ASSESSMENT OF MERGERS

MAY 2023

GIDEON K. SANG

Vision: "A Kenyan economy with globally efficient markets and enhanced consumer welfare for shared Prosperity"
❑ Introduction
❑ Merger Thresholds and Filing Fees

❑ Merger Assessment and Determination

❑ Regional Mergers
❑ Merger Abandonment and Withdrawal

❑ Advisory Opinions and Premerger Notification Meetings

❑ Mergers Implemented Without Approval

"A Kenyan economy with globally efficient markets and enhanced consumer welfare for shared Prosperity"
➢ Competition Act No. 12 of 2010 (the Act) – Part IV

➢ Competition (General) Rules, 2019

➢ Consolidated Merger Guidelines

➢ Joint Venture Guidelines

➢ Guidelines for Market Definition

➢ Competition Administrative Penalties and Settlement Guidelines

"A Kenyan economy with globally efficient markets and enhanced consumer welfare for shared Prosperity"
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➢ A merger occurs when one or more undertakings directly or
indirectly acquire or establish direct or indirect control over the
whole or part of the business of another undertaking.

➢ Merger is defined under Section

41 of the Act

Vision: "A Kenyan economy with globally efficient markets and enhanced consumer welfare for shared Prosperity"

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Joint Ventures: Acquisition of: > 50%

Full function JV Assets Shares

Controlling
interest

Majority votes

Majority board
appointment
rights

Material influence

Vision: "A Kenyan economy with globally efficient markets and

enhanced consumer welfare for shared Prosperity" 5
Horizontal Mergers

Vertical Mergers

Conglomerate Mergers

Vision: "A Kenyan economy with globally efficient markets and

enhanced consumer welfare for shared Prosperity" 6
 Identifying
notifiable
transactions

Principles
for turnover
calculations

Eliminate double
notifications
(COMESA)

Vision: "A Kenyan economy with globally efficient markets and enhanced consumer welfare for shared Prosperity"

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Threshold (combined Value of Applicable Filing Nature of Notification and Approval
Assets/turnover) (Kes) Fees (Kes)
0-500,000,000 0 Excluded from any form of notification.

500.000.001 – 1,000,000,000 0 Excluded upon notification

1,000,000,001 – 10,000,000,000 with the 1,000,000 Notified in a prescribed manner

target’s turnover/assets above
500,000,000
10,000,000,001 – 50,000,000,000 with 2,000,000 Notified in a prescribed manner
the target’s turnover/assets above
500,000,000

Over 50B with the target’s 4,000,000 Notified in a prescribed manner

turnover/assets above 500,000,000

Acquirer’s turnover is over 10B, target An application Notified in a prescribed manner

and acquirer are in the same line of based on the three
business or are vertically integrated. immediate bands
The turnover does not meet COMESA above
thresholds

Vision: "A Kenyan economy with globally efficient markets and enhanced consumer welfare for shared prosperity" 8
➢ Turnover generated in Kenya includes imports and excludes exports
and sales within a group of companies.
➢ For the acquirer, in case of a group of companies, it is the group
turnover.

Vision: "A Kenyan economy with globally efficient markets and enhanced consumer welfare for shared Prosperity"

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Vision: "A Kenyan economy with globally efficient markets and enhanced consumer welfare for shared Prosperity"
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➢ The Authority applies the Substantial Lessening of Competition
(SLC) criteria and the Public Interest Tests (PIT) in making
determinations on mergers.
➢ This is as provided for by the law.

Vision: "A Kenyan economy with globally efficient markets and enhanced consumer welfare for shared Prosperity"

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Market Definition (product and geographic)

Market Concentration

Possible Unilateral and Coordinated Effects

Possible Foreclosure and Coordinated Effects

Entry (likely, timely, sufficient)

Countervailing Power (supplier and buyer power)

Barriers to Entry (strategic, natural, regulatory)

Failing Undertakings

Vision: "A Kenyan economy with globally efficient markets and enhanced consumer welfare for shared Prosperity"

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Vision: "A Kenyan economy with globally efficient markets and enhanced consumer welfare for shared Prosperity"

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Structural Remedies

Vision: "A Kenyan economy with globally efficient markets and enhanced consumer welfare for shared Prosperity"

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➢ Compliance checks within 1 year

➢ Revocation of approval (s47)

❑ Misleading/ materially incorrect information

❑ Non-compliance with material conditions

Vision: "A Kenyan economy with globally efficient markets and enhanced consumer welfare for shared Prosperity" 15
➢ Crosscutting transactions where the target has a physical of product
presence in more than one country in Africa including Kenya.

Vision: "A Kenyan economy with globally efficient markets and enhanced
consumer welfare for shared Prosperity"
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➢ The East Africa Community Competition Authority (EACCA)

➢ The COMESA Competition Commission (CCC) oversees

competition and consumer protection in all the 21 member
states.

"A Kenyan economy with globally efficient markets

and enhanced consumer welfare for shared Prosperity" 17
➢ Mergers are said to meet CCC thresholds where two thirds of the
combined turnover or assets of the merging parties is not
generated within Kenya.
➢ Inform CAK within 14 days.

➢ Eliminate double notifications from 2019

"A Kenyan economy with globally efficient markets

and enhanced consumer welfare for shared Prosperity" 18
➢ Instances of occasioning abandonment
❑ Failure by the parties to the proposed merger to respond to
request for additional information by the Authority within
21 days.

❑ A party withdraws from a notified merger and informs the

Authority in writing
➢ No refund of merger filing fees.

"A Kenyan economy with globally efficient markets

and enhanced consumer welfare for shared Prosperity" 19
➢ The Authority offers advisory opinions to stakeholders to

provide clarity on the application of the of the Competition Act

or the Competition General Rules and the Guidelines.

➢ These opinions are offered free of charge.

"A Kenyan economy with globally efficient markets

and enhanced consumer welfare for shared Prosperity" 20
MIWA if:

>20% consideration is paid

exchange of strategic information between the merging parties

other than for valuation or due diligence purposes

actual integration of any aspect of the merging parties

Acquirer influences or controls any competitive aspect of the

target’s business

"A Kenyan economy with globally efficient markets and enhanced consumer welfare for shared Prosperity"
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"A Kenyan economy with globally efficient markets and enhanced consumer welfare for shared Prosperity"
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"A Kenyan economy with globally efficient markets and enhanced consumer welfare for shared Prosperity"
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