The Competition Authority of Kenya (CAK) has approved the unconditional acquisition of the entire issued share capital of Kenya Bottling Company Limited by Mauritius-based Crown Beverages Limited.
In a Gazette Notice on Friday, the competition watchdog said the approval had been granted based on the finding that the transaction was unlikely to negatively impact competition in the non-alcoholic ready-to-drink beverages, nor elicit negative public interest concerns, the two key considerations during a merger analysis.
Crown Beverages is an undertaking incorporated and registered in Mauritius and does not have subsidiaries or market presence in Kenya.
It is however affiliated with PepsiCo, a Ugandan entity involved in the bottling of carbonated drinks.
Kenya Bottling Company, on the other hand, is a locally incorporated undertaking that operates a bottling plant in Nairobi as an independent bottler for PepsiCo products within Kenya.
“The transaction qualifies as a merger within the meaning of Section two and 41 of the Competition Act No. 12 of 2010 which stipulates that a merger, or takeover, may occur when an undertaking directly or indirectly acquires control over another business within Kenya. This may happen through, among others, purchase/lease of shares, exchange of shares or vertical integration,” stated CAK.
Merging parties whose combined turnover or assets, whichever is higher, is over Sh1 billion are required to seek approval from the Authority prior to implementing intended transactions. The non-alcoholic beverages market in Kenya is characterised by a mix of multinational corporations and local companies and is diverse, with various products catering to different consumer preferences.
Coca-Cola is the leading player dealing with carbonated drinks with a 93.9 percent market share, followed by Highlands (3.6 percent) and then Pepsi (1.5 percent).
CAK said one criteria of assessing a merger’s impact on competition is the post-merger market share of the undertakings involved in the transaction.
“With regard to the proposed merger, the post-merger market share in the market for non-alcoholic ready-to-drink beverages will not change since the acquirer has no market presence in Kenya,” noted the Authority.
Other public interest factors considered include the impact on employment opportunities, impact on competitiveness of SMEs, impact on particular industries as well as impact on the ability to compete in international markets.
“As per the parties’ submissions, this transaction will not elicit negative public interest concerns. Specifically, there will be no employment loss and all the current 27 employees of the target will be retained,” stated CAK.
