The Competition Authority of Kenya has approved establishment of a joint venture between Amstel Trading Company Limited and Kingsbourne Assets Limited unconditionally. This approval has been granted based on the finding that the transaction is unlikely to negatively impact competition in the market for provision of printing and photocopy papers, nor elicit negative public interest concerns, the two key considerations during merger analysis.
CAK stated, “The transaction qualifies as a merger under sections 2 and 41 of the Competition Act CAP 504. According to the Act, a merger or acquisition occurs when an entity, directly or indirectly, gains control over another business within Kenya. This can occur through various means, including the purchase or lease of shares, the exchange of shares, or vertical integration.”
Amstel Trading Company Limited (Amstel), joint venture parent company one, is incorporated in Kenya. Amstel imports photocopy paper into the Kenyan market for sale from paper mills in Indonesia, Kingsbourne Assets Limited’s affiliates.
Kingsbourne Assets Limited (KAL), joint venture parent company two, is incorporated in British Virgin Islands. KAL is an investment holding company which owns a range of technology, expertise and intellectual property rights related to manufacturing, conversion, supplying and sales of pulp and paper products in Indonesia, though its affiliates. It has no operations in Kenya.
The proposed transaction involves the establishment of a full-function JV between Amstel and KAL. According to the parties, the JV will establish a paper converting facility in Kenya to manufacture photocopy paper, thereby reducing delivery time of photocopy paper into the market. The transaction will also enable Amstel to expand its distribution of photocopy paper beyond the Kenyan market, specifically in the East African Community.
The proposed transaction is unlikely to raise competition concern as its combined market share is low and the new entity will face competition from other players in the market who control 85% of the market. Additionally, the transaction will benefit the country by expanding its manufacturing capacity. Therefore, the proposed transaction is unlikely to lead to a Page 3 of 3 substantial lessening of competition in the market for printing and photocopying papers in Kenya. CAK Added
As per the parties’ submissions, this transaction will not elicit negative public interest concerns. Specifically, there will be no employment loss since the JV vehicle is newly incorporated with no employees and is expected to create new job opportunities once local production commences.
Merging parties whose combined turnover or assets, whichever is higher, is over Ksh. 1 Billion are required to seek approval from the Authority prior to implementing the proposed transaction. The transaction between Amstel Trading Company Limited and Kingsbourne Assets Limited met this threshold for mandatory notification and full analysis as provided in the Competition (General) Rules, 2019.
The photocopy papers market is a large industry dominated by a number of suppliers and distributors who mostly import the papers from Asian countries for local resale to stationers. Some of the merchants are; International Paper & Board Supplies Ltd, The Paper House of Kenya Ltd, Transpaper Kenya, Tronik Kenya, Officemart Ltd, Plannettech, and Direct Office Technology among others. Some popular photocopy paper brands are; JK copier, Paperline, A-ONE, Spectra, Ultima, and Sappi, among others.
The 2023 Economic Survey indicates that the value of imported paper into the Kenyan market was Ksh. 49.3 Billion which translates to a 12.33% and 2.7% market share for KAL and Amstel, respectively.
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