A deal that makes complete commercial sense can still be unlawful to complete without regulatory clearance. Under the Competition Act, 2010, mergers and acquisitions above certain thresholds must be notified to the Competition Authority of Kenya (CAK) before they complete, and the definition of “merger” under the Act is wider than most business people expect — it is not limited to two companies formally merging into one.
What counts as a merger for notification purposes
The Act’s merger control regime captures the acquisition of shares, business assets, or control — including situations where one party acquires the ability to materially influence the policy of another business, which can happen well short of acquiring a majority shareholding. A minority investment that comes with board representation and consent rights over key decisions can be a notifiable merger even though nobody would naturally describe it as one.
Thresholds and exclusions
Notification is assessed against combined turnover or asset thresholds of the parties involved [VERIFY: current CAK merger notification thresholds — combined turnover/asset figures], and the Authority has published exclusion thresholds below which a transaction does not require notification at all. There are also specific exclusions and simplified procedures for certain categories of transaction. Because these thresholds are set by the Authority and have been revised over time, the right approach on any given transaction is to check the current figures against the deal at hand rather than to rely on a threshold remembered from an earlier transaction.
Small mergers and the Authority’s call-in power
Transactions that fall below the notification thresholds — sometimes referred to as small mergers — do not require mandatory pre-approval. That is not, however, an absolute safe harbour: the Authority retains the power to call in a transaction for review within a set period after completion if it has competition concerns [VERIFY: current call-in period during which the Authority may review a small merger after completion]. A transaction that is small in value but significant within a narrow market — two of only three suppliers of a specific product merging, for example — can attract scrutiny even though it never crossed the mandatory notification threshold.
The notification and review process
A notifiable merger cannot be implemented before clearance — this is sometimes called a “suspensory” regime, and completing before clearance is itself a contravention regardless of whether the deal would ultimately have been cleared. Once notified, the Authority reviews the transaction within statutory timelines [VERIFY: current CAK merger review timelines for Phase I and, where applicable, Phase II review], which can extend if the Authority requires further information or identifies competition concerns that need a more detailed second-stage review. Building the notification and review period into a transaction timetable from the outset — rather than treating it as a formality to be dealt with near completion — avoids the more common problem of a signed agreement with a completion date that assumes clearance will simply appear in time.
The cost of completing without clearance
Completing a notifiable transaction without clearance exposes the parties to financial penalties [VERIFY: current penalty framework — percentage of turnover or fixed penalty amounts — for implementing a merger without CAK approval] and, in principle, to the transaction being unwound. Beyond the direct legal exposure, an unnotified merger is a liability that sits on the target’s books indefinitely — it does not go away simply because the Authority has not yet noticed, and it is exactly the kind of issue that surfaces in due diligence on a subsequent transaction, at which point unwinding history is far more disruptive than notifying would have been at the time.
Getting the assessment right early
The practical difficulty is less the mechanics of filing than correctly identifying, at the term sheet stage, whether a transaction is notifiable at all — particularly for minority investments, joint ventures, and group reorganisations that do not look like a conventional acquisition but can still meet the Act’s definition of a merger. That assessment should happen before the transaction structure is finalised, not after signature, because the answer can influence how a deal is structured — a phased acquisition, for example, raises different notification questions than a single completion.
If you are structuring a transaction that involves acquiring shares, assets, or influence over another Kenyan business, the merger notification question is worth answering at the term sheet stage rather than discovering the answer during legal due diligence for the deal itself.
