Regional Merger Control in the Digital Economy Era: Valuation Metrics for Digital Markets, Asset Safeguards and Nexus Tests in the EAC and COMESA Common Markets

A Fintech founder in Dar es Salaam, Lusaka or Nairobi may be finalising a term sheet. Her company holds few assets on its balance sheet, yet a regional bank is willing to pay US$250 million for it. The real asset is the volume of transactions flowing through her application. Two years ago, that deal could have closed across the Common Market without a regional competition regulator ever hearing about it. Today, that is unlikely; the transaction must first be cleared by the COMESA Competition and Consumer Commission and the EAC Competition Authority. INTRODUCTION In the past, the frameworks for regulating mergers in the East African region and the broader COMESA markets were tailored to a traditional economy, focusing on physical assets and local revenue streams to initiate competition scrutiny. However, the advent of the digital economy, the aggressive move by commercial banks into fintech, and the interest of global tech giants in start-ups that have yet to generate revenue have highlighted a significant gap in regulation. Transaction experts structuring deals involving volatile technology infrastructure and mobile money platforms have long struggled to apply a fixed monetary threshold to assets with minimal regional turnover but substantial strategic value. Regulators have faced ongoing challenges with the issue of "killer acquisitions", where a company of significant strategic value is acquired without triggering merger scrutiny due to its low revenue, as seen in Facebook's 2014 acquisition of WhatsApp. This transaction served as a major alert for regulatory bodies, leading Germany and Austria to be among the first to adapt by incorporating transaction-value thresholds into their competition laws in 2017. Germany and Austria's regulatory initiative served as a model for international antitrust practices, prompting various regions to revise their merger regulations to tackle the significant issue of killer acquisitions. The European Union incorporated comparable strategies to systematically monitor digital mergers through the Digital Markets Act, which was proposed in 2020, approved by the Parliament and came into effect in 2022. African nations and regional trade blocs have similarly and assertively transitioned from conventional revenue measures to contemporary transactional metrics to support the rapidly expanding fintech and digital startup ecosystem. Notably, COMESA, a regional bloc encompassing approximately 21 member states, has undergone a significant transformation. Through its Competition and Consumer Protection Regulations of 2025 and Competition and Consumer Protection Rules of 2025, it has evolved from being the most ambitious cross-border framework to becoming Africa's most dynamic and cohesive regional antitrust regulator. CRITICAL ANALYSIS AND RECOMMENDATION This article investigates three key components of the emerging deals framework. It specifically looks into the process of determining transaction value, the factors that prevent traditional assets from entering the digital gatekeeper system, and the differences between COMESA’s nexus test and that of the EAC. On 4 December 2025, the COMESA Council of Ministers approved the COMESA Competition and Consumer Protection Regulations and the COMESA Competition and Consumer Protection Rules (hereinafter referred to as “the 2025 COMESA Competition Regulations” and “the 2025 COMESA Competition Rules”) respectively. Regulation 41(5) of the 2025 COMESA Competition Regulations, read together with Rule 23(1) of the COMESA Competition Rules of 2025, retains the general notification requirement test for traditional mergers. This means a merger is notifiable to COMESA Competition and Consumer Commission (CCCC) provided that: - The combined annual turnover or combined value of assets, whichever is higher, in the Common Market of all parties to a merger equals or exceeds COMESA Dollars Sixty Million (COM$ 60 million); and The annual turnover or value of assets, whichever is higher, in the Common Market of at least two of the parties to a merger equals or exceeds COMESA Dollars Ten Million (COM$ 10 million), unless each of the parties to a merger achieves at least two-thirds of its aggregate turnover or assets in the Common Market within the same Member State. Regulation 41(7) of the COMESA Competition Regulations, read together with Rule 23(2) of the COMESA Competition Rules, operates as an independent, parallel gateway for mergers “in digital markets, including platforms”, where a notification is triggered when at least one party operates in two or more Member States and a merger meets the transaction value of COM$ 250 million. By contrast, the East African Community Competition Authority (EACCA) still applies a rigid or conventional minimum combined assets or turnover standard of US$ 35 million, with no equivalent dedicated digital market test. This is in accordance with the EAC Competition (Merger and Acquisition Notification Fees) Regulations approved by Council of Ministers and published on