𝐂𝐀 Director General Responds to Petition Queries Regarding Alleged Fraudulent Acquisition of Shareholding at 𝐄𝐀𝐁L

The Senate Standing Committee on Trade, Industrialization and Tourism today held a meeting with the Ag. Director General of the Competition Authority of Kenya to deliberate on a petition by Mr. Nicholas Rono on the fraudulent acquisition of shareholding at East Africa Breweries Ltd.

The Competition Authority of Kenya Ag. Director General, Dr. Adano W. Roba confirmed that Diageo PLC which operates in Kenya through its wholly owned indirect subsidiary, Diageo Kenya holds 50.03% stake in EABL. Asked whether the defunct Price Control and Monopolies Commission investigated the acquisition of majority shares in EABL in 1997 by Guinness and the share restructuring in 2000 culminating in Diageo Kenya PLC acquiring majority shares in the Company; the Authority told the Committee that it had noted that the records pertaining to the above mergers were duly destroyed in accordance with the records management processes. As such, the Authority cannot ascertain how the mergers were analyzed and the relevant approvals granted.

The Ag. Director General further informed the Senators that the brewed alcoholic beverages market in Kenya currently has two major players, EABL through its wholly owned subsidiary KBL, and Keroche Industries. As at 2020, KBL had a 90% market share of the market while its closest competitor, Keroche Industries had 2% of the market. The rest of the players comprising of small local brewers and importers of international brands such as Heinken, SABSMiller Bacardi, Pernod Richard and KWAL shared the remaining 8% of the market share.

Dr. Roba clearly stated that there are significant barriers to entry in the market which cushion the incumbents from effective competition and this may lead to exploitation of consumers. He further explained that the presence of anti-competitive conduct towards distributors is a subject that the Authority has dealt with in previous cases such as Competition Authority of Kenya v KBL (2014), in which the Authority in a settlement process pursuant to section 38 of the Competition Act directed KBL and UDV to review and amend their existing distributorship agreements to remove clauses on territorial and brand exclusivity. KBL/UDV were reported to have adhered to all the terms of the settlement agreement as was established by subsequent compliance checks carried out by the Authority, with the last compliance check having been undertaken earlier this year.

The Authority in conclusion stated that it is in the process of collecting proposals for amendment of the Competition Act to take care of the Digital Market aspect and other matters of concern. It also undertook to continue monitoring the market to ensure the dominant player does not engage in abuse of its dominance to the detriment of consumers and new entrants.

The Sen. Lenku Seki chaired Committee asked the Authority to ensure that the documents detailing the 1997 merger are availed to the Committee at the earliest, and details of production percentages of spirit products in Kenya.

Sen. Esther Okenyuri- the Committee Vice Chairperson, Sen. Jackson Mandago, and Sen. Andrew Omtatah were physically present in the meeting while, Sen. Dr. Lelegwe Ltumbesi, Sen. Betty Montet and Sen. Crystal Asige joined the meeting online.