Regulatory Framework for M&A in Kenya

Mergers and acquisitions (M&A) in Kenya are regulated by the Competition Act No. 12 of 2010. The Competition Authority of Kenya (CAK) is the body mandated to oversee market conduct and ensure fair competition. Any merger or acquisition that meets certain thresholds must be approved by the CAK.

What Constitutes a Merger?

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. This includes:

• Purchase or Lease of Shares/Assets: Buying a controlling stake or significant assets of another company.
• Amalgamation: Two or more companies combining to form a new entity.
• Joint Ventures: Certain types of joint ventures that are full-function and perform all the functions of an autonomous economic entity.

Notification Thresholds

The CAK has set thresholds for notification based on the combined turnover or assets of the merging parties.

• Mandatory Notification: Mergers where the combined turnover/assets of the merging parties is above KES 1 Billion and the turnover/assets of the target undertaking is above KES 500 Million require mandatory notification and approval.
• Exclusion: Mergers falling below certain thresholds may apply for exclusion from notification.

Assessment Criteria

When reviewing a merger application, the CAK considers:

• Competition Impact: Whether the merger will substantially lessen competition in the relevant market.
• Public Interest: The impact on employment, the ability of SMEs to compete, and the ability of national industries to compete in international markets.

Larpei & Company Advocates provides strategic advice on structuring M&A deals, conducting due diligence, and navigating the regulatory approval process with the Competition Authority of Kenya.