Competition Tribunal Eases Merger Conditions for Telkom Kenya and Airtel

For the first time in Kenya, the Competition Tribunal has made a ruling which reversed or amended merger conditions that had been imposed by the Competition Authority of Kenya as part of its approval to a transaction, in an application filed by Anjarwalla and Khanna (A&K) on behalf of Telkom Kenya and Airtel.

In October 2019, the Authority conditionally approved a merger application submitted by Telkom and Airtel, imposing various conditions, including a requirement for the spectrum in the 900MHz and 1800MHz acquired by the merged business from Telkom to revert back to the Government of Kenya; a blanket prohibition from selling or transferring any of the parties operating licences and spectrum licenses; and a blanket prohibition for the merged entity from entering into any form of sale agreement within the next five years, which would have had the effect of restricting the merged business from even selling shares to raise further capital or any commercial sale of normal assets in the ordinary course of business.

Following a merger review application filed before the Tribunal by A&K on behalf of the parties, Telkom and Airtel successfully challenged 6 out of 7 conditions, with the Tribunal finding it necessary to either overturn or amend 6 of the conditions that had been imposed by the Authority.

The Tribunal ruled that the Authority’s conditions relating to spectrum and licenses did not address any competition law concerns and were an unreasonable and unjustified curtailment of the merged entity’s right to property. The Tribunal also held that instead of a blanket ban against entering into any form of sale agreement, the merged entity could dispose up to 40 percent of its shareholding at any time during a five year period. Further, the ruling upheld that the merged entity was not to be restricted from disposing of its assets and shares in the ordinary course of business.

This is an important decision in many respects and marks the first merger review application ever filed before the Tribunal against a decision of the Authority since its establishment, and the decision has already attracted significant attention. Click here to read more about the landmark ruling from recent press coverage.

A&K is honoured to have acted for the applicants in this matter.


Should you have any questions regarding the information in this legal alert or any other competition matters, please do not hesitate to contact Anne KiunuheKarim Anjarwalla or Abbas Esmail.

Anne Kiunuhe
Partner
ALN Kenya | Anjarwalla & Khanna
ak@africalegalnetwork.com
Karim S. Anjarwalla
Managing Partner
ALN Kenya | Anjarwalla & Khanna
ksa@africalegalnetwork.com
Abbas Esmail
Senior Associate
ALN Kenya | Anjarwalla & Khanna
aae@africalegalnetwork.com

 


The content of this alert is intended to be of general use only and should not be relied upon without seeking specific legal advice on any matter.

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