BY SAM ALFAN .
International school Makini has suffered a blow after Competition Tribunal upheld a fine of Sh7.2 million imposed by competition watchdog over failure to involve the authority while acquiring a campus in Kisumu a few years ago.
The competition Tribunal upheld the fine imposed by the Competition Authority of Kenya (CAK) over the failure to seek approval when it acquired R.K Bhayani Nursery & Primary School in Kisumu in 2019.
Led by Chairman Daniel Ogola and members including Valentine Mwende, Odongo Okeyo, Kiprop Marrirmoi and Raymond Nyamweha the Tribunal dismissed claims by Makini that the business was in the processing of being wound up, after the death of its founder, Mr Narandas Ratanshi Bhayani.
“We find that penalty imposed by the Competition Authority of Kenya was justified as per the provisions of section 42 (6) of the Act,” ruled the Tribunal.
In the ruling, the Tribunal determined that Makini School was in violation of section 42 (2) of the Act and there was merger, and the approval of Competition Authority was not sought.
It was the Tribunal’s finding that the school was capable of being acquired and that the students and teachers of Bhayani were assets capable of being acquired by the Makini School.
The Tribunal noted that the students and teachers were in fact acquired by the Makini School.
“The students and teachers were not bare assets but constituted an enterprise and therefore the Appellant in acquiring them took control of a going concern.
Therefore, the acquisition of the Target’s business constituted a merger within the meaning of sections 2 and 41 of the Act,” the tribunal said.
The Authority had earlier slapped Makini slapped Makini School with a penalty of Sh36,199,380.95 but later reviewed it to Sh7,239,876 after mitigation.
Makini School being dissatisfied by the CAK’s and filed appeal before the Tribunal seeking to quash the decision.
The school argued that CA erred in fact and in law as aforesaid as a consequence of misapprehending, misconstruing or disregarding material evidence produced by Makini and thereby proceeding to declare the conduct of the school to constitute an infringement of Sections 42(2) and/or 43 of the Competition Act and an offence under Section 42(3).
Makini further argued that Competition Authority erred in law and fact by deeming the conduct of Makini School to have constituted a merger as defined in Sections 2 and 42(1) of the Competition Act (No. 12 of 2010).
“The Competition Authority erred in law and fact by finding that the Appellant had acquired a whole or a part of the business of the R.K Bhayani Nursery & Primary School, the purported target undertaking,” argued Makini School.
The competition Authority maintains that there was a transaction between Makini School and Bhayani School and the same amounted to a merger and asserts that the conduct of the Appellant in the circumstances was contrary to Section 42(2) of the Act and the financial penalty imposed subsequently was justified.
While welcoming the Tribunal decision, the regulator said that the judgement reaffirms the legal requirement in the Competition Act that no person, either individually or jointly, may implement a proposed merger in the national economy unless it is approved by the Authority or has been excluded from notification.
