Amstel Trading Company Ltd., which imports photocopy paper into the Kenyan market, is set to establish a paper converting facility in Kenya after the Competition Authority of Kenya (CAK) approved its joint venture with Kingsbourne Assets Limited (KAL).
- Kingsbourne is a company registered in the British Virgin Islands, but owns affiliate paper manufacturing plants in Indonesia – where Amstel sourced most of its imports from.
- The deal will enable Amstel to expand its production capacity across the East African market by reducing product delivery time, thus hastening the distribution of photocopy papers in the market.
- The venture between the two companies had to receive approval from CAK because they both own combined turnover or assets higher than KSh1 billion.
“The proposed transaction is unlikely to raise competition concern as its combined market share is low and the new entity will face competition from other players in the market who control 85% of the market,” CAK said in a statement. “The proposed transaction is unlikely to lead to a substantial lessening of competition in the market for printing and photocopying papers in Kenya.”
The Authority has also lauded the move as beneficial to the economy, citing that it will expand Kenya’s manufacturing capacity and provide additional jobs.
According to the 2023 KNBS Economic Survey, the value of imported paper into the Kenyan market stood at KSh49.3 billion. Kingsbourne owned a market share of 12.33% while Amstel’s share is at 2.7%.
Amstel and Kingsbourne’s joint venture qualified as a merger within the meaning of sections 2 and 41 of the Competition Act CAP 504. The Act stipulates that a merger, or takeover, may occur when undertaking directly or indirectly acquires control over another business within Kenya. This may happen through the purchase of shares or vertical integration.
Asian countries remain a crucial source for Kenya’s paper imports, which are sold to merchants such as International Paper & Board Supplies Ltd, The Paper House of Kenya Ltd, Transpaper Kenya, Tronik Kenya, Officemart Ltd, Plannettech, and Direct Office Technology.
“Joint Ventures typically spur economic growth as a result of increased productivity and access to new markets. This ensures enhanced availability of goods and services, in terms of prices and choice. However, if joint ventures s are not clearly delineated, they may reduce competition among the firms in the alliance, including through sharing of market-sensitive information,” CAK said.
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