Tuskys gets nod to acquire one Ukwala Supermarket branch

Kenya: Competition Authority of Kenya has approved the proposed acquisition of Ukwala Supermarket's Jogoo Road branch by Tusker Mattresses Limited. This is according to a Gazette Notice No. 6461, dated September 15, 2014 signed by the authority's Director General Wang'ombe Kariuki.

The authority said the two firms could go ahead with the transaction but excluded Ukwala's five branches that were part of the original take-over deal.

"In exercise of the powers conferred by section 46 (6) (a) of the Competition Act, the Competition Authority of Kenya has approved the proposed acquisition cited herein conditionally, and allowed for the acquisition of the business and assets of only the Ukwala Supermarket branch on Jogoo Road, Nairobi, by Tusker Mattresses Ltd," the notice said.

Tuskys Supermarket had earlier intended to take over six Ukwala Supermarket outlets. They included stores on Hakati Street, Ronald Ngala Street, Jogoo Road, Haile Selassie Avenue, and the two branches on Tom Mboya Street.

However, the watchdog declined to approve the take-over, saying that the companies were engaging in "horizontal restrictive trade practice". The two firms were fined Sh5.3 million earlier in the year for engaging in unfair trade practices.

Considered the second largest retail chain after Nakumatt, Tusker Mattresses Limited is a private company which began in Nakuru as a family-owned business 10 years ago. In 2007, it rebranded to Tuskys. As at February 2014, Tuskys had expended to 52 outlets spread out across the country

Over the years, Tuskys has in addition to providing conventional supermarket services embarked on providing in-store bakeries, butcheries, whole milk dispensers, water dispensers and a wide range of fresh fruits. Mid this year the authority cracked the whip and fined both retail chains Sh5.3 million for engaging in what it said were unfair trade practices.

According to the authority, the two firms colluded in setting retail prices of items in their supermarkets in a manner that undermined fair competition in the retail sector.

The retailers had gone into an agreement where Tuskys was to manage some outlets on behalf of Ukwala without seeking approval from the Competition Authority, which is against the law. The authority noted that the arrangement, which allowed Tuskys to manage three Ukwala Supermarket stores for a period of nine months, amounted to a horizontal restrictive practice.

The authority said the move contravened the Competition Act as it allowed Tuskys to set prices and other trading terms of a competitor and managing three Ukwala Stores, in terms of marketing and management systems.