The Competition Authority of Kenya (‘the Authority’) published the Draft Joint Venture Guidelines (‘the Guidelines’) on 4th February 2021[1]. Merriam Webster dictionary defines a joint venture as a cooperative business agreement or partnership between two or more parties that is usually limited to a single enterprise and that involves the sharing of resources, control, profits and losses[2].

The Guidelines generally define a joint venture as an integration of operations between two or more separate firms where the following conditions are present:

  1. the enterprise is under joint control of the parent firms;
  2. each party makes a substantial resource contribution to the enterprise;
  3. the enterprise exists as a business entity separate from its parents; and
  4. the joint venture creates significant new enterprise with direct market access through new productive capacity, new technology, new products or entry into a new market.

The Guidelines acknowledge that joint ventures warrant competition assessment to balance the pro and anti-competitive effects that come with these business arrangements. To increase predictability of review and notification requirements, the Guidelines aim to complement competitive assessment of joint ventures as currently guided by Part IV of the Competition Act, the Competition (General) Rules 2019, the Consolidated Guidelines on Substantive Assessment of Mergers and the Market Definition Guidelines.


a) Filing Notifications for Joint Venture Transactions

While typical mergers and acquisition transactions clearly identify a target and the acquirer, joint venture agreements may at times lack this distinction. In this regard, the Authority requires the parent parties and the joint venture entity to separately submit documentation as joint venture parents and the joint venture vehicle respectively.

b) Greenfield Joint Ventures

Typically, joint ventures involve parties whose lines of business are complementary in nature. This is aimed at tapping into the respective resources and expertise brought by the collaborating parties to increase efficiencies, expand innovation, lower production costs and/ or maximise profits. The Guidelines identify Greenfield Joint Ventures as ‘arrangements aimed at engaging in a new business venture separate from and unrelated to the activities undertaken by the parties.’

Greenfield Joint Ventures are acknowledged as a form of market entry mostly used when an entity seeks a high degree of control over activities in a foreign jurisdiction particularly in new business areas uninhabited by any entity existing in the said country. The Guidelines provide a non-exhaustive list of instances that may be deemed to be Greenfield Joint Ventures including:

  1. collaboration between parties for the sole purpose of sharing knowledge and expertise on a new area of business that leads to the incorporation of an entity to pursue the venture;
  2. utilization of parties’ resources to develop a business idea; and
  3. implementation of new information from other areas of the world to better existing ideas in a certain country with the assistance of an entity from the country of origin as a joint venture partner.

The Authority guides parties to seek its advisory opinion before the implementation of Greenfield Joint Ventures where there is uncertainty.

c) Basis for Determination of Assets and Turnover Thresholds

The Guidelines acknowledge that parent entities’ investment in a joint venture may lead to a dynamic change to competition in the market. Therefore in a departure from the requirement to disclose financial information in relation to assets and turnover attributed to Kenya, in a joint venture merger application the parents are required to submit to the Authority complete financial information even if not generated in Kenya.

Parties are also required to submit turnover and assets figures for entities directly or indirectly controlled by the parent entities in Kenya and, where applicable, for the joint venture entity. In calculating the merger filing fees, the Authority will consider whichever is higher between the sum of assets or turnover figures attributable to the parent entities and the joint venture entity.

d) Elements of Joint Ventures and Review by the Authority

The Authority will consider anti-competitive effects of a joint venture transaction by examining terms such as the activities of the joint venture and its parent entities, the governance structure adopted, the duration of the joint venture, the nature and extent of assets transferred to the joint venture versus those retained by the parties to the transaction and the freedom the parent entities will retain to compete with each other and the joint venture entity.

Exclusivity clauses that introduce or increase restrictions to entry or expansion by third parties will trigger review by the Authority. Where competition already exists between parent entities, the Authority will widen its investigation to identify a formal market definition, estimate concentration levels and consider the significance of barriers to entry and/ or expansion.

The Authority’s review will also involve public interest factors including employment, entry and growth of small and medium-sized enterprises and expansion to international markets. In reviewing full-function joint ventures, the Authority will consider the technological benefits, real resource savings, compatibility with competition and economies of scale accompanying the transaction.

e) Contemporary Issues Regarding Joint Venture Transactions

The Authority has also provided guidance on its assessment of the digital economy as an emerging trend in the mergers and acquisitions regime with respect to joint venture transactions. As e-commerce has anchored its influence in most sectors, the Guidelines acknowledge the key role of data analysis and manipulation in entry and operations in most digital economies. The Authority will consider the dynamics of entry and access to data in joint venture transactions likely to involve big data even where data is not the primary component of the transaction. Parties may be required to submit data-specific information including custody of data pre and post-transaction, impact of the data to entry and competition in the relevant market sector and value of the data.

The Authority may engage parties to a transaction to establish remedies to mitigate against anti-competitive and negative public interest impact that is likely to arise from implementation of the joint venture. The Authority will also advise which of the parties to the joint venture would be impacted by such remedies.


The Authority has also published a template for submission of comments that will close on 5th March 2021. This is an opportunity for stakeholders to share their views and build the Guidelines’ perspective of a market-sensitive regime considering the current economic landscape.

Insights by Edward Kimuma who is a Junior Associate at MMAN Advocates. His area of practice is corporate and commercial law with a focus on mergers and acquisition, asset finance, commercial contracts, and corporate insolvency.


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