The Competition Authority of Kenya (“CAK”) has proposed new thresholds for merger notification as provided under section 42 (1) of the Competition Act, No. 12 of 2010. The guidelines named the Merger Threshold Rules, 2018 (“the Rules”) are currently awaiting approval by Parliament before taking effect.

The Rules seek to change the current practice in Kenya and bring it in line with international best practice whereby competition authorities only have authority over mergers that have a substantial effect on competition in the relevant jurisdiction. At the moment, all mergers in Kenya, irrespective of their value, are notifiable. Therefore, any merger carried out without an approval of CAK, has no legal effect.

The Rules propose the following changes:

1. Mergers exempt from notification

A merger notification shall no longer be required for merger transaction whose combined turnover/assets (whichever is higher) is less than Kshs. 500 million (approximately US$ 5 million). In other words, such mergers may be concluded without reference to CAK.

2. Mergers to be considered for exclusion

Merger transactions between undertakings which have a combined annual turnover/asset value of between Kshs. 500 million and Kshs. 1 billion (approximately between US$ 5 million and 10 million) may be considered for exclusion. The parties to the merger will still need to notify CAK of their merger and CAK will have 14 days to issue its decision.

3. Full mergers subject to notification

It is mandatory to notify CAK where the merger involves undertakings which have a minimum combined turnover/assets (whichever is higher) of Kshs. 1 billion (approximately US$ 10 million) and the turnover or assets (whichever is higher) of the target undertaking is above Kshs. 500 million (approximately US$ 5 million).

Further, any proposed merger where the value of turnover/assets (whichever is higher) of the acquirer is above Kshs. 10 billion (approximately US$ 100 million) and the merging parties are in the same market(s) and/or can be vertically integrated is also notifiable to CAK.

4. Double notification at the national and regional level

The Rules do away with the need to notify both CAK and the COMESA Competition Commission (“CCC”) of mergers unless those mergers have a direct competition implication in Kenya. For mergers to be notifiable to both CAK and CCC, the transaction must meet the threshold set in 3 above and in addition, two thirds (2/3) or more of the turnover or assets (whichever is higher) must be generated or located in Kenya.

As per the Rules, mergers which meet the COMESA Merger Notification Threshold and two thirds (2/3) or more of their turnover or assets (whichever is higher), relevant in the COMESA common market is not generated or located in Kenya shall be exempted from notification to CAK.

However, the Rules are silent concerning the notification of mergers that affect the East African Community (EAC). In April 2018, the East African Community Competition Authority (EACCA) became operative. EACCA’s mandate includes investigating competition law matters that have a regional (EAC) dimension. It remains to be seen how such mergers shall be treated following the passing of the Rules.

5. Fees

The Rules also provide for changes in the notification fees as below.

Current fees

 Proposed fees

 The Rules are available here.

Please contact us at Info@cfllegal.com should you require further information.