Navigating Merger Regulations in Morocco

Morocco has amended its merger control regime in 2023 in an attempt of bringing it in line with European law. The amendment also has the effect that an increasing number of international transactions is caught by Moroccan merger control. This article discusses the implications for international parties, based on the most recent developments.

The 2023 Reform of Merger Control

The 2023 merger control reform in Morocco resulted in a significant increase of cases. Notably, the Competition Council also subjects transactions involving only foreign companies to merger control. For example, on June 6, 2024, the Competition Council announced a concentration project involving the exclusive takeover of “LG-LHT Aircraft Solutions GmbH,” “LG-LHT Passenger Solutions GmbH,” and “AerQ GmbH” by “Lufthansa Technik”¹.

This economic concentration involved only German companies and, in applying the guidelines of 14 December 2023 (Guidelines) on the control of concentration operations², the Competition Council invited interested third parties to intervene in the proceedings. This permits third parties to object to the implementation of the merger and shall enhance the quality of decision making at the Competition Council.

The Guidelines explain the merger control proceedings under Law no. 104-12 on Freedom of Pricing and Competition, and its implementing Decree no. 2-14-652, amended and supplemented on 22 May 2023 by Decree no. 2-23-273³.

The last amendment is part of the Competition Council’s effort of bringing Moroccan competition law in line with European law by adopting mechanisms similar to those in the European Union such as the two-phase control⁴, with an initial assessment of the merger followed by an in-depth examination of the operation if necessary. Also for instance the control criteria, the introduction of a fast-track procedure, and the increase of the thresholds show an effort to align Moroccan regulations to the merger control procedure foreseen within the European Union.

Threshold triggering Merger Control

Decree no. 2-23-273 of 22 May 2023 amended article 8 of the implementing decree no. 2-14-652 by setting three alternative thresholds that trigger a clearance obligation:

– If the combined worldwide turnover, of all the enterprisesinvolved in the merger exceeds 1.2 billion dirhams (approximately 110 million euros), excluding tax, and at least one of these companies individually has a turnover in Morocco of more than 50 million dirhams (approximately 4.5 million euros); or

– If the total turnover in Morocco of all the merging enterprises exceeds 400 million dirhams (approximately 36.6 million euros), and at least two of these companies each have a turnover of more than 50 million dirhams (approximately 4.5 million euros), excluding tax, in Morocco; or

– If the enterprises involved in the merger, or related to it, collectively achieve more than 40% of sales, purchases or other transactions on a national market for similar goods or services during the previous year.

Clearance is required if the target has direct, indirect, horizontal or vertical legal or commercial links with Morocco, even if the target itself does not generate any turnover in Morocco⁵ . This very broad formulation extends the scope of international mergers that must be notified to the Council thus controlling all operations with an effect on the Moroccan market. Similar to that in Europe⁶, in order to counter attempts by enterprises to circumvent the notification rules by splitting a single merger into several operations, the Competition Council treats repeated mergers between the same entities within two consecutive years as a single merger for the purposes of calculating the notification thresholds.

The Competition Council usually examines notifications of mergers within 60 days following their notification. A number of mergers that are not likely to harm competition in Morocco may benefit from a simplified merger control procedure in which the Competition Council issues its decision within 30 days on average, from the date of notification of the Competition Council’s acceptance to the parties⁷.

A fast-track procedure has also been introduced allowing parties to submit a reasoned request to the Competition Council for a decision within a short period of 21 days on average⁸ . This procedure may be motivated by significant economic disadvantages that could result from the delay in the merger, such as collective lay-offs or the impending bankruptcy of one of the companies.

Failure to comply with the clearance obligation can result in a fine of up to 5% of the parties’ turnover and an obligation to revert to the situation prior to the transaction. Implementing a notified transaction before the council’s decision can also lead to sanctions⁸ . Additionally, the article lists penalties for non-compliance with the council’s decisions, including withdrawal of authorization⁹.

Article 2 of decree no. 2-23-273 also introduced a fee to be paid to the Competition Council forthe assessment of a merger notification file. The amount of the fee varies depending on the nature of the merger being notified, as shown in annex 1.

The significant increase in thresholds shows Morocco’s efforts towards liberalizing the market.And although it is not conceivable to compare the Moroccan thresholds with the much higher, European thresholds in this area¹⁰, it is important to note that Morocco’s position remains very competitive in the context of other MENA countries. This contrasts with other countries in the region, such as the UAE, where the notification obligation is determined case-by-case by thresholds set by decisions of the Council of Ministers, rather than by establishing specific thresholds.

Annex 1: Fee calculation method¹¹:

[1]  Press release from the Competition Council on the proposed economic merger concerning the acquisition of sole control of ‘LG-LHT Aircraft Solutions Gmbh’, ‘LG-LHT Passenger Solutions Gmbh’ and ‘AerQ Gmbh’ by ‘Lufthansa Technik AG
[2] 2023 Merger control guidelines  https://conseil-concurrence.ma/wp-content/uploads/2023/12/Lignes-directrices-Francais-14-02-2024.pdf
[3] Decree 2-23-273 of 2 Kaada 1444 (22 May 2023) amending and supplementing Decree 2-14-652 implementing Law 104-12 on freedom of pricing and competition and Decree 2-23-274 of 2 Kaada 1444 (22 May 2023) amending and supplementing Decree 2-15-109 implementing Law 20-13 on the Competition Council, http://www.sgg.gov.ma/BO/FR/2873/2023/BO_7197-bis_fr.pdf.
[4] Article 10 of COUNCIL REGULATION (EC) No 139/2004 of 20 January 2004 on the control of concentrations between undertakings (the EC Merger Regulation)
[5] Merger control guidelines, P. 20
[6] Article 5 of COUNCIL REGULATION (EC) No 139/2004 of 20 January 2004 on the control of concentrations between undertakings (the EC Merger Regulation)
[7] Merger control guidelines, P. 31
[8] Merger control guidelines, P. 32
[9] Article 19 of Law N° 104-12 concerning Freedom of Prices and Competition
[10] Article 1 of COUNCIL REGULATION (EC) No 139/2004 of 20 January 2004 on the control of concentrations between undertakings (the EC Merger Regulation).
[11] Merger control guidelines, P. 29

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