditions established by law). Submission of a simplified form does not preclude the CRA from determining that the circumstances surrounding the intended transaction result in restrictions of competition, in which case it may request submission of the regular form.

From the information contained in the form submitted, the essential elements of the transaction will be extracted for publication in two national newspapers for the purposes of comments by any interested party. After due analysis of the merger transaction, the CRA may authorize it, subject it to changes, or prohibit it.

The concentration notifications are subject to the payment of a fee corresponding to 5% (five per cent) of the turnover of the year prior to the year of the application for appraisal of the transaction, in accordance with the Ministerial Order no. 79/2015, of 5 June. We understand that the competent authorities are currently considering the proposal to review this fee in order to reduce it, which we believe to be timely and very important, given that the percentage currently in force may be penalizing and possibly motivate attempts to avoid communicating mergers.

It should be noted that the Competition Law provides for fines for different types of infringements, including failure to notify mergers that are subject to mandatory pre-notification and failure to provide or providing false, inaccurate or incomplete information in response to requests by the CRA. In addition, other more serious economic consequences may fall upon ongoing investments or transactions, which requires that this legislation be properly known and observed.

Finally, it should be noted that Mozambique has some sectoral legislation with specific rules on competition (e.g., telecommunications, aviation, etc.), therefore it will be necessary to have regard to these sectoral provisions as well. Where applicable, CRA coordinates with the sectoral authorities on competition issues.