TerraLex Cross-Border Guide to Pre-Merger Notification Guide

Yes. The Competition Act No. 12 of 2010 (the Act) requires that where a merger is proposed, except where the merger is excluded from the provisions of Part IV of the Act pursuant to section 42 (1), each of the undertakings involved shall notify the Competition Authority (the Authority) of the proposal in writing or in the prescribed manner. No person may implement a proposed merger which is not excluded pursuant to section 42 (1), unless the proposed merger is approved by the Authority and implemented in accordance with any conditions attached to the approval.

No. At the moment, all mergers are notifiable unless excluded pursuant to section 42 (1) of the Act. See response to question 4 for further details of which mergers qualify to be excluded.

The Act defines a ‘merger’ as an acquisition of shares, business, or other assets, whether inside or outside Kenya, resulting in the change of control of a business, part of a business or an asset of a business in Kenya in any manner and includes a takeover. Further, the Act provides a non-exhaustive list of ways a merger may be achieved including:

• the purchase or lease of shares, acquisition of an interest or purchase of assets of the other undertaking in question;
• the acquisition of a controlling interest in a section of the business of an undertaking capable of itself being operated independently whether or not the business in question is carried on by a company;
• the acquisition of an undertaking under receivership by another undertaking either situated inside or outside Kenya;
• acquiring by whatever means the controlling interest in a foreign undertaking that has a controlling interest in a subsidiary in Kenya;
• in the case of a conglomerate undertaking, acquiring the controlling interest, of another undertaking or a section of the undertaking being acquired capable of being operated independently;
• vertical integration;
• exchange of shares between or among undertakings which result in substantial change in ownership structure through whatever strategy or means adopted by the concerned undertakings; or
• amalgamation, takeover or any other combination with the other undertaking.

Section 42 (1) of the Act provides that the Authority may by notice in the Gazette, set the threshold for any merger excluded from the provisions of Part IV of the Act. This was effected through the Competition (General) Rules 2019 (the Rules). The Rules contain the Merger Threshold Guidelines (the Guidelines) that serve to identify notifiable transactions and transactions that qualify for exclusion. The Guidelines state that mergers that meet the following thresholds must be notified to the Authority:

• Where the undertakings have a minimum combined turnover or assets (whichever is higher) of one billion shillings and the turnover or assets (whichever is higher) of the target undertaking is above five hundred million Kenya Shillings;
• Where the turnover or assets (whichever is higher) of the acquiring undertaking is above ten billion shillings and the merging parties are in the same market or can be vertically integrated, unless the transaction meets the COMESA Competition Commission Merger Notification Thresholds;
• In the carbon-based mineral sector, if the value of the reserves, the rights, and the associated assets to be held as a result of the merger exceeds ten billion Kenya Shillings;
• Where the undertakings operate in the COMESA, their combined turnover or assets (whichever is higher) does not exceed five hundred million Kenya Shillings and two-thirds or more of their turnover or assets (whichever is higher) is generated or located in Kenya.

The following transactions are excluded from notification:

• Where the combined turnover or assets (whichever is higher) of the merging parties does not exceed five hundred million Kenya Shillings; or
• Where the merger meets the COMESA (the Common Market for Eastern and Southern Africa) Competition Commission Merger Notification threshold and at least two-thirds of the turnover or assets (whichever is higher) is not generated in Kenya.

The Guidelines also provide that the following transactions may be considered for exclusion from notification (upon application to the Authority):

• Where the combined turnover or assets (whichever is higher) of the merging parties is between five hundred million Kenya Shillings and one billion Kenya Shillings;

If the firms are engaged in prospecting in the carbon-based mineral sector, irrespective of asset value.

The Rules also provide that a merger shall not be subject to notification if it is taking place wholly or entirely outside of Kenya and has no local connection.

The Rules provide that a joint venture that is not full function shall not qualify as a merger. A ‘full-function joint venture’ is defined a joint venture which must perform for a period of ten years or more and carries on all the functions of an autonomous economic entity.

The Act has extra-territorial application to conduct by: - a citizen of Kenya or a person ordinarily resident in Kenya;

• a body corporate incorporated in Kenya or carrying on business in Kenya;
• any person in relation to the supply or acquisition of goods or services by that person into or within Kenya; or
• any person in relation to the acquisition of shares or other assets outside Kenya resulting in the change of control of a business, part of a business or an asset of a business, in Kenya.

However please also see the response to question 4 regarding exclusion from mandatory notification of a transaction taking place wholly or entirely outside of Kenya and having no local connection.

The Rules provide for Form III, the Merger Notification Form (the Notification Form) Undertakings applying for exclusion from the provisions of Part IV of the Act and the Guidelines are required to complete and file Part I (questions 1 to 26) and Part IV of the Notification Form together with the requested documentation.

