If a company is considering the acquisition of a new business or company, or is considering a merger with another company, it is essential to obtain legal advice at an early stage in the process.
The Competition Act of 2018, amongst other things, applies to agreements that have the effect of creating dominant positions. And those that are defined as ‘restrictive agreements’. Certain forms of horizontal agreements are prohibited, as are vertical agreements that involve resale price maintenance. The Competition Authority, following an investigation, also has power to prohibit certain types of horizontal or vertical agreement. The Authority may also prohibit conduct that amounts to an abuse of a dominant position in the market.
Part X of the Act defines acquisitions and mergers that are further controlled. These include, for example, where one enterprise directly or indirectly acquires or establishes control of the whole or part of the business of another enterprise. The Competition Authority has extensive powers to investigate such acquisitions and mergers, and the Act provides a process by which a decision or determination of the Competition Commission may be challenged in the High Court.
The Act also protects companies and enterprises from the disclosure of confidential information by a member of the Competition, an employee of the Competition, or an inspector appointed under the Act.
Additional Considerations
Certain industries have specific regulatory bodies that have responsibility to oversee changes in control to maintain industry standards and protect public interests. For example, the Botswana Communications Regulatory Authority (BOCRA) is mandated to regulate the communications sector in Botswana comprising Telecommunications, Internet and Information and Communications Technologies, Radio communications, Broadcasting, Postal services and related matters. A business operating in any of these sectors should be familiar with the requirements of BOCRA and the potential approvals required.
Commercial agreements undertaken by the target enterprise often include change of control provisions, which may for example require the target enterprise undergoing a change of control to require prior written approval from the third party. A failure to obtain such consent may result in termination of the contract due to breach. Labour law considerations may also arise.
Due Diligence
The above and other considerations require careful planning and compliance by transacting parties. A thorough due diligence investigation must be undertaken at an early stage in the transaction process so as to identify all contractual and licence requirements.
This article is provided for general information only and does not constitute legal advice. Legal advice should be obtained in relation to your specific circumstances.
