The Scoop
A regulatory complaint filed by a Heineken subsidiary in recent weeks is threatening to disrupt the $2.3 billion acquisition of Diageo’s East African Breweries Limited (EABL) by Japan’s Asahi Group.
Kenya Wine Agencies Limited (KWAL) accused EABL of abusing its dominant market position, and raised concerns that the acquisition could entrench alleged long-standing anti-competitive practices by the brewer, according to three people with direct knowledge of the complaint, including two working for KWAL.
The people told Semafor that the company wants the Competition Authority of Kenya (CAK) to review the deal’s potential effects on the market and set conditions for its approval to promote fair competition for smaller players. The regulator acknowledged queries from Semafor regarding the complaint and promised to respond “as soon as possible,” but had yet to do so by the time of publication.
The complaint by KWAL noted EABL’s sustained dominance across segments including beer and spirits, and highlights several alleged anti-competitive practices by the company, such as abuse of their market power by locking in distributors and suppliers to exclusive agreements that enables them to dictate prices.
“Our fear is that these factors will be amplified should the merger go ahead,” a KWAL source told Semafor, adding that the company wants CAK to put in place conditions to correct EABL’s “abusive dominant position” as the market leader.
The Asahi-Diageo deal, announced in December, is still pending regulatory approvals from the competition authority as well as regulators in Tanzania and Uganda. The transaction is expected to close in the second half of 2026.
Neither KWAL nor EABL responded to requests for comment.
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London-headquartered Diageo’s sale of its 65% stake in EABL forms part of its turnaround strategy, which involves offloading non-core assets to reduce debt and accelerate growth. Asahi, on the other hand, is keen on expanding its geographic footprint and is counting on the EABL deal to deliver long-term growth “driven by population increase and economic expansion.”
EABL, whose net profit for the six months to December 2025 rose 38% to $87 million, operates primarily in Kenya, Uganda and Tanzania and is one of the region’s largest public companies. Its portfolio includes beer brands Tusker and Serengeti, and the company plans to enter into long-term licenses for Diageo’s global brands such as Guinness and Johnnie Walker to continue selling them in the region after the acquisition.
Martin’s view
EABL has previously been accused of engaging in anti-competitive practices by smaller Nairobi-based brewers including Keroche Breweries and African Originals as well as distributors such as Bia Tosha. KWAL’s regulatory push is, however, especially noteworthy as it is one of EABL’s largest competitors and has the backing of a global giant in Heineken. It is certainly the largest player to ever go up against EABL over the alleged abuse of its dominant market position.
Should the regulator set conditions for the acquisition’s approval, meant to correct alleged abuse of dominance, it would have an impact on EABL’s operations and growth prospects. In the 2019 acquisition of ARM Cement by National Cement, for example, the regulator approved the merger but set conditions to address public interest concerns, including supplier protection and employee retention.
EABL shareholders will be keen on the regulator’s decision to understand the company’s future, particularly when coupled with long-running concerns over an unpredictable tax regime and uncertainty over proposed new regulations on alcohol consumption in its home market.
The competition authority’s decision will, however, also consider EABL’s unique position in the market landscape — it directly employs over 1,600 people and is responsible for numerous more indirect opportunities for farmers and distributors.
Room for Disagreement
Some analysts argue that the acquisition is likely to be approved without conditions to correct the alleged abuse of dominance, given the dismissal of long-running complaints from other players in the sector over the years.
Ian Mwangi, a Nairobi-based economist, also told Semafor that EABL’s healthy cash position and liquidity meant that it was likely to absorb any shocks in the medium-term should the regulator set unfavourable conditions.
“EABL has been accused of abusing its dominance in the past and regulatory action was not taken,” he said. “I don’t think the change from Diageo to Asahi will change that.”
Notable
- Asahi Group has hired advisers in the region as it seeks regulatory approvals for the $2.3 billion acquisition of EABL, African Intelligence reported this week.
- Nairobi-based brewer African Originals in 2024 accused EABL of orchestrating a smear campaign as it launched a competing product line, a story broken by Semafor.