Mergers which are at or above the prescribed thresholds and where the undertakings do not operate in the same line of business and/ or where no vertical relationship exists between the parties require the undertakings to complete and file Part I and Part IV of the Notification Form together with the requested documentation.

Mergers which are at or above the prescribed thresholds and where the merging parties operate in the same line of business, or where there are vertical relationships between the parties require the undertakings to complete and file Parts I, II and IV of the Notification Form together with the requested documentation.

Mergers at or above the prescribed thresholds and where the merging parties operate in the same line of business, or where there are vertical relationships existing between the parties; or there is a high likelihood that the combined market share of merging parties falls above 35% in one or more markets or one or more of the parties are dominant in at least one market require the undertakings to complete and file Schedules I, II, III and IV of the Notification Form together with the requested documentation.

The Authority is not restricted to the questions and responses in the Notification Form. Where the information provided by either of the undertakings is not sufficient for the purposes of determining a proposed merger, the Authority may within 30 days of receiving the notification request further information from the undertakings concerned.

Further, the Notification Form provides for all or some of the following documents to be filed together with the duly completed Notification Form: (this will depend on which Parts of the Notification Form apply to the merger)

• a signed copy of the sale and purchase agreement;
• duly signed audited financial statements for the last three years;
• the latest annual reports;
• board resolutions and related documents regarding the merger;
• copies of certificates of incorporation/ registration certificates and similar documents including other shareholder companies where there is chain ownership;
• breakdown of employees and plans to realise cost savings, efficiencies and plans documenting investment evaluations;
• documents prepared for the Board of Directors of regulatory bodies in relation to the transaction;
• reports, surveys, analysis, or other documents assessing the transaction with respect to its impact on competition;
• latest business plans, marketing plans, sales report and strategic plans including for relevant subsidiaries and divisions;
• periodic (such as monthly and quarterly) review of sales and market trends including by consumer category and by different geographic areas for the last three (3) years; and
• pricing schedules including terms of discounts and rebates offered.
• The amount of time taken to compile the information shall be dependent on the nature of the proposed merger transaction.

There are no specific ways to minimize the required information filing.

A complete Merger Notification to the Authority consists of duly filled Notification Forms with the accompanying documents and proof of remittance of the fees. The filing fees are based on the combined turnover or assets of the merging parties as follows:

• Nil where the combined value of turnover or assets of the undertakings is between 0 and 500,000,000 Kenya Shillings;
• Nil where the combined value of turnover or assets of the undertakings is between 500,000,001 and 1,000,000,000 Kenya Shillings; and
• One million Kenya Shillings where the combined value of turnover or assets of the undertakings is between 1,000,000,001 Kenya Shillings and 10 billion Kenya Shillings.
• Two million Kenya Shillings where the combined value of turnover or assets of the undertakings is between 10,000,000,001 and 50 billion Kenya Shillings;
• Four million Kenya Shillings where the combined value of turnover or assets of the undertakings is above fifty billion Kenya Shillings.

Implementation of a proposed merger is subject to the Authority’s approval. As a signed copy of the Sale & Purchase Agreement is to be submitted with the Notification Form, the notification should be filed no earlier than the date of the agreement’s execution.

Proposed merger transactions can only proceed after the Authority’s approval which is given within the provided statutory time periods. See the response to question 12.

Under the Act, the Authority is required to make a determination: - within 60 days of the date it receives the Merger Notification;

• if it has requested for further information, within 60 days of the date of receiving such information; or
• if it has convened a hearing conference, within 30 days of the date of conclusion of the conference.

Moreover, if the Authority is of the view that a transaction is complex, it may extend the determination period by an additional 60 days, before the expiry of any of the previous determination periods, by providing written notice to the undertakings involved.

If an undertaking has applied for exclusion of a proposed merger under the Rules, the Authority is required to respond to the application within 14 days.

Implementation of a merger transaction without notifying the Authority is prohibited. A merger carried out in the absence of an authorizing order by the Authority shall have no legal effect and no obligation imposed on the participating parties by any agreement in respect of the merger shall be enforceable in legal proceedings.

In addition, any person who contravenes this prohibition commits an offence and shall be liable, on conviction, to imprisonment for a term not exceeding five years or to a fine not exceeding 10,000,000 Kenya Shillings or both. Further, the Authority may impose a financial penalty in an amount not exceeding 10 percent of the preceding year’s gross annual turnover in Kenya of the undertaking or undertakings in question.

There is no applicable statutory waiting period. No merger may be completed before approval is granted. See the response at question 18 regarding when the Authority may revoke a decision.

The parties’ adherence to the approval conditions imposed by the Authority as well as general statutory compliance should prevent the occurrence of any post-closing challenges.