the 31 December 2024. While this regional control somehow addresses the underlying issues around digital markets mergers, it raises three critical issues for deal counsel and regulators alike. These issues are addressed below: - Valuation Metrics: The Methodological Dilemma of “Transaction Value” The initial challenge lies in determining how these Regional Competition Authorities establish their notification thresholds (COM250m, equivalent to US$250m, for COMESA and US$35m for EAC) when dealing with a target that might report minimal or no revenue. Traditional methods of M&A valuation rely on EBITDA multiples or discounted cash flow, which are based on a revenue foundation for multiplication or discounting. However, digital targets often lack such a revenue base. Their worth is derived from their scalability and data, including user numbers, transaction volumes and network effects, which cannot be easily condensed into a single audited figure. In the context of COMESA, a digital transaction is considered relevant only when one of the merging entities is active in at least two COMESA member countries. Although the global transaction-value threshold of USD 250 million effectively addresses the enforcement gap concerning "killer acquisitions"—where leading companies acquire emerging digital innovators before they start earning regional income, its application poses immediate challenges in structuring deals. This is the case in circumstances where: - A major international technology company, known as the acquirer, is active in only two COMESA member states. They must obtain acquisition clearance for any global acquisition if it surpasses US$250M, regardless of whether the target entity has a presence in the common market. A deal might be arranged such that the initial payment is US$200 million, with an additional US$100 million contingent on future user growth. Upon thorough examination, this acquisition would probably necessitate reporting for COMESA clearance, as the total value amounts to US$300 million. These structural challenges could impact how deals are structured across the region. They could act as a lee way for deals architects to structure deals below the prescribed threshold given that the calculations are based on transaction values as opposed to actual book values. Similarly, it may affect how money and investment flows in the region in the sense that a mere presence in two of the COMESA markets forces the acquirer to notify each acquisition anywhere in the world. Not only does this raise a larger question about whether this policy reform serves as a regulatory measure to prevent a few from dominating the market in terms of geographical competition, but it also raises questions whether this does not act as a barrier to African market expansion or a means to financially burden large companies through reporting fees. For the EAC, this is more critical because of the lack of dedicated threshold and calculation methodology for digital-market mergers. Although the East African Community Competition (Mergers and Acquisitions) Regulations of 2025 acknowledge the expanding digital markets and new technological sectors in the area by defining a "nascent sector" as an economic sector in its initial development phase marked by innovation and swift expansion, the Regulations lack a specific threshold for those nascent sectors (digital markets) to address the expanding digital economy. They simply set a US$35M minimum standard test based on combined assets or turnover, provided that the undertakings operate in two or more East Africa markets. Importantly, since the EACCA framework relies on conventional asset and turnover measurements, digital market startups in their early stages, which have large user bases but minimal local revenue, might evade detection by the EACCA's structure. This could happen unless they are identified by overlapping COMESA regulations, making the recognition ineffective. As noted earlier, COMESA and EAC are not writing on a blank page. In 2017, Germany implemented the first global transaction-value test for mergers in digital markets, as outlined in section 35(1a) of the Gesetz gegen Wettbewerbsbeschränkungen (GWB), also known as the "Act against Restraints of Competition." This test imposes four cumulative conditions alongside a qualitative one: the combined global turnover of the parties must surpass €500 million; one party must have a turnover in Germany exceeding €50 million; the target's turnover within Germany must be less than €17.5 million; the consideration's value must be over €400 million; and importantly, the target, rather than the acquirer, must demonstrate "significant activity" in Germany (erhebliche Inlandstätigkeit). Austria's equivalent section 9(4) of the Kartellgesetz (the "Cartel Act" or "KartG") applies the same architecture at a lower €200 million consideration threshold. The German Federal Cartel Office (Bundeskartellamt) and the Austrian Federal Competition Authority (Bundeswettbewerbsbehörde) have since published joint guidance defining "value of the consideration" to capture deferred, contingent and securities-based elements. Germany's Federal Court of Justice, the