NaCC anticipates more mergers

The Namibian Competition Commission (NaCC) says it has noticed a significant rise in the number of merger cases brought before the regulator and anticipates further increases.

According to NaCC Chief Executive Officer (CEO) Vitalis Ndalikokule, the surge in mergers has had a notable impact on market competition.

Ndalikokule attributes the increase to various factors, including the Covid-19 pandemic.

"One would be the Covid-19 pandemic, which had a significant impact on the increase in mergers. As numerous entities faced financial challenges, some decided to sell their businesses, leading to a rise in mergers notified to the Competition Commission," Ndalikokule said.

Additionally, he said global market conditions have played a role in driving mergers, adding that during times of crisis, certain businesses struggle while others thrive, creating opportunities for resourceful entities to acquire struggling ones.

"When you have a problem on one side of the world, you will have investors looking for opportunities in other parts of the world, and we could be a target for investors seeking alternatives due to the difficulties they experience in Europe, for example," said the CEO.

Despite the current surge in mergers, Ndalikokule does not anticipate a decline in the near future.

On the contrary, he believes that geopolitical tensions in Europe might further contribute to an increase in mergers in markets like Namibia.

"Investors seeking opportunities outside troubled regions may target the country, potentially leading to more mergers and acquisitions. The impact of these mergers on the competitive landscape is a cause for concern in terms of ownership," Ndalikokule expressed.

The CEO highlighted the issue of ownership dynamics resulting from foreign companies acquiring Namibian entities, which may reduce local ownership opportunities.

"The majority of entities in specific sectors may now be owned by foreign companies, reducing local ownership opportunities," he warned.

An example of such an acquisition is the recent takeover of Media Breweries by Heineken International, a Dutch company, which has shifted ownership and potentially decreased the reinvestment of profits into the local economy.

However, Ndalikokule clarified that Heineken was already a minority shareholder in Namibia Breweries.

"The competition will primarily revolve around product offerings and price variations among competitors," he stated.

Given these developments, Ndalikokule urged all companies operating in the Namibian market to comply with competition laws.

The Competition Authority's mandate is to ensure that businesses adhere to the regulations set forth by the authority.

"Compliance with the Competition Act is crucial to maintaining a level playing field, Non-compliance will prompt the Authority to take action and enforce the law to protect fair competition," he emphasised.

As Namibia continues to witness an influx of mergers, the NACC remains vigilant in monitoring the impact on competition.

The focus on maintaining a balanced market where businesses comply with competition laws will ensure fair opportunities for all participants.





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Last modified on Friday, 26 May 2023 12:29

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