Kenya has sought to handle the proposed merger of security companies G4S and KK Security under its local rules, citing fears over potential negative effects on jobs and the economy.
The merger is being handled by the Common Market for Eastern and Southern Africa (Comesa), which confirmed receipt of a referral request from the Competition Authority of Kenya.
Canadian security firm GardaWorld is seeking to acquire the entire issued share capital of its UK rival G4S through its subsidiary, Fleming Capital Ltd. GardaWorld acquired Nairobi-based KK Security in 2016.
CAK warned that the merger could occasion job losses in Kenya, considering that the two multi-nationals are the biggest employers in the private security sector.
The authority noted that the deal could also potentially harm the sector by creating or enhancing a dominant position in contravention of local competition laws.
“The CAK has therefore submitted that the proposed transaction is likely to lead to concentration in certain markets in the security sector and potentially, lead to acquisition of, or enhancement of a dominant position contrary to the provisions of Section 46(2) (b) of the Competition Act No. 12 of 2010 of Kenya.
“This will substantially lessen competition in the sector in Kenya leading to loss of welfare to the people of Kenya,” the letter dated January 20 read in part.
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CAK Communications Manager Mugambi Mutegi noted that the referral request was submitted in line with Comesa rules, as the authority felt the deal could reduce competition to a material extent.
He asserted that CAK would undertake a full analysis of the deal before making a determination.
Gardaworld and G4S both have operations in Comesa countries including Kenya, DR Congo, Uganda, Zambia and several others.
“The parties generate over 40 per cent of their revenue in Kenya and have overlaps in the markets for provision of physical security and cash management services.
“The proposed merger is therefore likely to lead to a significant increase in concentration in some markets,” Mutegi stated.
Dogged by scandals around the world in recent years, G4S has been the target of take-over bids from North American rivals GardaWorld and Allied Universal (US), in a deal expected to be worth over 3.8 billion pounds (Ksh568.6 billion).
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