KENYA – The competition watchdog is investigating a deal in which supermarkets chain Tuskys is funding the restocking of troubled rival Nakumatt for possible breach of anti-trust regulations.
Tuskys on Saturday announced that it had started restocking two of Nakumatt’s prime Nairobi outlets with the intention of including even more stores across the country.
Sources familiar with the matter indicate that the Competition Authority of Kenya (CAK) is investigating the deal between the two rival retailers for what could amount to collusion by competitors.
CAK director-general Wang’ombe Kariuki has repeatedly said that any merger, buyout or partnership between Nakumatt and Tuskys would require approval by his office.
In an interview yesterday Mr Kariuki said the retailers were yet to file a formal application, but declined to confirm that an investigation was underway.
“The authority is going to actualise the provisions of the law,” said Mr Kariuki in a brief response.
The law empowers the regulator to carry out investigations into trade practices that might distort competition.
Following investigation, the CAK is also empowered to block and order reversal of any merger or partnership that could result in restrictive trade practices and to impose financial penalties on parties in breach.
Tuskys’ restocking of Nakumatt stores could amount to a prohibited action under the Competition Act as it suggests that the two companies have started sharing sensitive strategic information and are no longer relating as competitors.
“The moment you start having information regarding your competitor, sharing strategic decisions, and sensitive information you stop being competitors. Competition thrives where you don’t know the strategy of your competitors,” said Mr Kariuki.
Companies involved need to get the approval of the watchdog before entering such agreements. However, Mr Kariuki says that as of yesterday noon the authority had not been informed of any such plans.
Tuskys chief executive Dan Githua in responses to the Business Daily did not directly address the regulatory concerns.
“We are in constant communication with CAK. As soon as we get approvals, the restocking programme will take off fully,” said Mr Githua.
Tuskys had, however, indicated in a Saturday press statement that restocking had already been completed at Nakumatt outlets at the Village Market Mall and Nakumatt Ukay in Nairobi.