Betting firm hit with Sh15m fine over merger deal
Online sports betting firm Betway is set to fork out a Sh15 million fine after it moved to merge with Maltese company GM Gaming without seeking and receiving approval for the transaction from the competition regulator.
The Competition Authority of Kenya (CAK) said in a report that Betway first sold a majority of its stake to GM-Gaming in 2015, which later disposed of controlling shares to yet another firm without the approval of the watchdog.
The Competition Act requires that any business that acquires shares or assets of another company that results in the change of control must seek approval from the regulator.
If the combined turnover of the two parties is valued at over Sh1 billion, for the year preceding the notification to the agency, the transaction is analysed for its possible impact on competition and public interest concerns.
“The authority, using its own intelligence, initiated investigations into the conduct of Bluejay (Betway) pursuant to Section 42(2) of the Act that prohibits implementing mergers without prior approval of the authority,” said the CAK.
“It was established that Bluejay were in contravention of Section 42(2) and (3) of the Act by implementing two transactions without prior approval.
The first change of control took place in September 2015 that made GM-Gaming the majority shareholder. Further another transaction saw GM holding transferring their majority shareholding to Rosehall Global.”
Punishment for implementing a merger without the CAK nod is imprisonment for a term not exceeding five years, a maximum fine of Sh10 million, or both, for criminal prosecutions.
The regulator may also impose an administrative penalty of up to 10 per cent of the preceding year’s relevant turnover of the undertakings.
“Pursuant to Section 42(6) of the Act, the authority imposed on Bluejay an administrative financial penalty of Sh15 million.”