In December 2023 the Moroccan Competition Council issued new merger control guidelines. These guidelines provide comprehensive explanations of the council’s position on competition law concepts and their interpretation of the Moroccan Competition Law.
In December 2023 the Moroccan Competition Council issued new merger control guidelines. These guidelines provide comprehensive explanations of the council’s position on competition law concepts and their interpretation of the Moroccan Competition Law. Among guidance on material and procedural aspects of the Moroccan competition regime and their interpretation, the guidelines also address the local nexus requirement and clarify that notification is only mandatory where the target has some connection to Morocco.
In May 2023, the Moroccan legislator amended certain aspects of the Moroccan merger control regime including the notification thresholds. The new thresholds require notification under the Moroccan merger control regime, where at least one of three thresholds is met:
The most significant amendment the reform of the thresholds brought was the abandoning of a purely worldwide turnover threshold. Under the old thresholds notification could be mandatory based on worldwide turnover alone. Now the international turnover thresholds was not only increased but also supplemented with a local turnover requirement.
This raised the question whether the Competition Council would continue to apply the local nexus test applied under the old thresholds. Under the old thresholds the Competition Council held that even where the notification thresholds were met, a notification was not required unless the target of the transaction had at least some turnover in Morocco. This local nexus test was not based in any laws or regulations. Instead, it was established by a decision of the Competition Counsel in 2022. Initial comments from authority officials suggested that since the new international turnover notification threshold also included a local turnover requirement, no local nexus test would be applied. Hence, acquirer turnover alone could trigger fling obligation. The guidelines now clarify that for a filing obligation to arise, the target must have at least some connection to Morocco. Thus, notification is required:
A connection of the target to Morocco can be established by Moroccan turnover. This turnover does not have to meet the MAD 50m (approx. USD 4.8m) threshold. According to the guidelines any turnover appears to suffice. It remains to be seen whether negligible target turnover in Morocco would actually suffice, or if the council will require at least some minimum threshold to be met. Furthermore, a target’s connection to Morocco can also be established without the target having turnover in Morocco.
The guidelines explicitly state that any ‘vertical’ or ‘horizontal’ relationship to Morocco would suffice.
The guidelines do not go into detail of what is meant by ‘vertical’ or ‘horizontal’ relationship to Morocco. Conceivably a vertical relationship could exist where the target procures supplies from Morocco or where the target’s business would have a vertical overlap with the Moroccan business of the acquirer. Imagining a horizontal relationship of the target that would establish a nexus to Morocco is more difficult. Any relationship that existed to Moroccan undertakings of the seller’s group would (in most cases) be severed through the transaction. A horizontal overlap with the acquirer’s Moroccan business may, however, be relevant in the council’s assessment. Finally, the guidelines explicitly state that a ‘legal’ relationship of the target to Morocco would also suffice. Again, it is unclear what type of legal relationships would trigger a filing obligation.
Overall, the guidelines establish a very broad application of the local nexus test. It appears that even low Moroccan turnover or other loose connections of the target to Morocco would suffice to trigger a filing obligation. Hence, parties contemplating a transaction that targets an undertaking or group of undertakings with any connection to Morocco, should explore possible obligations under the Moroccan merger control regime. Currently it will be difficult to independently assess whether a transaction meets the local nexus test and consultations of the Competition Council may be necessary. It remains to be seen whether the Competition Council will address existing ambiguities of the local nexus test in practice and establish more concrete parameters.
Bremer maintains offices throughout the Near and Middle East and Africa, positioning clients for success in the region.
21 Soliman Abaza
GIC Tower 3rd Floor
El-Dokki, 12311 Giza
Ras Al Khaimah
United Arab Emirates
Mohammad Thunayan Al-Ghanim Street
Kuwait City, Kuwait