CAK seeks Tobiko’s help to prosecute Tuskys, Ukwala

Politics and policy

Tuskys branch, formerly Ukwala supermarket, along Tom Mboya Street. Photo/Diana Ngila 

By MUGAMBI MUTEGI, pmutegi@ke.nationmedia.com

In Summary

• The supermarket chains missed a Monday night deadline set by the Competition Authority of Kenya to terminate the acquisition of three Ukwala outlets by Tuskys.
• CAK says it will forward the matter to the Director of Public Prosecutions as a violation of laws against restrictive trade practices.
• If charged and found guilty under Section 21 of the Competition Act, the owners of the two businesses could face up to five years in prison, a fine not exceeding Sh10 million or both.

Directors of Tuskys and Ukwala risk jail terms and multi-million shilling fines for defying an order to reverse an unsanctioned outlet acquisition deal.

 

The supermarket chains missed a Monday night deadline set by the Competition Authority of Kenya to terminate the acquisition of three Ukwala outlets by Tuskys.

The authority now says it will forward the matter to the Director of Public Prosecutions as a violation of laws against restrictive trade practices.

If charged and found guilty under Section 21 of the Competition Act, the owners of the two businesses could face up to five years in prison, a fine not exceeding Sh10 million or both.

CAK could also impose a penalty of up to ten per cent of their turnover.

Tuskys, which acquired part of its rival’s business for Sh200 million in April last year, had until the end of last month to reverse this deal after the competition watchdog determined it was restrictive to business.

On Tuesday, a spot-check by the Business Daily revealed the former Ukwala stores, situated on Jogoo Road, Ronald Ngala and Tom Mboya streets were still operating as Tuskys outlets.

Not only had Tuskys failed to strip its signage from its former rival’s branches, it had also not changed the receipting system or plastic bag packaging back to Ukwala.

READ: Tuskys breaches Ukwala bid deadline

Tuskys managers would not shed light on what was going on. None of the directors of the two chains could be reached for comment.

Wang’ombe Kariuki, the CAK director general, now says his officials will visit the concerned stores to collect evidence of the ongoing “infringement” and forward it to the DPP for prosecution proceedings to begin.

“By continuing to operate under the Tuskys brand, the infraction we had fined them (Sh5.3 million) for (in June) is still ongoing,” said Mr Kariuki.

“As an authority, we cannot enforce criminal charges on the management. However, we will in a few days conduct investigations and then forward all the evidence we collect to the DPP’s office.”

Tuskys is a family-owned business currently run by five brothers, led by Stephen Kamau, the managing director. The brothers took over the company from their father Joram Kamau, who died in 2002, and have grown it into a household name with over 50 branches and a turnover of more than Sh25 billion.

The ownership structure and financials of Ukwala, on the other hand, are not public knowledge. It is run by managing director Anil Dhingra who has previously told the Business Daily he has no knowledge of the transaction with Tuskys.