Kenya Risks Turning a Straightforward Diageo-Asahi Deal Into a Cautionary Tale

There is a version of the Diageo-Asahi transaction that should have closed months ago. A British company is selling its majority stake in a Kenyan-listed brewer to a Japanese company. The factories stay put. The workers stay employed. The brands on the shelf, Tusker included, do not change. What changes is who sits at the top of the shareholding register. Uganda approved it. Tanzania approved it. Capital markets regulators across the region cleared it without even triggering a mandatory buyout of minority shareholders. And yet in Kenya, the deal remains stuck, not because anyone has shown it will harm consumers, but because it has become a vehicle for settling scores unrelated to competition law.

The Competition Authority of Kenya has now put two conditions on the table. The first would force the merged entity to set aside twenty percent of retail fridge space for rival products in bars, supermarkets, petrol stations and hotels. The second would ring-fence at least four percent of the transaction value, reportedly around fifteen billion shillings, as a reserve against third-party claims and historical disputes. Both proposals were revealed not through a published determination but during testimony before a parliamentary committee, which itself should give pause. As the columnist Jaindi Kisero has asked, where is the evidence that a change in shareholding threatens existing distributor agreements or farmer contracts? A merger remedy that cannot point to a demonstrated anti-competitive risk is not a remedy. It is an improvisation.

The fridge space proposal is a particularly awkward fit. Fridge placement disputes are the kind of thing competition authorities sometimes address after finding that a dominant firm has used exclusive distribution arrangements to shut out rivals. But that is a different case, built on different evidence, and normally resolved through a proper market inquiry rather than bolted onto an unrelated ownership transfer. Negotiating a specific commercial outcome like this through Parliament, rather than through a transparent regulatory process, opens a route for whoever has the loudest lobbyist to shape the outcome. That is not competition policy. It is rent-seeking dressed up as consumer protection.

The reserve fund raises a different but equally serious problem. Kenya’s courts are already hearing several cases tied to EABL, from a decade-old distribution dispute to a construction arbitration award to challenges brought by minority shareholders. Those matters belong in front of judges, where evidence can be tested and liability properly established. Asking the competition regulator to effectively pre-fund settlements for disputes still working their way through litigation blurs the line between merger control and dispute resolution. It also raises basic governance questions that have not been answered. Who would control such a fund? Under what legal authority would the regulator hold it? And why would parties with grievances against EABL not simply see this as an invitation to route their claims through the merger process instead of the courts, where the burden of proof is heavier?

None of this is to say Kenya’s competition regulator lacks a legitimate role. Market dominance is a real concern in the beverage sector, and rivals like Keroche and Kenya Wine Agencies have raised points worth examining. But there is a difference between scrutinising a transaction for genuine competition harm and using it as leverage to resolve unrelated grievances. The Authority has also been criticised, fairly, for explaining its major merger decisions through brief press statements that leave the underlying economic reasoning largely hidden from the public it is meant to serve.

What is easy to lose in all of this is the scale of what is at stake. This is a transaction worth hundreds of billions of shillings, one that would hand the Kenya Revenue Authority a capital gains tax windfall among the largest in the country’s history. Every month of delay is a month that windfall sits out of reach, and a month that global investors watching East Africa take note of how unpredictable it is to close a deal here once politics and litigation start layering conditions onto conditions. Uganda and Tanzania have already shown that this transaction can be assessed and cleared within a reasonable timeframe. If Kenya cannot match that, the lesson investors will draw has little to do with beer or spirits and everything to do with whether Kenyan institutions can be trusted to apply clear, evidence-based rules. That is a far more expensive outcome than any fridge space dispute, and it is one Kenya can still avoid if its regulators and lawmakers choose the narrow, evidence-based path over the broad and improvised one.

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