1) Is a merger control regulation in force?

Yes. Merger control regulation was introduced by Decree no. 97/2014, of 31 December 2014, amended by Decree no. 101/2021, of 31 December 2021.

2) Which authorities enforce the merger control regulation?

The Mozambican Competition Authority enforces the Mozambican Competition Act including the merger regulation contained therein. 

3) Relevant regulations and guidelines with links:

The relevant legislation may be downloaded from the website of the Competition Authority.

4) Does general competition regulation apply to mergers or ancillary restrictions?

Although Mozambican Competition Law does not directly address ancillary restraints, it should be noted that the notification forms require the parties to identify and justify potential ancillary restraints. This indicates that the Mozambican Competition Authority considers that restrictions of competition that are ancillary to the merger, are considered inherent parts of the merger and are not subject to separate scrutiny under the general competition regulation.

However, it should be noted that, according to the decisions available on its website, the Mozambican Competition Authority has not yet specifically assessed ancillary restraints.

General competition law will apply to all mergers that are not caught by the Mozambican Competition Act, as well as to those restrictions that are not considered directly related and necessary to the merger.

5) May an authority order a split-up of a business irrespective of a merger?

Yes. The Mozambican Competition Authority may order the split-up of an existing business to cease negative effects on competition.

6) Other authorities that also require merger filing or may prohibit transaction
(Note that this may not be an exhaustive list and that industry-specific legislation should always be considered. Furthermore, a merger will often require change of registrations with – but not approval from – the companies register, land register and authorities that have issued permits for the activities of the merging parties.)

Mozambique is still a strongly regulated economy. For this reason, several sectoral legislations are in force and must be considered on a case-by-case basis.

Banks and insurance companies:

Regarding merger approval, the Bank of Mozambique and the ISSM (Insurance Supervision Institute of Mozambique) have regulatory power over this matter with regard to banks and insurance companies respectively.

Foreign investment control

Mozambique does not have an FDI regime requiring approval for foreign investors’ investments in sensitive industries in Mozambique.

Foreign investors’ rights, duties, and obligations are the same as for domestic investors.

Generally, foreign investors can own 100% of a Mozambican company.

It may be worth noting that Law 8/23 of 09 June 2023 (Investment Act) has established the legal framework for domestic and foreign investments that can benefit from the established guarantees and incentives (e.g. the right to repatriate the invested capital and profits obtained, tax and customs incentives and the state’s guarantee of security and protection of the investments and private property).

The investments covered by the Investment Act must contribute to the sustainable economic and social development of Mozambique, subordinate to the principles and objectives of the national economic policy.

The Act does not apply to investments in the areas of prospecting, research and production of oil and gas, mining of mineral resources or to public investments financed by funds from the General State Budget or investments of exclusively social nature.

To benefit from the guarantees and incentives provided for in the Investment Act, investment projects must follow one of the following regimes:

1. Registration regime, which consists of simply submitting an investment proposal for the purpose of registration and allocation of applicable incentives;
2. Authorization regime, which applies to:
   • Large-scale investment projects as well as those affecting economic activities with foreseeable economic, environmental, safety, or public health implications;
   • Public-private partnership projects and business concessions;
   • Investment projects requiring land extension of an area equal to or greater than 10,000 acres;
   • Investment projects requiring a forest concession of an area exceeding 100,000 acres;
   • Investment projects focused on the industrial processing of mining and/or petroleum products.

However, regarding the current regulation (Decree 43/2009, of August 21 (Investment Law Regulation) and its respective amendments as stated in Decree 21/2021, of April 13 (Investment Law Regulation)”, the procedures are the following:

1. Proposal must be submitted to APIEX, IP (Angola's Private Investment and Export Promotion Agency) - a legal entity governed by public law that is dedicated to the promotion of exports, attracting private investment, registering investment proposals, institutional support and monitoring the execution of investment projects and internationalization of Angolan companies - in four copies, using the appropriate form, along with the necessary documents for evaluation. Registration is done after verifying their compliance. Project proposals can be submitted in either Portuguese or English. Proposals submitted by mail or electronically are registered and processed if they contain the necessary information and elements for analysis and decision-making. The project is registered in the name of the implementing company under the reserved corporate name, and it is necessary to indicate the name of the representative and/or legal agent of the proposing investors;
2. The documents that must accompany the project proposal for analysis and approval must include a copy of the identification document of the proposing investor, a certificate of commercial registration or the reservation of the corporate name of the implementing company, a topographical map or sketch of the project's location, a properly stamped lease agreement or property title for the real estate, and a plan for hiring local labor and professional internships. If the project involves establishing foreign commercial representation, a copy of the Commercial Representation License issued by the competent authority in the country must also be provided.
3. The decision will be issued within 30 (days).

