Competition and Fair Trading Commission Malawi Enacts New Competition Law

Malawi's merger and acquisition landscape has undergone a significant transformation with the enactment of the Competition and Fair Trading Act 2024 (CFT Act 2024), which repealed and replaced the Competition and Fair Trading Act 1998. This new legislation, effective July 1, 2024, introduces a mandatory and suspensory merger notification regime, moving away from the previous voluntary system. Key changes include the establishment of specific financial thresholds for notification, a revised fee structure, and the empowerment of the Competition and Fair Trading Commission (CFTC) to impose substantial administrative fines for non-compliance. The CFT Act 2024 also formalises a public interest test in merger assessments and clarifies the jurisdictional interplay between the CFTC and the COMESA Competition Commission, aiming to enhance competition enforcement and align with international best practices.

The regulatory framework governing mergers and acquisitions (M&A) in Malawi has recently experienced a profound overhaul, marking a new era for competition law enforcement in the country. On July 1, 2024, the Competition and Fair Trading Act 2024 (CFT Act 2024) officially came into force, repealing its predecessor, the Competition and Fair Trading Act 1998 (1998 Act). This legislative development is a critical milestone, fundamentally reshaping how M&A transactions are assessed and approved by the Competition and Fair Trading Commission (CFTC), the primary regulatory body in Malawi.

The impetus for this comprehensive reform stemmed from identified shortcomings in the 1998 Act, particularly the absence of mandatory notification thresholds, the lack of administrative fines, and a need to align with evolving international best practices in competition and consumer protection. The CFT Act 2024 addresses these deficiencies by introducing a mandatory and suspensory merger control regime, establishing clear financial thresholds, and granting the CFTC enhanced enforcement powers, including the authority to levy significant administrative penalties. This article delves into the key provisions of the new Act, its implications for businesses engaged in M&A activities in Malawi, and the practical considerations for legal practitioners navigating this updated regulatory environment.

Prior to July 1, 2024, M&A activities in Malawi were regulated under the Competition and Fair Trading Act 1998. This earlier legislation provided for the regulation of mergers and acquisitions, but notably, it operated on a voluntary notification basis, meaning parties were not legally compelled to notify the CFTC of a proposed merger unless it was likely to result in a substantial lessening of competition. Furthermore, the 1998 Act lacked specific financial thresholds to determine notifiability, leading to uncertainty and, at times, a reactive rather than proactive approach to merger control.

The 1998 Act also presented challenges regarding enforcement, as highlighted in the 2023 High Court of Malawi Civil Division case of *CFTC v Airtel Malawi Plc*, which ruled that the Commission lacked the authority to impose administrative fines under the old Act, as violations were deemed criminal in nature. This judgment underscored the need for legislative reform to empower the CFTC with more effective administrative enforcement tools. The Competition and Fair Trading Act 2024, along with the Competition and Fair Trading Act Regulations (2006) and Merger Guidelines, now forms the bedrock of Malawi's competition law framework, explicitly defining a merger as the acquisition of a controlling interest in any trade or asset, or a transaction resulting in a lasting change to the structure of commerce in the domestic market.

Malawi's membership in the Common Market for Eastern and Southern Africa (COMESA) also introduces a dual jurisdictional aspect to merger control. The CFTC is responsible for mergers whose parties are domiciled in Malawi only and do not operate in other COMESA member states. Conversely, the COMESA Competition Commission (CCC) has jurisdiction over mergers where parties operate in more than two COMESA member states and meet the CCC's notification thresholds, operating on a 'one-stop-shop' principle for regional transactions. The CFT Act 2024 includes provisions for cooperation between the CFTC and regional/continental competition regulators, ensuring a coordinated approach to cross-border transactions.

A cornerstone of the CFT Act 2024 is the introduction of a mandatory and suspensory merger notification regime. This means that mergers meeting prescribed criteria must be notified to the CFTC and cannot be implemented until formal approval is granted. This is a significant departure from the voluntary notification system under the 1998 Act, which often allowed potentially anti-competitive mergers to proceed without prior scrutiny. The Act applies to all economic activities within, or having an effect on, Malawi, including the acquisition of control in foreign enterprises with a controlling interest in a Malawian subsidiary.

Crucially, the CFT Act 2024 empowers the CFTC to introduce transactional thresholds, which were subsequently gazetted in December 2024 through the Competition and Fair Trading (Thresholds for Proposed Mergers) Notice, 2024 (Government Notice No. 77 of 2024). A merger is now notifiable if the combined annual turnover or combined value of assets of the merging parties, whichever is higher, derived from Malawi, equals or exceeds MWK 10 billion (approximately US$6 million), or if the annual turnover of the target undertaking, derived from Malawi, equals or exceeds MWK 5 billion (approximately US$3 million). These thresholds provide much-needed clarity and predictability for businesses. Alongside these thresholds, the Competition and Fair Trading (Fees) Regulations, 2024 (Government Notice No. 76 of 2024) introduced a new fee structure, pegging merger application fees at 0.5% of the combined annual turnover or total assets of the merging parties derived from Malawi, whichever is higher.

When assessing a merger, the CFTC now formally applies a public interest test, considering factors such as the effect on competition, production or distribution efficiencies, consumer prices, exports, technological advancement, employment, and economic growth. This holistic approach allows the Commission to weigh the broader economic and social impacts of a transaction beyond mere market concentration. The CFTC is mandated to make a decision on a merger application within 45 days of receipt of a complete application or the provision of all requested information.

Furthermore, the CFT Act 2024 significantly strengthens the CFTC's enforcement capabilities. It grants the Commission express powers to issue administrative orders and impose administrative fines of up to 10% of gross annual turnover for enterprises and 5% of gross annual income for individuals, for infringements of the Act. This directly addresses the limitations exposed by the *CFTC v Airtel Malawi Plc* case under the previous regime. The CFTC can also apply to the High Court for cease and desist orders or other interim orders to prevent the implementation of unapproved notifiable transactions.

The interaction with the COMESA Competition Commission (CCC) remains a critical aspect of Malawi's M&A landscape. While the CFTC handles purely domestic mergers, the CCC asserts jurisdiction over mergers with a regional dimension, specifically those impacting more than two COMESA member states and meeting the CCC's own notification thresholds. Recent data indicates a shift, with a reported 75% decrease in local mergers analysed by the CFTC (one local merger between April 2024 and March 2025) and a 39% increase in mergers processed by the CCC that impact Malawi (32 mergers in 2024/2025), suggesting a growing number of transactions with a regional footprint.

The enactment of the Competition and Fair Trading Act 2024 represents a pivotal moment for mergers and acquisitions in Malawi, ushering in a more robust and predictable regulatory environment. Practitioners advising clients on M&A transactions in Malawi must now meticulously assess notifiability against the new financial thresholds and adhere to the mandatory and suspensory notification requirements. The introduction of a formal public interest test and the CFTC's enhanced administrative enforcement powers necessitate thorough pre-merger analysis and strategic engagement with the Commission.

Businesses contemplating transactions with a regional dimension must also carefully consider the jurisdictional implications of the COMESA Competition Commission, ensuring compliance with both national and regional competition laws. The shift towards a more proactive and punitive enforcement regime underscores the importance of early legal advice and diligent compliance to avoid significant administrative penalties and transaction delays. As the CFTC continues to implement and interpret the new Act, practitioners should closely monitor its decisions and guidelines to ensure their advice remains current and effective in this evolving landscape.