- According to the regulator, Makini school acquired Bhayani in 2019 despite the premise still being operational.
- It says the appellant implemented the merger under the operational undertaking scheme, which is a breach of the Competition Act.
The Competition Tribunal has struck out an appeal by the Makini School seeking to overturn a Sh7.23 million fine slapped on it by the Competition Authority of Kenya.
The authority faulted Makini on grounds that the school breached the acquisition laws under the Competition Act.
Back in December 2020, the regulator found the school in violation of the Act laws by acquiring Bhayani school in Kisumu in its expansion bid.
Makini sought to expand its Kisumu campuses in 2018, and began scouting for premises, where it became aware of Bhayani School.
According to the regulator, Makini acquired Bhayani in 2019 despite the premise still being operational, a move CAK says is among the threshold for the illegal take over.
The appellant was of the argument that it had secured a lease not a merger as the alleged acquired school was registered as a sole proprietorship and the owner had passed away.
"We only acquired the lease over the school complex. Further, between 2017 and 2019, the Bhayani School was in the process of being wound up by the executrix of the late owner,” Makini says.
“The school further being a sole proprietorship, ceased to exist as a legal entity upon the death of its proprietor.”
Makini added that Bhayani School had no legal status in law, thus was not capable of being acquired.
However, the regulator in its submissions noted the appellant implemented the merger under the operational undertaking scheme.
“The school was not in the process of winding up as suggested. On the contrary, the move was a fully operational undertaking and thus capable of being acquired,” CAK says.
It adds that Makini school implemented a merger without the approval of the regulator, hence a violation of section 42(2) of the Act.
Nevertheless, the regulator contended that Makini school did in fact acquire control of the business of Bhayani School.
"The transfer of business was effected by transfer of students, teachers and support staff from Bhayani School to the Appellant," it says.
CAK noted that the still operational Bhayani was an asset from which revenue could be generated or one which affected the strategic competitive impact of the business.