News

Asante fined Sh0.5m for illegal merger

Tuesday, February 18th, 2020 06:41 | By

Competition Authority of Kenya (CAK) has fined Asante Capital EPZ Ltd, an agro-forestry firm, Sh549,019 for engaging in an illegal merger with Moringa Entities contrary to Section 42(2) of the Competition Act.

The Act states: “No person, either individually or jointly or in concert with a person may implement a proposed merger to which this part applies unless the merger is approved by the Authority.”

Section 42(5) of the Act further says any person who contravenes the provisions of this section commits an offence and shall be liable on conviction to imprisonment for a term not exceeding five years or a fine not exceeding Sh10 million or both.

Annual turnover

However, the Act provides that any entity violating that section may be fined not more than 10 per cent of the preceding year’s gross annual turnover in Kenya of the undertaking or undertakings in question.

The competition watchdog said the parties first sought clarification for the acquisition of 44.2 per cent shareholding in Asante by Moringa Entities was subject to the Competition Act Part IV regulating mergers and acquisitions.

But since the proposed acquisition of 44.2 per cent shareholding by Moringa would not lead to control of shares in Asante, the first tranche of investment did not require prior approval as required by the Act.

In 2018, the same parties wrote again to CAK seeking approval to the third tranche of investment, saying the second  had already been actualised.

In response, the authority advised the parties that they were not notified when the second tranche transaction – which qualified as a merger within the meaning of Section 2 and 41 of the Act – thereby giving Moringa Entities’ a controlling stake in Asante took place.

It said the execution of the second transaction was contrary to the provisions of section 42(2) of the Act.

However, while imposing the penalties the authority took into account deterrence and proportionality of the infringement as guided by the Fining and Settlement Guidelines.

More on News


ADVERTISEMENT