Retailers seek exemption from anti-trust regulations

Retail stores Tuskys and Nakumatt have applied for their merger plan to be exempted from anti-competitive regulations.

In a Gazette Notice published yesterday, the Competition Authority of Kenya (CAK) said it had received the proposed Management Services and Loan Agreement, aimed at giving a new lease of life to debt-ridden Nakumatt.

CAK had initially rejected the merger plan on grounds that it had been applied on the wrong clause of anti-trust law. It said the plan was not a merger as it did not interfere with the ownership structure of Nakumatt.

However, concerns were raised when Tuskys planned to restock Nakumatt’s shelves without CAK’s approval, with the Authority saying it had the potential of distorting competition in the market.

With the latest application, CAK will not, among other things, look into whether the said agreement will hurt competition.

“Pursuant to provisions of section 25 (3) of the Competition Act, the Competition Authority of Kenya wishes to notify the public that Nakumatt Holdings Limited and Tusker Mattresses Limited (Tuskys) have made an application under section 25 of the Act for the exemption of their proposed Management Services and Loan Agreement for a period of three years,” said the Gazette Notice.

Tuskys plans to inject up to Sh3 billion into the troubled rival, of which Sh650 million will be an emergency fund while the remaining will be in the form of recurring payment guarantees of between Sh1.5 billion and Sh3 billion for the outstanding debt.

Pay debts

The latter will be used to pay some of the debt Nakumatt owes employees and landlords.

The deal will also see Tuskys provide management services to Nakumatt including procurement and inventory management.

“Tuskys shall provide recurring payment guarantees to the suppliers of the target to ensure the suppliers supply stocks to...Nakumatt’s outlets,” read the statement by CAK Director-General Wang’ombe Kariuki.

Those opposed to the plan have 30 days to raise complaints with the CAK.

“All interested parties must, within thirty days of the publication of this notice, submit any written representations which they wish to make in regard to this application,” said Mr Kariuki.

It was not immediately clear if Tuskys had resolved internal wrangles it had with one of its shareholder, Yusuf Mugweru, who last year went to court to block the proposed merger.