Popular articles

Digitization of the Merger Filing Process in Kenya


Competition agencies across the world have in the recent past commenced the automation of their services by initiating a change-over from a manual case management system to an automated case management system. Kenya is no exception to the trend with the Competition Authority of Kenya (the ‘Authority’) having initiated efforts since 2016 to put in place an automated case management system for filing of merger applications to replace the manual case management system currently in use.

The manual merger filing system

The key statute regulating mergers and acquisitions in Kenya is the Competition Act No. 12 of 201o (the “Act”), which came into force on August 2011.

The Act provides that all mergers and acquisitions must be notified to the Authority for its approval or exclusion prior to completion. The parties to a proposed merger, that is, the undertaking directly or indirectly acquiring or establishing direct or indirect control over the whole or part of the business of another undertaking (the “Acquiring Undertaking”), and the undertaking being acquired (the “Target Undertaking”), are both required to notify the Authority of the proposed merger in “writing or in the prescribed manner”. This notification is done through the completion of a Merger Notification Form which is delivered along with the following documents:

  1. A compete list of shareholders and their respective shareholding for both the Acquiring and the Target Undertakings and of any undertaking that directly or indirectly controls the Acquiring Undertaking;
  2. The products or line of business that the parties deal in; and
  • Strategic documents of the merging parties in relation to the affected markets including, but not limited to:
  • Merger Agreement (for example a copy of the Sale Purchase Agreement or a Shareholders Agreement),
  • Board minutes approving the transaction;
  • Annual Financial Statements for the preceding three years;
  • Business plans;
  • Claim for Confidentiality (if applicable);
  • Evidence/proof of remittance of the applicable merger fees (if applicable).

The duly completed merger application may be hand-delivered to the Authority’s Registry or may be sent by electronic mail (though the Authority will still require the original application to open the merger record file) or by post. The Authority will acknowledge receipt of the merger application within 30 days and may also make a request for additional information or convene a hearing conference if it deems this necessary. Thereafter, the Authority reviews the application and communicates its determination within 60 days.

Challenges of the manual merger filing system

The Authority, as well as stakeholders, have noted that the manual case management system is cumbersome due to the reliance on the manual filing of documentation a challenge that has been compounded by the increasing number of merger and acquisition filings in Kenya. While the Authority has largely managed to adhere to the timelines set out in the Act, the need to physically deliver the Merger Notification Form to the Authority together with the supporting documents and any other information requested and thereafter make visits and phone calls to the Authority’s offices to physically follow up on the progress of applications filed has made the process unjustifiably slow.

The move towards an automated merger filing system in Kenya

In line with the global trend towards automation of systems, the Authority has embarked on a journey to automate all its processes with an aim of increasing the speed of operations, reducing the cost of multiple interactions with stakeholders, fast-tracking the decision making process and expediting stakeholder feedback.

In this regard the Authority intends to introduce an automated case management filing system for merger filings in Kenya and has commenced a public consultation and participation exercise with various stakeholders that has included an interactive briefing on the proposed online automated system. Below are some salient features of the proposed system:

  1. Both the Acquiring and Target Undertakings will be required to register a user account with their respective personal details and create a user name and password for the account to allow the respective undertakings to file their merger applications on the system.
  2. To proceed with the filing of a merger transaction, both the Acquiring and Target Undertakings will be required to create a merger application record by uploading their respective details and the description of the merger as well as their email addresses on the automated system. The parties must also indicate which party is making the application, with the party lodging the application first in time being the First Party and the party lodging its application thereafter being the Subsequent Party.
  3. Upon registration of the merger application, a unique reference code will be automatically generated and an acknowledgement of the initiation of the merger process issued to the respective undertakings by the Authority. It is noteworthy that the Subsequent Party will be required to obtain the merger reference code from the First Party to access the merger application record created.
  4. Upon the creation of the merger record, each undertaking will proceed to fill the schedules of the online merger application form which schedules are similar to the Merger Notification Form currently in use. The undertakings will also be required to upload the requisite supporting documentation for the Schedules in the Portable Document Format (PDF) as files in other formats will not be accepted by the system.
  5. Upon submission of the online form, each undertaking will be issued with an acknowledgement by the Authority. It is noteworthy that the Authority will follow the same process of evaluation of the online application as for a manual application before the issuance of a determination.

The Authority has also put in place a similar automation system on the automated case management portal for all its services.

Benefits of the automated merger filing system

The following benefits are likely to accrue from the implementation of the automated case management system:

  • Faster applications by undertakings when lodging merger applications;
  • Ease for undertakings in tracking, querying and receiving feedback on the status of their lodgments online through the use of unique application reference numbers thereby reducing physical follow-ups;
  • Enhanced confidentiality in handling client information through ether electronic storage of applications as opposed the physical filing of manual applications;
  • Increased efficiency and ease in obtaining user feedback 0n merger applications;
  • Minimized human error and increased accuracy of merger application process; and
  • Retention of institutional memory.

Potential data protection and privacy concerns

While the implementation of the automated merger filing system will be expected to greatly ease and speed up the merger application process in Kenya, vital concerns remain regarding the protection and privacy of data provided on the automated system as the Authority has not clearly stated in what manner the data will be stored and thereby protected from unlawful disclosure. Therefore there exists a potential risk to undertakings of having their data submitted on the system illegally accessed. It is noteworthy that the above concerns are evident in the digitization processes of other Government services.

While Article 31 of the Constitution of Kenya, 2010 provides a general right to privacy, which includes the right not to have information relating to one’s family or private affairs unnecessarily revealed or the privacy of one’s communications infringed, Kenya does not have a substantive law protecting personal information from unlawful disclosure or misuse. Furthermore, the recently enacted Computer and Cybercrimes Act 2018, while setting out various provisions dealing with cybercrimes, does not provide any protections against the disclosure of personal data.

However, the proposed Data Protection Bill 2018 includes various provisions on data protection and states that interference with personal data of a data subject or infringement on the right to privacy will attract a fine not exceeding Kshs. 500,000 or to imprisonment for a term not exceeding 2 years or to both. In addition, the Privacy and Data Protection Policy 2018 proposes principles for data protection and as well as consequences for non-compliance.

In the interim, it will be incumbent on the Authority to provide relevant undertakings to the parties confirming the security and protection of the data provided on the system prior to the use of the system by the parties.

Way forward on the implementation of the automated merger filing system

The Authority has indicated that the automated case management system is in the final stages of the developmental process and further that it has planned to carry out additional engagements with the various stakeholders for the review of the automated system prior to its anticipated rollout in the course of the year.


Looking for more?

We provide all the legal insights for your business.