Background

Section 42 (2) of the Competition Act, No. 12 of 2010 (the “Act”) requires parties to an acquisition transaction to seek the approval of the Competition Authority of Kenya (“CAK”) prior to implementing a transaction which would result in a change of control of an undertaking or business.

Under Section 78(3) of the Act, CAK is empowered to make rules prescribing filing fees and other fees to be paid by persons in connection with its procedures.

Introduction of Merger Filing Fees

In furtherance of the above provisions, the CAK has, through Kenya Gazette Notice No. 4567 (published on 4th July 2014), introduced filing fees for proposed mergers as follows:

Threshold (Ksh.)              Fees per proposed merger (Ksh.)

5 Million – 1 Billion                 500,000.00
1Billion – 50 Billion                 1,000,000.00
50 Billion and above               2,000,000.00

The above filing fees will take effect from 1st August 2014. Accordingly, all applications for approval of mergers (which fall within the above thresholds) filed after 1st August 2014 shall require proof of payment of the applicable fees.

Comment

We have noted that the Gazette Notice is unclear on whether the prescribed thresholds relate to assets or turnover and, in either case, whether it is the combined total of the merging entities in Kenya or otherwise. We consulted the Mergers and Acquisition Division of the CAK which indicated that the applicable threshold for purposes of the merger filing fees is the combined turnover or assets of the merging entities in Kenya whichever is higher, based on the audited accounts of the relevant entities for the preceding year.