The Competition Authority of Kenya (CAK) has fined Kenyan-based agroforestry firm that focusses on medicinal plants for merging with another company without seeking approval in line with the law.
CAK fined Asante Capital EPZ Limited a total of Sh549,019 for implementing a merger with two Moringa Entities (Moringa SCA and Moringa Mauritius Africa) without seeking approval as stipulated by the Competition Act.
Moringa first acquired a 44.2 percent shareholding in Asante in 2017 by making a first tranche of investment but this did not require CAK approval since it did not lead into acquisition of control.
However, the regulator says subsequent investments in Asante have resulted in a change of control and therefore the firm erred by not making a formal application for approval.
“Premised on the above, the Authority imposed a penalty of Sh549,019 on Asante Capital EPZ Limited Petroleum (K) Limited for contravening section 42(2) of the Act and ordered them to initiate steps to regularise the transaction,” said CAK in a statement on Monday.
“The Authority advised the parties that the second tranche of investment was a notifiable transaction. Moringa Entities’ stake in Asante had resulted in a change of control and therefore qualified as a merger within the meaning of Section 2 and 41 of the Act.”
Moringa has been investing Sh600 million ($6 million) in Asante in phases with the first tranche of Sh300 million.
Section 42(2) of the Competition Act 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.”
The Moringa entities are impact investment funds investing in agroforestry businesses in developing countries with the objective of scaling their social and environmental impact.
Asante, which is incorporated in Kenya in 2015, is an agroforestry company that partners with with rural communities in South Coast to grow eucalyptus trees, ginger and drumstick tree (moringa), which are medicinal. It also processes tress to veneer and makes briquettes.
Early this year, Basco Paints and Thika-based fruit juice processor, Del Monte, were slapped with antitrust fines totalling Sh21.5 million by the Competition watchdog for engaging in unfair trade practices.
Kenyan Business Feed is the top Kenyan Business Blog. We share news from Kenya and across the region. To contact us with any alert, please email us to [email protected]