7) Are any parts of the territory exempted or covered by particular regulation?

Decree-Law 2/2014 of 2 December establishes the special legal and Contractual Framework applicable to liquefied natural gas projects in Areas 1 and 4 of the Rovuma Basin - the Rovuma Basin Project. This Project will be implemented through Rovuma Basin Enterprises under one or more approved development plans. This Decree-Law applies to each project in the Rovuma Basin, whether it is carried out solely under the terms of Concession Contracts for Exploration and Production or under Concession Contracts for Exploration and Production and Government Agreements together, as well as under the terms of other contractual instruments to which the Government is a party relating to the implementation of the Rovuma Basin Project.

8) Is merger filing mandatory or voluntary?

Merger filing is mandatory, provided the thresholds are met.

The Mozambican Competition Authority may also request that a merger below thresholds be notified, or the parties may decide to voluntarily submit a simplified filing to the Authority, which may well be advisable if there is any chance that the Authority intervenes ex officio. Decree 101/2021 clarifies that in those cases, at least two of the undertakings concerned should achieve a turnover above MZN 105 million in Mozambique.

9) Is there a general definition of transactions subject to merger control?

Yes, according to the Mozambican Competition Act a merger subject to merger control consists of a transaction where a change of control occurs on a lasting basis as a result of:

1. the merger of two or more previously independent undertakings or parts of undertakings;
2. the acquisition, directly or indirectly, of control of the whole or parts of the share capital or parts of the assets of one or various other undertakings, by one or more persons or by one or more undertakings already controlling at least one undertaking; or
3. the creation of a full-functioning joint venture on a lasting basis.

10) Is "change of control" of a business required?

Yes, generally a merger will only be considered to take place if the transaction results in a change of control over a business. Transactions that consist of the establishment of a new business (that is, a joint venture), jointly controlled by two or more undertakings or persons already controlling one or more undertaking, will also be deemed to be a merger.

11) How is “control” defined?

The concept of "concentration" broadly follows that of EU and Portuguese competition law.

The definition of "control" under the Mozambican Competition Act is inferred from all legal and factual circumstances that confer the ability to exercise decisive influence on the target’s activity, in particular through:

1. the acquisition of all or part of the share capital;
2. the acquisition of rights of ownership or use of all or part of an undertaking’s assets; and
3. the acquisition of rights or the signing of contracts, which grant a decisive influence over the composition or decision making of an undertaking’s corporate bodies.

12) Acquisition of a minority interest

Acquisition of a minority interest that does not result in anyone gaining control over a business is not subject to merger control.

13) Joint ventures/joint control – which transactions constitute mergers?

Transactions regarding businesses subject to joint control may be subject to merger control if the joint venture performs on a lasting basis all the functions of an autonomous economic entity and the notifications thresholds are met.

Where the creation of the joint venture has the object or effect of coordinating the competitive behavior of undertakings that remain independent, such coordination is assessed under the rules applicable to prohibited agreements and practices.

14) Which thresholds decide whether a merger notification must be filed?
(Unless explicitly stated otherwise, the thresholds described under one threshold category are not cumulative with those described under another category. Thus for instance if there is a market share threshold and a turnover threshold, it is sufficient to meet one of these, unless stated otherwise.)

a) Turnover thresholds

Notification is mandatory whenever the transactions meets one of the following thresholds:

1. the combined turnover of all the undertakings concerned in Mozambique in the preceding year is equal to or exceeds 925 million MZN, provided that the turnover generated in Mozambique of at least two companies participating in the concentration is higher than MZN 105 million: or
2. the transaction results in the acquisition, creation or reinforcement of a share of or above 30 % of the national market of a given good or service, and each of at least two of the undertakings concerned achieved in the preceding year a turnover of at least 105 million MZN in Mozambique.

