ICN MERGER WORKSHOP 2022
The ICN Merger Workshop 2022, led by Tekla Mwasaru, focused on fostering globally efficient markets and improving consumer welfare to boost shared prosperity in the Kenyan economy. Discussions covered merger-related topics, competition enforcement, antitrust matters, and digital solutions developed to address challenges authorities face. Insights from UK, France, Austria, and other countries highlighted the significance of strategies like veto rights, defacto control, and concentration remedy transactions in achieving the vision.
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Presentation Transcript
ICN MERGER WORKSHOP 2022 Tekla Mwasaru Vision: "A Kenyan economy with globally efficient markets and enhanced consumer welfare for shared Prosperity"
The workshops aim was to provide insight into current merger-related topics and post-pandemic scenarios, with discussions around competition enforcement and antitrust matters, competitive concerns, merger reporting issues, and remedies, including recent challenges authorities have been facing and new digital solutions developed to address them. "A Kenyan economy with globally efficient markets and enhanced consumer welfare for shared Prosperity"
UK(CMA) France Austria Albania Share of Supply test Material Influence test Retail Sector thresholds EU Referrals Transaction value test Domestic threshold test Global turnover thresholds Domestic turnover thresholds Vision:"A Kenyan economy with globally efficient markets and enhanced consumer welfare for shared Prosperity" 3
Veto Rights Defacto Control Common shareholding(TKR Case) EU/France Percentage shareholding & board sitting Defacto control (target s policies) Amazon & Deliveroo case UK (CMA) Several factors(access to info, commercial influence, degree of control on management) OECD Vision: "A Kenyan economy with globally efficient markets and enhanced consumer welfare for shared Prosperity" 4
USA (FTC) Spain (CMCN) India (CCI) Concentration- remedy transactions Phase II review-complex mergers More digital mergers (amend MNF & guidelines) E-filing and CMS Turnover thresholds Evidence/consumer-based assessment Simplification of MNF Market shares thresholds Process changes(e-filing), experts Vision: "A Kenyan economy with globally efficient markets and enhanced consumer welfare for shared Prosperity" 5
Time & resources DaTA Unit UK (CMA) Online survey tools In-house data extraction tool Chile (FNE) Vision: "A Kenyan economy with globally efficient markets and enhanced consumer welfare for shared Prosperity" 6
Monitoring the unnotified digital mergers (data experts) Technology officers, AI Experts, trainings FTC Value-based thresholds (digital mergers) Challenges on remedies EU Amended guidelines (digital aspects) Introduced transaction-value-thresholds JFTC Vision: "A Kenyan economy with globally efficient markets and enhanced consumer welfare for shared Prosperity" 7
(Eesti & Meedia merger) -market shares calculations (no. of visitors, views, ads), switching possibilities, barriers to entry/expansion, investment analysis Lithuania Updated guidelines(consideration of the evidence on expected competition development in the future, non-price elements (quality, innovation, level of privacy), barriers to entry and expansion, switching costs, and network effects) Facebook & Kustomer; Taboola & Outbrain CMA Appetite for divesture remedies (horizontal competition concerns), non-divesture remedies on non-horizontal concerns should address equally to divesture remedies EU Vision: "A Kenyan economy with globally efficient markets and enhanced consumer welfare for shared Prosperity" 8
Behavioural remedies (problematic), Combination of structural and behavioural. Timely inter-jurisdicSoriana & Contraladora, Remedy to preserve competition pre- merger, Global mergers: Cooperation, timely review, localization, information sharing, joint reviews. Delta Airlines & Auromexico, cooperation on global mergers tion cooperation in review and analysis Regulated markets cooperation with sector regulators. Vision: "A Kenyan economy with globally efficient markets and enhanced consumer welfare for shared Prosperity" 9
Turkey Italy (AGCM) Examples India Non-compliance -10% turnover fine, Advantages of behavioral remedies, Merging parties may modify proposed remedy subject to commission s approval EU Revision of remedies/indeterminate remedies monitoring issues Monitoring trustees Disadvantages of behavioral remedies. Monitoring is problematic. Vision: "A Kenyan economy with globally efficient markets and enhanced consumer welfare for shared Prosperity" 10
Peru Competition Authority Challenges: substantive analysis challenges which include how to impose remedies, merger review in the post-pandemic world, and handling digital mergers; Solutions : conducting ex officio investigation, introducing public policies provisions, capturing the aspects of the digital economy in their review and analysis, gain more experience from international cooperation and training. Technology development use block chain for data collection. ACCC - increased workload hence constraints timelines on merger analysis post-pandemic. Global transactions call for timely coordination among agencies. Strategic clearance. UNCTAD merger influx in pharma, maritime, digital and airline markets, more gun-jumping mergers. Increased monitoring activities, market studies, relaxation of the failing firm defense. Recommendations were global learning on simplification of filing and review of mergers, assessment of the effectiveness of turnover-based thresholds, regional cooperation, and implementation of exchange programs among jurisdictions for knowledge sharing. Vision: "A Kenyan economy with globally efficient markets and enhanced consumer welfare for shared Prosperity" 11
Merger Notification Form (MNF) MNF to capture more information relevant for digital mergers assessment. MNF to establish if the application has been filed in another jurisdiction so that inter-jurisdiction cooperation can be spearheaded Through the ICN merger working group, collect experience from other jurisdictions simplifying their merger notification forms & sample their MNF where appropriate. Merger Threshold Guidelines Conduct sector studies on the impact of turnover/asset based thresholds in different sectors and consider introduction of sectorial thresholds Further research on the effectiveness of size-of-transaction/transaction-value-test, share-of-supply- test, global-turnover-based thresholds Introduce market-share-threshold-tests to prevent gun-jumping by capturing excluded mergers not-requiring notification but are likely to give rise to competition concerns. Additionally, this can also capture digital transactions whose market-value is not necessarily on the revenue but rather on other factors such as the number of subscribers, big data, etc., where such factors promote a higher competitive edge and hence more market shares. Vision: "A Kenyan economy with globally efficient markets and enhanced consumer welfare for shared Prosperity" 12
Technology Introduce a unit similar to DaTA with data analytics competence and training. Outsource a big data analytic platform for the purpose of analyzing big data mergers and tracking MIWAs in the digital space. Adopt the use of online survey tools for data collection (e.g. Google forms). Consider the use of Nuix, Stata and R in technology aided review of mergers. Conduct more training on AI and big data to build capacity in the digital economy. Inter-agency Cooperation Re-introduce agency-to-agency peer attachments for deeper learning and exchange programs Introduce more terms on the BRS-CAK MoU to allow BRS to furnish CAK with a database of companies shareholdings annually so that MIWAs can be tracked. Others Introduce investment analysis as part of merger review where necessary; Review of conditions on remedied mergers when the competition aspects change as anticipated Periodic conducting ex-post-merger reviews to evaluate the effectiveness of the imposed remedies Introduce the use of monitoring trustees on complex behavioral remedies that are difficult to monitor. Vision: "A Kenyan economy with globally efficient markets and enhanced consumer welfare for shared Prosperity" 13
"A Kenyan economy with globally efficient markets and enhanced consumer welfare for shared Prosperity" 14
"A Kenyan economy with globally efficient markets and enhanced consumer welfare for shared Prosperity" 15
