CFTC APPROVES THE ACQUISITION OF INDEBANK BY NATIONAL BANK OF MALAWI

At its 45th meeting held at Mpikisano House in Lilongwe on 3rd June 2016, the Competition and Fair Trading Commission considered the application for authorisation for the proposed acquisition of 97.05% of shares owned by the Malawi Government in Indebank Ltd by National Bank of Malawi.

After thorough investigations to determine whether or not the acquisition would likely lessen competition, the Commission's findings were as follows:

1. The proposed merger would result in change in market concentration of the banking and foreign exchange markets. However, the change in market concentration would not be substantial as the merger involved acquisition of a small bank with a low market share by a dominant player.
2. It was less likely that the proposed transaction would result in substantial lessening of competition in the relevant markets. Evidently, there was a high likelihood that customers could easily switch to other service providers, in the event the merged bank decided to raise charges for customers above the competitive level.
3. The merger was likely to result in efficiencies that would benefit consumers. Further, the transaction could help prevent negative financial, economic and social developments that could potentially arise if Indebank was closed.

In light of these findings, the Commission authorised the merger subject to the following conditions:

1. The merged bank will not engage in anti-competitive trade practices towards its competitors or abuse its increased dominant position of market power arising from this merger.
2. The merged bank will maintain the current employment levels at Indebank and National Bank of Malawi Ltd. Where it became absolutely necessary to retrench employees, all due process should be followed and payments made in accordance with prevailing labour laws in Malawi.
3. The merged bank would be under the surveillance of the Commission. As such, a Memorandum of Understanding will be signed to ensure compliance with these conditions.

NOTES FOR EDITORS

1. The Competition and Fair Trading Commission is an autonomous agency of the government, established under the Competition and Fair Trading Act (CFTA), to regulate, monitor, control and prevent acts or behaviour which are likely to adversely affect competition and fair trading in Malawi.
2. Under the CFTA, the Commission is mandated to regulate mergers and acquisitions. Section 35 of the CFTA prohibits the consummation of mergers that are likely to result in substantially lessening of competition in a relevant market unless a prior authorization is obtained from the Competition and Fair Trading Commission.
3. This is the fourth merger that the Commission has authorised in the financial sector. The others are:

• • The acquisition of Malawi Savings Bank by FDH Holdings Ltd
  • The acquisition of International Commercial Bank by First Merchant Bank
  • The acquisition of IndeFund Limited by Indebank Ltd