The Mozambican Competition Authority may request a notification if none of the above thresholds are met, but at least two of the undertakings concerned achieve a turnover above MZN 105 million in Mozambique.

b) Market share thresholds

Notification is mandatory if the transaction results in the acquisition, creation or reinforcement of a share of or above 50 % of the national market of a given good or service.

c) Value of transaction thresholds

N/A

d) Assets requirements

N/A

e) Other

A merger that does not meet any of the above-mentioned thresholds for mandatory filing may still have to be notified if the Competition Authority requests this because it considers that the merger might significantly restrict competition.

15) Special thresholds for particular businesses

The thresholds stated in topic 14 apply to all transactions.

16) Rules on calculation and geographical allocation of turnover

The Mozambican Competition Act does not specify any rules on calculation or geographical allocation of turnover. However, given that the Act is inspired by the Portuguese Competition Act, it can be expected that the authority will request that turnover is based on the most recent audited financial year and that turnover must be allocated geographically based on the location of the customer.

Is the seller/seller's group turnover relevant in a standard acquisition of sole control?

No.

17) Special rules on calculation of turnover for particular businesses

Insurance undertakings

For an insurance undertaking the value of the gross premiums written paid in Mozambique applies. This includes all premiums received by the undertaking the relevant year. Amounts paid by the undertaking for reinsurance are not deducted.

Credit institutions and other financial undertakings

Turnover is calculated as the sum of:

1. Interest income and similar income
2. Income from securities
3. Fees and commissions receivable
4. Net profit on financial operations
5. Other operating income

18) Series of transactions that must be treated as one transaction

Merger control rules are not clear with regard to transactions that take place in stages. In theory, transactions that are interdependent because they are linked by conditions must be treated as one if control in each transaction is acquired ultimately by the same undertaking(s).

Two or more transactions that take place within a period of five years between the same natural or legal persons and which, individually, are not subject to notification, must be filed to the Mozambican Competition Authority after the last agreement has been concluded and before it is implemented if the transactions in combination trigger any of the thresholds in topic 14.

19) Temporary change of control

Merger filing is only required if there is a change of control on a lasting basis.

20) Special industries, owners or types of transactions

The Mozambican Competition Act specifies that there is no obligation to file a merger notification in the following situations:

1. Where control is acquired by a professional who has powers under current insolvency legislation to deal with and dispose of the undertaking;
2. Acquisition of shares with the mere objective of serving as collateral; or
3. Where credit institutions, other financial undertakings or insurance companies whose normal activities include transactions and dealing in securities are temporarily in possession of interests in an undertaking acquired with the intention to resell, provided that they a) do not exercise voting rights for the purpose of determining the competitive conduct of that undertaking or b) exercise voting rights exclusively with the aim of preparing the disposal of all or part of that undertaking and that the disposal takes place within one year of the date of acquisition.

21) Transactions involving only foreign businesses (foreign-to-foreign)

Foreign-to-foreign mergers are caught by the Mozambican Competition Law to the extent they have, or may have, effects in the territory of Mozambique. Therefore, the Mozambican Competition Law may apply whenever all parties or the target alone achieves, directly or indirectly, sales in Mozambique, despite the fact that neither of the undertakings concerned are established in the country.

22) No overlap of activities of the parties

There is no exemption for transactions with no overlap of activities, but there is a simplified procedure available if there is no overlap.

23) Other exemptions from notification duty even if thresholds ARE met?

N/A

24) May a merging party file voluntarily even if the thresholds are not exceeded?

Parties involved in a non-reportable transaction (i.e. a transaction that does not meet the notification thresholds) may voluntarily submit a simplified filing to the Authority.

Decree 101/2021 clarifies that in those cases, at least two of the undertakings concerned should achieve a turnover above MZN 105 million in Mozambique.

25) May the competition authority request a merger notification or oppose a transaction even if thresholds are not met?

