Seven months ago, Asahi Group Holdings agreed to buy Diageo’s controlling stake in East African Breweries – a $ 2.3 billion transaction, one of the largest cross-border deals the local market has seen in years, and one from which the Exchequer stood to gain roughly Sh40 billion in capital gains tax alone. Seven months on, the deal remains stuck.
The latest development is that the competition authority has escalated the matter to the Attorney-General – an implicit admission that the regulator itself is unsure of its own footing.
This is not a story about a regulator rigorously following the law. It is about a regulator that appears unable to make a decision.
Consider the record. The Competition Authority of Kenya first proposed a two-year timeline for settling a pecuniary penalty, then revised it to seven days.
It required that payments due to government be parked in an escrow account – a demand that sits uneasily with the Public Finance Management framework the state itself is bound by.
It tried to compress an agreed 40-day settlement window with complainants down to seven days, despite not being party to those settlement agreements in the first place.
Late in the process, it floated raising the penalty by as much as sevenfold, after months of negotiation had already taken place.
And it introduced, seemingly from nowhere, a demand to retain 10 percent of the entire transaction value in escrow – a condition that exists in no statute.
Each of these might be defensible in isolation. Together, they describe a pattern: an administration of competition law improvising in real time, on a transaction of national significance, months after the parties believed they had reached an understanding with the regulator.
Compounding the chaos is the fact that the Competition Appeals Tribunal – the body where parties can challenge decisions of the Competition Authority of Kenya (CAK) – has been virtually inactive since mid-2025, because the terms of its chairperson and key members expired several months ago. The board currently has only one member instead of seven.
Meanwhile, the Capital Markets Authority granted a mandatory takeover offer exemption, only for its implementation to be suspended by a court order sought by a third party. Litigation has multiplied across court stations, prompting the Judiciary itself to intervene and consolidate the files in Nairobi to stop what increasingly looked like forum shopping.
A coordinated campaign by fund managers has sought to reopen the commercial logic of a privately negotiated shareholder transfer altogether, months after signing.
Here is the question every serious investor is now entitled to ask before committing capital to Kenya: if I sign a merger agreement today, is there any credible basis for expecting it to close within six months? On the evidence of this transaction, the honest answer is no – not because of the underlying commercial logic, but because the process for approving it has no fixed floor.
The rules can be renegotiated by the regulator after the fact, unilaterally, and the goalposts can move again the moment the parties think they have reached them.
This is the real cost of the Asahi-Diageo saga, and it is far larger than the Sh40 billion in tax revenue at stake.
Clearly; the single greatest deterrent to foreign direct investment in Kenya is not tax policy, not infrastructure, not even the cost of capital.
It is the insensate instability of our competition regulation, and the absence of honour and good faith on the part of regulators who are supposed to be the guarantors of a predictable process.
Investors do not require regulators to say yes.
They require regulators to mean what they say when they say anything at all. A regulator that agrees to a 40-day settlement window and then unilaterally shortens it to seven; that agrees to a two-year penalty schedule and then demands payment within a week; that negotiates a penalty figure and then proposes multiplying it sevenfold without new facts to justify it – that regulator has broken the one thing capital actually prices: certainty.
The Asahi-Diageo transaction was supposed to be the easy case – two willing multinational parties, a company with no pending disputes with the competition authority, and a deal structure that preserved local listing, local jobs, and local management.
If even this deal cannot move predictably through Kenya’s regulatory architecture, no foreign board of directors evaluating an African market entry will conclude that theirs will fare better.
Regulators must be bound by the timelines and conditions they themselves set, not free to revise them under pressure from whichever constituency shouts loudest that month.