The Competition Authority is a body corporate established by the Competition Act No. 12 of 2010. The Authority has power to: 1. approve and revoke its decisions in merger proposals; 2. investigate and decide on, on its own initiative, any conduct that may allegedly constitute an infringement of prohibitions on restrictive trade practices or prohibitions relating to abuse of dominance; 3. declare conduct which is the subject matter of the Authority’s investigation as constituting an infringement of the prohibitions from restrictive trade practices under the Act; 4. restrain undertakings from engaging in anti-competitive conduct; 5. direct undertakings to remedy or reverse conduct that infringes prohibitions from restrictive trade practices under the Act; 6. impose a financial penalty of up to ten percent of ten immediately preceding year’s gross annual turnover in Kenya of the undertaking in question; 7. direct an undertaking to stop and desist from engaging in anti-competitive conduct until an ongoing investigation is concluded; and 8. grant such relief as it may consider appropriate.

The Act allows any person submitting information or documentation to make a claim for confidentiality in respect of that information or documentation. A prescribed Confidentiality Claim Form is provided by the Rules. Upon receiving this claim, the Authority evaluates the request and notifies the claimant of its decision. Where the Authority refuses to grant confidentiality, any information submitted is treated as confidential for 14 days after giving notice of such refusal. A submitting party may then withdraw any information submitted to the Authority within these 14 days. A person aggrieved by the decision of the Authority in such request for confidentiality may appeal to the Competition Tribunal.

Any person who discloses, confidential information otherwise than as authorised by the Act, commits an offence.

The Authority has the power to revoke a decision approving the implementation of a proposed merger if the decision was based on materially incorrect or misleading information for which a party to the merger is responsible or if any condition attached to the approval of the merger material to the implementation is not complied with. This shall be through a written notice to any undertaking involved in the merger and every other person likely to have an interest in the matter in the opinion of the Authority. The notified persons shall be invited to submit any representation they wish to make regarding the proposed revocation within thirty days of the receipt of the notice from the Authority.

To avoid the risk of revocation or further information requests by the Authority, it is recommended that parties provide accurate, detailed, and complete information with their notification. Parties may also seek an advisory opinion from the Authority using pre-notification enquiries to allow the Authority to formulate an opinion based on the proposed transaction’s set of facts.

Various sectors including the aviation, construction, engineering, land ownership, legal, private security, public procurement & asset disposal, shipping, banking, mining, insurance, and telecommunications sectors have specific regulations that limit the degree to which non-Kenyan persons can own undertakings in Kenya and/or limits on the shareholding of a single person. The capital markets sector also has its own rules governing the take-over procedure of listed companies. Mergers involving these sectors are subject to the approval of relevant regulatory authorities as well as clearance from the Authority.

COMESA Competition Regime: Regionally, the Common Market for Eastern and Southern Africa (COMESA), of which Kenya is a member, has rules in place which a proposed merger transaction in the Common Market will be subject to provided it meets the regional dimension test and financial threshold.

The COMESA Competition Regulations provide that a merger meets the regional dimension test if both the acquiring undertaking and the target undertaking or either of them operate in two or more COMESA member states. The COMESA Common Market comprises the following Member States: Burundi, Comoros, the Democratic Republic of Congo, Djibouti, Egypt, Eritrea, Ethiopia, Kenya, Kingdom of eSwatini, Libya, Madagascar, Malawi, Mauritius, Rwanda, Seychelles, Somalia, Sudan, Tunisia, Uganda, Zambia and Zimbabwe.

A merger is notifiable to the COMESA Competition Commission if both the acquiring firm and the target firm, or either of the acquiring firm or the target firm, operate in two or more Member States and the merger satisfies the following two-stage test:

1.The combined annual turnover or value of assets (whichever is higher) of all parties to a merger in the Common Market equals or exceeds USD 50 million; and

2.The annual turnover or value of assets, whichever is higher, in the Common Market of each of at least two of the parties to a merger is at least USD 10 million.

Even if these thresholds are met, a filing will not be required if each of the parties to a transaction achieves at least two-thirds of its aggregate turnover or assets in COMESA within one and the same Member State.

EAC Competition Regime: Kenya is also a Partner State of the East African Community (EAC). Under the East African Community Competition Act, 2006 and its Regulations, with effect from 1st November 2025 proposed mergers or acquisitions that involve undertakings with operations in two or more Partner States shall be notifiable to the East African Competition Authority provided they satisfiy the following criteria:

1. The combined turnover or assets in the Community of the merging undertakings, whichever is higher, equals to or exceeds USD 35 million; and

2. At least two undertakings to the merger or acquisition have a combined turnover or assets of USD 20 million in the Community, unless each of the parties to a merger achieves at least two-thirds of its aggregate turnover or assets in the Community within one and the same Partner State.

The Partner States of the EAC are Burundi, Democratic Republic of the Congo, the Federal Republic of Somalia, Kenya, Rwanda, South Sudan, Uganda and Tanzania.

The merger shall not come into effect before notification to the EAC Competition Authority and without the approval of the Authority.