Moroccan Merger Guidelines

In a landmark development, the Moroccan Competition Council has recently published updated merger control guidelines, offering much-needed clarity on notification obligations under Moroccan merger rules. These guidelines introduce significant changes to the local nexus test, which determines when a filing obligation applies. Understanding the intricacies of these guidelines is paramount for businesses navigating mergers and acquisitions involving Moroccan entities.

The cornerstone of these new guidelines lies in the expansion of the local nexus test. Unlike previous regulations, which primarily focused on the acquirer's local turnover requirements, the updated guidelines stipulate that both the acquirer and the target must have a connection to Morocco for a filing obligation to arise. This represents a fundamental shift in approach and underscores the importance of assessing the target's ties to Morocco when evaluating notification obligations.

To establish a connection to Morocco, the guidelines outline several criteria:

• Target Turnover in Morocco: Even minor turnover in Morocco is considered relevant for determining a filing obligation. While the guidelines provide some clarity on this criterion, the threshold for what constitutes "negligible turnover" remains somewhat ambiguous. Nonetheless, businesses must carefully evaluate the target's financial activities in Morocco to ensure compliance with notification requirements.

• Vertical Relationship to Morocco: This criterion encompasses scenarios where the target procures supplies from Morocco or has vertical overlap with the acquirer's Moroccan business. While this criterion may seem straightforward, businesses must carefully assess the nature and extent of any vertical relationships to ascertain their relevance for notification purposes.

• Horizontal Relationship to Morocco: Although the guidelines mention this criterion, they do not provide detailed examples. Given that a target's ties to Morocco may be severed after acquisition, determining the relevance of horizontal relationships requires careful consideration. Businesses must analyze the potential impact of the transaction on competition within the Moroccan market to assess whether a filing obligation arises.

• Legal Relationship to Morocco: Any legal ties of the target to Morocco are also considered relevant for determining a filing obligation. While this criterion broadens the scope of potential connections, the guidelines do not specify the nature of these legal ties. Therefore, businesses must carefully evaluate any legal relationships between the target and Morocco to ascertain their significance.

The broadening of the local nexus test signifies a significant departure from previous regulatory requirements. Previously, a substantive local presence was necessary to trigger a filing obligation. However, under the updated guidelines, even minor ties or loose connections to Morocco may now necessitate a filing requirement. This expanded scope underscores the need for thorough due diligence and compliance assessments when evaluating transactions involving Moroccan entities.

As a result of these changes, parties involved in transactions with any nexus to Morocco must conduct comprehensive assessments to determine potential notification obligations under the competition regulations. Given the expansive interpretation of connections in the guidelines, independently determining the need for notification can be challenging. In some cases, consultations with legal experts or the Competition Council may be necessary to conclusively resolve the matter.

The publication of the updated merger control guidelines by the Moroccan Competition Council represents a significant development in the regulatory landscape for mergers and acquisitions in Morocco. The expansion of the local nexus test underscores the importance of carefully evaluating the target's ties to Morocco to determine filing requirements accurately. While the guidelines aim to provide clarity, businesses must remain vigilant and seek legal advice to navigate the evolving regulatory landscape effectively. By conducting thorough assessments and ensuring compliance with notification obligations, businesses can mitigate risks and facilitate smoother transactions in the Moroccan market.

The broader implications of these guidelines extend beyond mere compliance. They signal a shift towards a more rigorous approach to competition regulation in Morocco, reflecting the country's commitment to fostering fair and competitive markets. As such, businesses should view these guidelines not just as a compliance burden but as an opportunity to enhance their understanding of the Moroccan market dynamics and competition landscape.

The transparency and clarity provided by these guidelines are conducive to fostering investor confidence and promoting foreign investment in Morocco. Clear and predictable merger control regulations can alleviate concerns among investors and facilitate smoother transactions, ultimately contributing to the country's economic growth and development objectives.

While the updated merger control guidelines introduce significant changes to the notification obligations for mergers and acquisitions in Morocco, they also present opportunities for businesses to enhance their understanding of the market and strengthen their compliance practices. By embracing these changes and adopting a proactive approach to compliance, businesses can position themselves for success in the dynamic and competitive landscape of the Moroccan market.

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For assistance or guidance concerning the new merger guidelines in Morocco, contact Bremer Law. Our experienced attorneys are ready to assist you and your business.