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Kenyan brewers see an antitrust decision to impose conditions on Asahi Group’s $2.3 billion acquisition of Diageo’s East African Breweries as a potential opening to reshape market dynamics in their favor.
The Competition Authority of Kenya recently set a number of conditions on the deal to assuage longstanding concerns over EABL’s dominance, including requiring retailers to allocate refrigeration space for brands other than those owned by EABL and Asahi, and ringfencing $115 million to resolve third-party disputes. The authority’s director-general disclosed the conditions in an appearance before parliament last week. If enforced, the retail stipulation could benefit global rivals such as Heineken as well as smaller local brewers including Keroche Breweries and African Originals.
The companies, as well as various distributors, have over the years accused EABL of engaging in anti-competitive practices. EABL has consistently denied these allegations and rejected both conditions set by the regulator, seeking a reversal of the decision.
One beer executive at one of EABL’s larger rivals, who spoke on condition of anonymity because they were not authorized to speak to the media, described the Competition Authority’s decision as “a positive first step.” However, he noted that competitors weren’t celebrating just yet as the regulator was yet to issue a formal notice of its decision. “It’s not over, you have to consider EABL’s lobbying power, the weight they carry and their position in the market as one of the region’s largest companies and employers.”
The competition authority and EABL were yet to respond to queries from Semafor at the time of publication.
In April, Semafor exclusively reported on a regulatory complaint filed by Heineken subsidiary Kenya Wines Agencies Limited (KWAL) over the sale of EABL. KWAL cautioned that the deal could entrench alleged abuses of market power by allowing EABL to lock distributors and suppliers into exclusive agreements and dictate prices.
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The decision to withhold antitrust approval has left the deal hanging in limbo. While authorities in Uganda and Tanzania have fully approved it, multiple hurdles remain in Kenya, EABL’s largest market. A court order remains in place stopping the sale until various legal challenges are heard.
At the same time, Kenya’s parliamentary finance committee wants the competition authority to implement binding safeguards for farmers, employees, suppliers, and consumers before the deal is approved.
The issues surrounding the sale have not affected EABL’s performance, with the company crossing a billion dollars in revenue for the first time in the financial year ending in June: The brewer posted a 49% rise in net profit in results published earlier this month, jumping to a record $140 million from $94 million the previous year.
Asahi is keen on expanding its geographic footprint and is betting on the EABL deal to deliver long-term growth “driven by population increase and economic expansion,” while London-headquartered Diageo is selling its 65% stake in EABL as part of a turnaround strategy, offloading non-core assets to reduce debt and accelerate growth.
Martin’s view
Existing concerns on EABL’s dominance focus on its exclusive agreements with distributors, suppliers, and partners which, according to critics, allows it to determine prices and limit market access for competitors.
If the regulator’s proposed remedy — compelling the allocation of refrigeration space to non-EABL brands in bars and retail outlets — is approved, it would be a game-changer for smaller companies that have struggled due to EABL’s dominance.
EABL’s focus will be on striking a deal with the Competition Authority as the appeals tribunal, where it could potentially challenge decisions by the regulator, is currently not fully constituted. Investor uncertainty will grow the longer the deal drags on, with Asahi and Diageo having earlier said the deal was expected to close in the second half of 2026.
Room for Disagreement
Reacting to the Competition Authority’s latest demands, Diageo said there was “no basis whatsoever for these proposed conditions,” adding that “the supposed concerns are entirely unrelated to the transaction and their imposition would be unlawful. Diageo and Asahi are continuing to discuss this issue with the CAK.”
Diageo’s position has been backed by some analysts, who argue that the situation does not bode well for investment in Kenya, and raises questions on the influence of lobby groups and MPs in major transactions.
“The long-term consequences are severe. If every high-profile corporate transaction becomes subject to parliamentary bargaining, international investors cannot rely on consistent, rules-based outcomes,” wrote Jaindi Kisero, a former managing editor of The EastAfrican newspaper, in a column for Kenya’s Business Daily.
Notable
- EABL this month disclosed plans to ensure business continuity after the merger, promising further investments in expansion and sustainability.