Yes. A merger that does not meet the notification thresholds may be subject to notification to the Mozambican Competition Authority, if the Authority considers that the transaction may impede, distort or restrict competition and is not exempted under the rules on restrictive agreements. Decree 101/2021 clarifies that in those cases, at least two of the undertakings concerned should achieve a turnover above MZN 105 million in Mozambique.

26) Referral within the jurisdiction

N/A

27) Referral from another jurisdiction

N/A

28) Referral to another jurisdiction

N/A

29) May the merging parties request or oppose a referral decision?

N/A

30) Stage of transaction when notification must be filed

Transactions must be filed within 7 working days from the date of agreement or from the date of the acquisition project. 

31) Pre-notification consultations

According to article 11 (3) of Decree-law 97/2014, prior to submitting the form, the parties may initiate an informal and confidential pre-notification procedure with the aim of obtaining assistance in completing the notification form and clarifying the issues relevant to the notification, in particular the need and obligation to notify.

32) Special rules on timing of notification in case of public takeover bids and acquisitions on stock exchanges

The Mozambican Competition Act does not prevent the implementation of a public takeover bid or an exchange offer that has been duly notified to the Mozambican Competition Authority, provided the buyer does not exercise voting rights attached to the respective shares or does so only to protect the full value of its investment. 

33) Forms available for completing a notification

There are two forms available: one for simplified notification (for the transactions that do not meet the notification thresholds, as set out in Article 17(3) of the Competition Regulation – i.e. where the Mozambican Competition Authority has requested a notification) and one for full notification. 

34) Languages that may be applied in notifications and communication

Portuguese.

35) Documents that must be supplied with notification

The parties are normally required to provide with the filing form, among other less significant annexes:

1. the financial statements and annual reports; 
2. any documents, reports or studies prepared and submitted to the management bodies of notifying party in the context of the preparation and assessment of the concentration;
3. All documents directly related with the transaction, such as share purchase or asset purchase agreement;
4. preliminary announcements; 
5. articles of association; 
6. shareholders’ agreements; 
7. information on suppliers and customers; and 
8. non-confidential version of the notification. 

36) Filing fees

Merger filings are subject to a notification fee of 0.11% of the turnover of the parties in Mozambique in the year prior to that of the request for review of the concentration; however, the fee cannot exceed 2,250,000.00 MZN.

37) Is implementation of the merger before approval prohibited?

Yes. A merger subject to prior notification shall not be implemented until tacit or express clearance is granted by the Mozambican Competition Authority.

38) May the parties get permission to implement before approval?

Yes, pursuant to Article 24(3) of the Mozambican Competition Act, the notifying party may submit a reasoned request prior to or subsequent to the notification requesting that the standstill obligation is waived.

39) Due diligence and other preparatory steps

There are no specific provisions or guidance in this regard.

40) Veto rights before closing and "Ordinary course of business" clauses

An "ordinary course of business" clause that prevents the target company from taking decisions outside the course of its ordinary business until the closing date is generally considered acceptable.

However, it must be assessed on a case-by-case basis to what extent the parties may discuss – or provide each other with veto rights concerning – any decisions in their respective businesses.

41) Implementation outside the jurisdiction before approval – "Carve out"

There are no specific rules on “carve out” of the Mozambican part of a transaction to avoid delaying implementation in the rest of the world pending approval in Mozambique.

42) Consequences of implementing without approval/permission

The Mozambican Competition Act foresees a number of possible legal and financial consequences if a merger is not notified: the Mozambican Competition Authority may impose a fine of up to 5% of a party's worldwide turnover and the transaction may be considered null and void.

The Mozambican Competition Authority may also impose the following penalties (depending on the seriousness of the offense):

1. (at the party's expense) publication of the sanction in the Official Gazette or in a newspaper with a major national, regional or local circulation, in accordance with the geographical market where the transaction has had its effect;
2. exclusion from public tenders for up to five years; and/or
3. the spin-off of a business, the transfer of shareholder control, the sale of assets, the partial cessation of activities or any other act considered necessary to eliminate harmful effects to competition.