Bundesgerichtshof, tested the domestic-activity requirement in Meta/Kustomer (Case KVR 77/22, judgment of 17 June 2025), holding that a target's processing of German end-users' data could itself constitute "significant domestic activity" even where the target had no direct contractual relationship with those users and its billed customers were based abroad. At the outset, we recommend that the COMESA Competition and Consumer Commission publish formulaic guidance that clearly defines the scope of application, as opposed to covering acquisitions happening across other areas while the target has no footprint in the common market. Similarly, the transaction value must be defined to ensure that numbers do not open a Pandora’s Box for structuring below the threshold given the dynamics involved in valuing the digital markets. More specifically, “value of the consideration” for purposes of Regulation 41(8)(b), should expressly address earn-outs, deferred and contingent payments, and equity- or debt-based consideration borrowing the wisdom from Germany and Austria. Doing so would give deal counsels a workable methodology and remove the present incentive to structure transactions just under COM$250 million for want of a rulebook, rather than for want of a genuine case that the deal falls outside the Commission’s concern. For the EAC Competition Authority, we recommend amending the Mergers and Acquisitions Regulations to include a transaction-value threshold and emphasize local digital impacts (with comprehensive guidelines) alongside its current $35 million asset/turnover test to ensure that dominant tech firms cannot bypass regional scrutiny when buying up high-potential "nascent sector" competitors given the rapidly growing fintech or agritech platforms and general tech startup ecosystem in the region. 2. Asset Safeguards: The Risk of Categorisation Mismatch The second issue is the scope. The 2025 COMESA Competition Regulations define “gatekeeper” but not “digital market” for purposes of Regulation 41(7). The EAC Competition (Mergers and Acquisition) Regulations, on the other hand, do not define digital markets. The absence of a clear definition creates a structural dilemma, specifically regarding the growing interest in digital solutions, which triggers a lot of acquisitions in the market space. With the growth in technology and Artificial Intelligence (AI) systems, traditional ways of running businesses are diminishing. Businesses are now highly integrating tech-driven solutions to increase productivity and scale. Traditional industries, such as banking, logistics, tourism and leisure, agriculture and retail, have been heavily digitized. These narratives are also changing the deals in current deal rooms. For example, a traditional bank could be structuring a deal to acquire a software application that enables the bank to embody a digital wallet in its operational system, or a logistics company could be acquiring a fintech startup to facilitate its billing, while a telecom could be acquiring an app that could be integrated into its system to enable tracking students and school bus movements. Structurally, these are traditional businesses targeting tech solutions with no actual revenue, at a transaction value of US$250m for COMESA. Therefore, the critical question is whether this would trigger a COMESA notification requirement in relation to digital markets and gatekeeping. On a literal reading of the COMESA Competition Regulation 41(7), it might. It could be contended that a bank's mobile wallet is secondary to a business focused on its balance sheet. However, an app for logistics that simply digitalises bookings or invoicing does not fit this description, especially when the term "digital market" lacks the clarity intended in the drafting of Regulation 41(7). To capture the essence of the Regulations under the evolving digital landscape, it is crucial to develop legal regimes that adopt a materiality test, such as that of Germany and Austria, where an undertaking falls within the digital market only where its platform or data-aggregation function is what drives its primary market power and not merely a feature of how it delivers an otherwise conventional service. Traditional assets that use a digital interface only to operate a wallet feature, a logistics app, or an internal scheduling tool should be expressly exempted to show that the platform or data function, rather than the underlying traditional business, is the source of the target’s strategic value. 