Posted on Mar 12, 2019
The Federal Competition and Consumer Protection Act 2019 (“the Act”) established the Federal Competition and Consumer Protection Commission (“Commission”) as Nigeria’s supervising mergers and acquisition (“M&A”) regulator. The Act stripped the Securities and Exchange Commission (“SEC”) of regulatory powers in respect of M&As by the repeal of sections 118-128 of the Investments and Securities Act (“ISA”) (and consequently Rules 421-444 of the Amended SEC Rules (“SEC Rules”)) (“Repealed Provisions”). The rationale for firms engaging in M&As are myriad, however, the concern here are M&As that are inadvertently and/or deliberately consummated to achieve and/or maintain market dominance as could be witnessed in the instant noodle, cement and flour mills markets.
Do PE/VC Transaction Raise Substantial Competition Law Concerns?
It depends on the facts and circumstances of the PE/VC transaction. Investors can be a (i) strategic investors who already owns a business similar to or complementary to that of the target company with the hope that a business combination will bring synergistic benefits (ii) long term investors desirous of entering the target’s business for varied purposes such as diversification of investment portfolio (“Long Term Investor”) and (iii) financial investor such as PE/VC firms who raise funds for investment in the targets with the aim of holding the investment for a finite period (typically 3-7 years) with the hope of improving the target’s business performance and then reselling the target business for significant profit. Whilst competition law concerns are more with Strategic and Long Term Investors and less with financial investors such as PE/VC firms, there are some instances where competition law concerns arise in respect of PE/VC transactions. For example, where the PE/VC House ( with the aim of becoming a strategic or significant player in a market) has cross or overlapping shareholding and directorship in competing portfolio companies in the same market.