The Competition Authority of Kenya has fined Asante Capital EPZ limited KSh549,019 for implementing a merger agreement with Moringa Entities without getting approval from the government entity.
The Competition Act No.12 of 2010 section 42 states that, “No person, either individually or jointly or in concert with any person, may implement a proposed merger to which this part applies unless this merger is approved by the Authority.”
Asante Capital, an agroforestry company based in Kwale county sought clarification from the Authority in 2017 if the acquisition of 44.2% ownership of Asante by Mauritian Moringa Entities was subject to the laws regulating mergers and acquisitions.
CAK advised the two companies that the purchase of Asante Capital by Moringa Entities did not require prior authorization as it did not constitute acquisition of a controlling stake in the company.
In 2018, the two companies wrote to the Competition Authority of Kenya seeking approval for a third transaction. CAK learnt that Moringa entities, without authorization from the authority, had purchased additional ownership in Asante Capital which qualified as a merger.
Due to the second unauthorised transaction, CAK has fined Asante Capital KSh594,091. The authority considered that the two companies reported the issue to the authority and that they were willing to settle the matter administratively.
Asante Capital is involved in growing ginger, eucalyptus, and drumstick trees in Kwale county. On the other hand, Moringa Entities is an impact investor fund based in Mauritius keen on Agro-forestry projects in developing countries.
It is not the first time CAK has penalized companies for unauthorized merger transactions. In 2019, the competition authority penalized Moringa School half a million shillings for conducting a merger without the authority’s approval.