Tuskys given 14 days to defend Ukwala takeover bid

The competition regulator has given Tuskys and Ukwala supermarkets 14 days to respond to a letter questioning their apparent violation of an order stopping a take-over deal between the two retailers.

The letter sent by the Competition Authority of Kenya (CAK) to the two retailers on Monday last week means the management of the supermarket chains have until Thursday next week to file their responses.

CAK ordered the two retail chains to reverse an intended take-over of three Ukwala stores by Tuskys since the transaction had been initiated without the regulator’s authorisation.

“We wrote a letter to them on 7th of July as a follow-up to the settlement reminding them of their obligation that they are yet to fulfil and the consequences of their continued conduct” said CAK in a statement.

The retailers had until July 1 to reverse the deal. The competition agency says it has still not heard from both retailers. If they do not respond by the end of next week, the directors could face criminal proceedings.

“They (Ukwala and Tuskys) have a joint advocate to whom the letter was addressed and was also copied both parties. They have 14 working days to send their reply meaning they still have some time left,” said CAK.

Several attempts by the Business Daily to get in touch with the management of both Tuskys and Ukwala to comment on the matter were unsuccessful.

READ: CAK seeks Tobiko’s help to prosecute Tuskys, Ukwala

Tuskys, the second largest retail chain in Kenya, is a family-owned empire which is currently run by five brothers – all of whom are directors of the company led by Stephen Kamau, the managing director.

Tuskys’ problems with the CAK began in April 2013 when it acquired three Ukwala branches – Ronald Ngala, Jogoo Road and Tom Mboya – for Sh200 million without seeking regulatory approval. In June this year, CAK fined the two retailers Sh5.3 million for participating in what the authority termed as restrictive business practices.

Upon paying the fine, the watchdog gave Tuskys until the beginning of this month to revert the stores to their former owner. Tuskys was also expected to take down their signage on the stores and revert the receipting systems to Ukwala.

Wang’ombe Kariuki, the CAK director general, said that they would seek the Director of Public Prosecution’s help in pursuing the cases after they collect evidence of the “ongoing” infringement.

“By continuing to operate under the Tuskys brand, the infraction we had fined them for is still ongoing,” said Mr Kariuki in an earlier interview with the Business Daily.

“As an authority, we cannot enforce criminal charges on the management. However, we will in a few days conduct investigations and then forward all the evidence to the DPP’s office.”

If Tuskys and Ukwala fail to respond to the CAK on time, the authority would thereafter invite the directors of the two businesses for a hearing conference where they will be asked to explain their actions.