Outlining the main trends in Kenyan competition law, Anne Kiunuhe noted the increased enforcement of merger control rules in Kenya and the region. She said that the Kenyan regulator had stepped up investigations and penalisation of past transactions that should have had prior approval by the competition authority, but where such approval had not been sought.
While many investors may have genuinely believed their deals did not require approval, or were unaware that the law applied to them, she noted, it was possible that certain old transactions might not have been compliant.
“That means investors are sometimes caught on the back foot when they are seeking an approval in relation to a live transaction.
“This happens if the transaction is based on data they provide to the authority, which then realises there was a (related) transaction undertaken say five years ago and that should have been approved by them but wasn't.”
When such investors or companies seek to be in good standing with the law, by voluntarily disclosing these transactions and so regularising them, the process of settling such matters with the authority and obtaining merger clearance post-the-fact, could be punitive and lengthy, she warned.
Despite mitigating circumstances, which should otherwise reduce the penalties, businesses could face a fine of up to 10% of their combined annual turnover in Kenya, which could be “quite significant” depending on their size. They were also likely to be subjected to negative publicity for not previously having complied with the antitrust laws.
“That does not do much to encourage parties to voluntarily try and settle matters with the competition authority and to regularise their matters.”
On the plus side, Kiunuhe noted that merger thresholds in Kenya had been reviewed recently, and more guidelines issued to provide clarity on what constituted a notifiable change of control.
The result was that smaller transactions no longer needed to be reported. This reduced the administrative burden and associated costs of compliance with Kenyan law. In cases where the guidelines or thresholds were unclear, Kiunuhe said ALN Kenya could obtain, as lawyers, written confirmations from the authority on some of those matters.
In such cases, greater clarification from Kenya’s regulators would be more productive, “so that all parties are then clear on the application of the thresholds and the guidelines to them before proceeding with their transactions”.
Similarly, Geoffrey Dimoso, partner at ALN Tanzania | A&K Tanzania, said: “Tanzania has put in place a sound legal and institutional framework for the implementation and development of competition law and policy which has also incorporated international best practices and standards.”
With a range of legislative tools, including the Fair Competition Act 2003, the law was supported by the Fair Competition Commission (FCC) and the Fair Competition Tribunal (FCT), which had been mandated to enforce competition laws.
Tanzania’s laws were stable, although, he said, “the FCC has taken a broader approach when enforcing competition laws”, much as Kenya’s competition authority had.
Most recently, in July 2020, Tanzania had reviewed the guidelines under which financial penalties for breach of the legislation were calculated, with existing regulations, issued in 2018, still in force. It was also worth noting that currently Tanzania was working with other East African Community (EAC) members to operationalise the Regional Competition Laws.
Zambia’s competition legislation, the Competition and Consumer Protection Act 2010, had been in force for more than a decade, noted Chanda Musonda Chiluba, partner at ALN Zambia |Musa Dudhia & Co.
The country’s regulator, the Competition and Consumer Protection Commission (CCPC), was similarly active, with Chiluba saying it was “actively engaged in regulating the competition landscape in Zambia”.
Regional considerations were also important. As well as national regulation, Kenyan clients might be subject to COMESA requirements which, Kiunuhe noted, until recently, meant dual filing.
“Previously, rather than just providing a one-stop-shop, often multiple filings were needed with regulators across that common market.”
However, since the recent amendments, filing merger control applications with the regional trade body now meant approval from the Kenyan competition authority followed as well, preventing the need to file directly with the Kenyan regulator.
While reforms meant that only one set of approvals were now needed, reducing the costs of dual filings and approvals, such changes had taken time. Such harmonisation only applied to merger control, with behavioural market conduct – cartels, restrictive trade practices and the like – remaining the work of both regional and national regulators, which still entailed duplication.
There was, Kiunuhe said, increasing collaboration between regulators across Africa with memorandums of understanding having been signed between Kenya and South Africa, for example. Also, an informal network of African competition regulators maintained an open dialogue, as they did with the International Competition Network, the umbrella group for antitrust authorities.
While such bodies were aimed in the right direction - in promoting competition law and compliance in a coordinated manner across jurisdictions - they “should seek to more actively engage with lawyers and businesses, particularly in Africa, to boost collaboration with the relevant stakeholders who are impacted by the regulators’ actions”.
ALN is an alliance of leading corporate law firms currently in fifteen key African jurisdictions, including the continent’s gateway economies.
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