Tuskys Supermarkets has obtained a court order allowing it to re-open two branches it acquired from rival Ukwala, marking a preliminary victory in its petition to overturn a ruling by the competition watchdog that stopped its bid to take over six branches of the retail chain.
The two former Ukwala branches on Tom Mboya and Ronald Ngala streets in Nairobi, which had already been rebranded in Tuskys colours, have remained shut since the Competition Authority of Kenya (CAK) issued the order on July 30 stopping the transaction.
The order by Justice George Odunga also restrained the watchdog from taking any steps against the two outlets until the case is heard and determined.
“The respondents (CAK) are hereby stopped from effecting the closure of the applicants (Tuskys) branches or instituting any proceedings arising from the failure to close the same pending the hearing and determination of the substantive motion or until further orders of this court,” states the order issued on Tuesday.
Tuskys and Ukwala supermarkets have been given 10 days to file a motion seeking to overturn CAK’s ruling.
The competition watchdog has also been ordered to refund a Sh5.3 million fine imposed on Tuskys and Ukwala for having initiated the acquisition process without seeking the regulator’s clearance.
The agency ruled that Tuskys’ acquisition of Ukwala branches in Nairobi’s central business district would have seen it attain a dominant market position to the detriment of consumers.
“An order is hereby issued directing the respondent (CAK) to pay back and refund the sum of Sh5.3 million,” ruled Justice Odunga sitting at the High Court in Nairobi.
Tuskys had applied to CAK for approval of an intended buyout of six Ukwala stores in Nairobi, but the competition watchdog declined to sanction the deal.
The authority maintained that an unconditional buyout of the outlets would reduce competition in Nairobi’s retail sector, ultimately limiting choice and negatively impacting on both consumers and suppliers.
The retailer was also ordered to reverse the acquisition of the two outlets that it had already acquired without the regulator’s approval, or risk criminal prosecution. The watchdog, however, allowed Tuskys to acquire Ukwala’s Jogoo Road branch, which it has since rebranded and taken control of.
“They (Tuskys and Ukwala) should be advised that they will be in violation of the relevant provision of the Competition Act if they continue with the arrangement between themselves in respect to Ukwala branches other than the Jogoo Road branch,” CAK warned in its notice.
Through lawyer Taib Ali Taib, the applicants are also seeking an order to compel CAK, to delete, cancel and or remove any and all entries in their records that may in any way adversely affect or prejudice their rights and interests, especially in respect to the acquisition and sale of any of the business and or assets of the six supermarkets.
Tuskys and Ukwala argue that 575 employees of the two supermarkets will lose their jobs due to CAK’s “erroneous, illegal and unlawful decision which was not only arbitrary, but was based on false evidence and or assumptions and made outside the ambit of and the jurisdiction provided by the law”.
The case will be mentioned on October 14.