3. Nexus Tests: The Regional Mismatch Between COMESA and the EAC The third issue arises from the gap between the two regimes rather than within either one. Regulation 41(7) triggers notification on a global transaction value of US$250 million, provided at least one party operates in two or more COMESA Member States, with no requirement that the deal have any meaningful competitive footprint within the Common Market itself. The East African Community Competition Authority (EACCA), which is now operational, employs a traditional approach by setting a combined threshold of US$35 million for turnover or assets within the EAC. Additionally, it mandates that at least two parties must individually possess US$20 million of that turnover or assets in the region, unless each party derives two-thirds of its turnover or assets from a single Partner State, regardless of the acquisition's nature. A strategically important East African digital start-up that is yet to generate revenue might not meet either of these figures. The result is a net with the wrong shape on both sides. COMESA’s threshold is wide enough to catch a global technology merger with a negligible East Africa user base, purely because the worldwide deal size clears US$250 million. The EAC's threshold, which is aligned with traditional assets and revenue, is limited yet sufficient to encompass a commercial bank or international platform acquiring an emerging East African digital innovator, though it presents challenges in valuation. COMESA and the EAC should each adopt a secondary local-nexus safeguard along the same lines. For example, a minimum number of monthly active users or a minimum volume of local transaction value generated within the trade bloc so that regulatory resources are directed at deals with a genuine competitive effect on regional consumers rather than at deal size alone. The two regimes should also formally cross-reference their thresholds and methodologies specifically for digital markets, so that a transaction assessed as non-notifiable under one is not, by that fact alone, assumed to be immaterial under the other. COMESA and the EAC would not be the first to close this gap. Saudi Arabia’s General Authority for Competition recently amended its own merger regime to add a dedicated local-nexus test alongside its turnover thresholds, precisely to tie notification to a transaction’s actual domestic footprint rather than to global deal size alone. CONCLUSION All the above considered, these three issues are a wake-up call for undertakings operating volatile tech infrastructure and mobile money platforms across the common markets in EAC and COMESA and the wider African region given the growing intra-Africa trade and the enforcement of the African Continent Free Trade Area (ACFTA) framework. The COM$250 million threshold under COMESA Competition Regulation 41(7) applies today without a bespoke valuation methodology for asset-light digital targets, without a settled test for excluding traditional hybrid undertakings and without any local-nexus safeguard to align it with the EAC’s separate and lower threshold. As the competition regulations within the EAC and broader COMESA markets continue to evolve in the digital economy era, businesses and their legal advisors involved in structuring digital or mobile money transactions in the region must independently evaluate notifiability against both general and digital-market criteria. It is important not to assume that failing one test negates the other. Additionally, they should maintain detailed transaction records, including the methodology used to determine transaction value, especially when earn-outs or deferred considerations are part of the deal. Furthermore, a transaction value below COM$250 million should be seen as reducing, but not eliminating, the likelihood of scrutiny by competition authorities under Regulation 41(10). Additionally, where the target operates across both COMESA and EAC Member States, the deal architects must run the EACCA’s asset-and-turnover test alongside the COMESA digital-market test rather than in isolation. For that founder in Dar es Salaam, Lusaka or Nairobi, the competition architecture in the common markets under construction means that her deal will likely need reporting to at least one regulator, even if the regulator has not finished writing her rulebook. Need to say, unfinished business does not necessarily create a pathway for players to doubt the underlying policy goal; it is a reason to keep building the methodology, the safeguards and the nexus tests until the architecture matches the ambition. DISCLAIMER: This article does not constitute legal advice and should not be relied upon as such; it is intended to provide general information on the subject matter discussed only. Victory Attorneys & Consultants explicitly disclaims any responsibility for any loss or damage that may occur if this article is relied upon without first seeking professional legal advice from our legal experts. Individuals should consult qualified professionals for tailored legal guidance related to their specific circumstances. ABOUT US Victory Attorneys & Consultants is a leading law firm in Tanzania, based in Dar es Salaam. We actively support businesses, investors and organisations navigating complex transactions and regulatory environments. We advise on various areas including mergers and acquisitions, cross-border transactions, competition and regulatory matters, corporate and commercial transactions, investment and market entry. Our expertise also spans intellectual property, technology and data, real estate, entertainment, tax and finance, mining and natural resources, and dispute resolution. We are eager to work with local and international clients on transactions and investments across Tanzania, East Africa and wider African markets.