Competition watchdog probes Tuskys’ Ukwala deal

An Ukwala Supermarket outlet on Tom Mboya Street in Nairobi. Competition Authority of Kenya has launched investigations into Tuskys Supermarket’s involvement with Ukwala, amid talk that it acquired some outlets owned by the rival firm. Photo/Salaton Njau  Nation Media Group

By EVELYN SITUMA

In Summary

• Kariuki Wang’ombe, director-general of the competition watchdog, said Thursday that the authority had not been informed of the transaction.
• Tuskys has been running three Ukwala stores in the city ahead of a complete rebrand of the outlets, people familiar with the deal say.
• Where a firm is found to have breached the law, the regulator can cancel a transaction, have the directors jailed for five years or order payment of a fine of up to Sh10 million.

The Competition Authority of Kenya has launched investigations into Tuskys Supermarket’s involvement with Ukwala, amid talk that it acquired some outlets owned by the rival firm.

Kariuki Wang’ombe, director-general of the competition watchdog, said Thursday that the authority had not been informed of the transaction.

Tuskys has been running three Ukwala stores in the city ahead of a complete rebrand of the outlets, people familiar with the deal say.

Both retailers refused to comment on the issue, but Business Daily found out that sales receipts from the Ukwala stores in the central business district (CBD) bore the TML (Tusker Mattresses Limited) logo and phone contacts.  

“We are currently looking into the issue to determine the nature of transaction,” Mr Wang’ombe said in an interview yesterday, adding that mergers or significant purchase of shares or a business interest must be approved by the authority.

“We are currently not sure if it is a takeover (Tuskys/Ukwala deal) with controlling interest. If that’s the case, it is not enforceable by any law.”

Where a firm is found to have breached the law, the regulator can cancel a transaction, have the directors jailed for five years or order payment of a fine of up to Sh10 million.

The authority can also impose a financial penalty equivalent to 10 per cent of a firm’s sales.

If Tuskys is found liable, it may face a penalty of up to Sh2.5 billion given that it generated sales of about Sh25.2 billion last year, making it the second-largest retailer based on sales behind Nakumatt whose revenues stand at Sh55 billion.

This paper could not establish whether Tuskys had bought out Ukwala Supermarkets or acquired the outlets and that its rival would continue operating in other locations.

Tuskys had 48 branches in Kenya by this October. “Tuskys started its operation in three Ukwala outlets two weeks ago. They absorbed permanent staff and let go of the temporary workers,” said a source at Tuskys on condition of anonymity.

The three Ukwala outlets operated by Tuskys are Ronald Ngala, Jogoo Road and Tom Mboya branches —firming Tuskys’ hold on the central business district where it had nine branches.

READ: Tuskys finally takes over Ukwala stores

Nakumatt Supermarkets has four branches while Uchumi and Naivas have two stores each in the city centre.

Ukwala Supermarkets had three branches and it has trailed rivals Nakumatt, Tuskys, Naivas and Uchumi in expansion. This has seen its market share shrink and Naivas dislodge it as Kenya’s fourth-largest retailer.