43) Phases and deadlines

The deadlines are extended whenever the Authority asks for further information from the parties, assesses commitments and conducts a hearing of the notifying parties and third parties who have expressed opposition to the transaction. A hearing can be waived by the Authority in case of clearance decisions without commitments and in the absence of interested third parties. In a case of gun jumping, if the Authority initiates an ex officio investigation, the procedural deadlines do not apply.

44) Tests or criteria applied when a merger is assessed

The substantive test for the assessment of a concentration is the ‘dominance test’, pursuant to which concentrations should be blocked if they are likely to create or strengthen a dominant position that may significantly impede effective competition in the relevant markets (art. 18 (1) of the Competition Act).

The wording of the Competition Law Regulation, however, appears to empower the Authority to block a concentration that gives rise to a significant impediment of effective competition, even in the absence of a dominant position. It is hoped that the administrative practice of the Authority clarifies the scope of the substantive test.

45) May any non-competition issues be considered?

Yes. The Authority is bound to take into account public interest reasons which may justify any restrictions of competition resulting from the notified concentration. In its public interest assessment, the Authority should consider the effect of the transaction on:

• a specific sector or region;
• employment;
• the capacity of small enterprises, or enterprises controlled by historically disfavored persons, to become competitive; and
• the capability of national industry to compete internationally.

46) Special tests or criteria applicable for joint ventures

The assessment for joint ventures is the same as for other mergers.

47) Decisions and remedies/commitments available

A merger may be approved, approved with conditions/commitments or prohibited.

Commitments may take any form and they can be either structural or behavioural and with or without time limitations.

48) How and when will details about the merger be published?

The Mozambican Competition Authority will make a public announcement, in two large newspapers, 5 days after it has received a merger notification and again when a decision has been taken, as referred in article 29 of decree no. 97/2014.

49) Access to the file for the merging parties and third parties

The merging parties:

The merging parties have a right to access to the file, which includes correspondence with third parties that the Mozambican Competition Authority may have had, including market survey questionnaires as well as an overview of all documents/correspondence in the file.

Third parties:

Following publication of a notice of the notification by the Authority in two national newspapers (which should be made within five days of filing) any interested third party whose rights or legitimate interests may be affected by the transaction may submit comments within the deadline established by the Authority, which cannot be less than 15 business days. In addition, prior to the adoption of a final decision, the Authority must hold a hearing with interested third parties which have already intervened in the procedure and expressed an adverse opinion of the merger. The hearing suspends the time periods for the adoption of the decision.

50) Who can appeal and what may be appealed?

According to the applicable general rules, in particular, article 25 of  decree no. 97/2014, it is important to stress that all decisions on merger control by the Authority are subject to judicial review.

The Statute of the Competition Regulatory Authority (CRA) of Mozambique states that the Authority’s decisions can be appealed in Court, be it before the Judicial Court of the City of Maputo or the Administrative Court.

If a decision of the Authority is appealed, as a rule, the effects of such decision are suspended.

This does not apply to decisions that impose fines. When this kind of decision is at stake, article 25(2) must be followed, in particular “appeals against decisions which impose fines shall comply with the provisions of the Criminal Procedure Code and shall have merely devolutive effect. The affected party may request, when instituting the appeal, that it shall have sufficient effect when the execution of the decision causes it considerable prejudice, if it offers to put up security in substitution, and the attribution of this effect shall be conditional upon the effective putting up of that security, within the time period set by the court.”

Third Parties may appeal the decision of the CRA if it affects them.

Regarding the competent court, article 50 of Decree 96/21 of 31 of December of 2021 stipulates that:

• Decisions issued by the ARC, in proceedings that result in the imposition of fines or other sanctions as provided by law, can be challenged in the City of Maputo Judicial Court.
• Decisions related to concentration proceedings and exemption procedure are subject to appeal in the Administrative Court.

With regards to the deadlines, the law is not clear, but if the decision of the ARC applies fines or other sanctions, the processual penal code establishes a deadline of 15 days to pay the fine, and it is our understanding that it is within this deadline that appeal must be made.

If the decision of the ARC is connected to merger proceedings and exemption procedure, the Administrative Litigation Procedural Law is applicable, which determines a deadline for appeal that varies between 90 to 365 days. However, an appeal claiming nullity of a decision can be exercised at any time.