CAK
says that it has forwarded to the Director of Public Prosecutions a
case in which Mr Kinuthia’s company, Interconsumer Products, merged with
Belsize Industries without the authority’s approval.
The case
first came to the attention of the authorities in 2015 when a lawyer
acting on behalf of Interconsumer wrote to the authority about the
transaction.
Billionaire businessman Paul Kinuthia
has raised the competition watchdog’s ire after acquiring a company
without seeking approval of the regulator.
Competition
Authority of Kenya (CAK) says that it has forwarded to the Director of
Public Prosecutions (DPP) a case in which Mr Kinuthia’s company,
Interconsumer Products, merged with Belsize Industries without the
authority’s approval.
CAK established that
Interconsumer bought out 100 per cent of Belsize — trademarks, plant
machinery, furniture, motor vehicles and electricals.
That is considered to be an indirect acquisition.
Section
41.1 and 41.2 of the Kenya Competition Act includes certain types of
asset acquisition in their definition of a merger, which fit the
Belsize-Interconsumer deal.
The law states that persons
contravening regulations on merger approvals face prison sentences of
up to five years or fines of up to Sh10 million or both.
In addition, the CAK can choose to penalties of up to ten per cent of the gross annual turnover of a company.
The
case first came to the attention of the authorities in 2015 when a
lawyer acting on behalf of Interconsumer wrote to the authority about
the transaction.
The CAK could do nothing by then but
forwarded the case to the DPP for possible prosecution as outlined by
the Competition Act. The case was forwarded in April 2016.
Mr
Kinuthia disputes CAK’s narrative, saying his company did not acquire
Belsize but rather “their tissue paper rewinding machines for Sh47
million when they closed down.”
Following the
transaction, he was advised by his auditors to write to the Competition
Authority on the matter. After being informed he was in breach of the
Act and that the matter might be brought for prosecution, Interconsumer
asked to be pardoned.
“We believe that we are not in
breach and we shall appeal when we get the notices of prosecution from
the DPP office,” says Interconsumer in a statement.
Mr
Kinuthia built Interconsumer from the ground up until it became a force
to reckon with, drawing the attention of French multinational L’Oreal
which bought Mr Kinuthia off in 2013 for an estimated Sh1.5 billion.
CAK
says that it has forwarded to the Director of Public Prosecutions a
case in which Mr Kinuthia’s company, Interconsumer Products, merged with
Belsize Industries without the authority’s approval.
The case
first came to the attention of the authorities in 2015 when a lawyer
acting on behalf of Interconsumer wrote to the authority about the
transaction.
Mr Paul Kinuthia disputes the CAK’s narrative. PHOTO | FILE | NMG 
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