Joint Venture Guidelines under the Competition Act No. 12 of 2010

The Competition Authority of Kenya to Clarify the Rules and Filing Requirements of Joint Venture Arrangements

The Competition Authority of Kenya (the CAK) has published draft joint venture guidelines (the Guidelines). The Guidelines aim to provide clarity, transparency and predictability about joint venture arrangements that require CAK approval. The Guidelines specifically clarify the CAK’s position on what consists of a Full Function Joint Venture, a Greenfield Joint Venture; and lays out the process for notifying and filing a joint venture with the CAK, as well as how the CAK reviews a joint venture’s impact on competition.

The Guidelines are still open to review and amendment, with the CAK inviting comments by Friday, March 5th, 2021. However, the following are the main implications of the proposed Guidelines:

Full Function Joint Venture

The Guidelines define a Full Function Joint Venture as a joint venture undertaking that performs all the functions of an autonomous economic entity for ten (10) years or more including:

i. operating on a market and performing the functions normally carried on by undertakings operating in the same market; and

ii. having a management dedicated to its day-to-day operations and access to sufficient resources including finance, staff and assets in order to conduct for a long duration its business activities within the area provided for in the joint-venture agreement.

Full Function Joint Ventures constitute a merger under the Competition Act and will require notification and filing with the CAK. However, it should be noted that a joint venture established for a purposefully finite period (e.g. a ten (10) year construction project) will not be viewed as having a long duration and will not qualify as a Full Function Joint Venture.

Greenfield Joint Venture

The Guidelines set out Greenfield Joint Ventures as joint venture undertakings in which local or foreign entities collaborate with other locally domiciled entities to develop a new product separate from the products and services provided by the parent entities. Typical distinguishing features of a Greenfield Joint Venture include: a new joint venture vehicle formed by the parties for the purpose of the transaction, undertakings in new areas for the parties in the joint venture, and the transaction entailing entry into a new business area or enhancement of an existing business.

The Guidelines recommend that parties potentially entering into a Greenfield Joint Venture should seek the advisory opinion of the CAK as Greenfield Joint Ventures are reviewed on a case-by-case basis.

Process for Filing a Joint Venture With CAK

The Guidelines set out the registration requirements for a Full Function Joint Venture. The CAK requires the parent entities to separately submit documents relating to the transaction by filling the Merger Notification Forms (MNF) as Joint Venture Parents, and if a joint venture vehicle exists as a part of the undertaking it will also be required to file the MNF. In situations where the joint venture parties have no separate joint venture vehicle, (e.g. a contractual relationship or have acquired existing shares in an existing undertaking that results in a joint venture) the parent entities will only need to separately submit documents by filling the MNF as Joint Venture Parents.

Determination of Impact on Competition

The Guidelines specify how the CAK determines the competition impact a Full Function Joint Venture transaction is likely to have in a market. The CAK considers the turnover and asset figures of all the parents to a joint venture, including the entities directly or indirectly in the control of the joint venture parents and the joint venture vehicle where applicable. In addition, the CAK looks at the terms of the joint venture agreement(s), public interest factors (e.g. the effect of the joint venture on the labour market) and whether the efficiency benefit of the joint venture brings more economic gains compared to the competition detriment. If the CAK makes a finding that a joint venture transaction has negative competition and public interest impacts, it may engage the joint venture parties to come up with remedies to mitigate against the harm. Additionally, the CAK will direct on which of the joint venture parties as well as the joint venture vehicle will be impacted by the mitigating factors.

The draft joint venture guidelines aim to further clarify the rules and reduce the confusion surrounding the competition regulations on joint ventures. Pursuant to the Guidelines, the CAK is committed to further its mandate on fostering competitive markets through transparency.

For further information please contact Walid Khan or Benedict Nzioki.

Chambers Global 2021 highlights our cross-border strengths

Norton Rose Fulbright ranked first among all law firms with 18 ranked lawyers in the Chambers Global 2021 global-wide practice rankings, as well as standing in the top 10 for total number of global-wide departmental practice rankings, practice rankings across all categories and lawyers ranked overall.

The firm earned 22 global-wide practice rankings, and was ranked in 185 practice areas across all categories, including global-wide and country-specific. The 185 practice area rankings include 16 top tier rankings in China, Greece, Malaysia, Morocco, Myanmar, the United Kingdom, the United Arab Emirates and the United States.

A total of 234 Norton Rose Fulbright lawyers were individually ranked as leaders in their field. The firm also picked up six new departmental rankings in Africa, Latin America, Russia, the United Kingdom and United States.

In its analysis, Chambers cited clients who provided feedback on the firm’s work, praising its extensive global reach.

“The (Norton Rose Fulbright) international network has become an increasingly important component of their service delivery as cross-border business grows,” one client told Chambers. Another praised the firm’s “ability to function seamlessly with team members in different offices and across time zones.”

A full list of our rankings is available online.

Chicago Partners Again Honoured as Notable Minorities in Law

For the second consecutive year, Crain’s Chicago Business has named partners Zulf Bokhari, Roderick Branch, and Robert Fernandez to its Notable Minorities in Accounting, Consulting, and Law 2020 list. The honourees are recognised for having “overcome challenges and bias to rise to the top of their professions” through both their practice work and efforts to advance diversity and inclusion.

Bokhari, a member of Latham’s Banking Practice, represents leading commercial and investment banks in the syndicated loan markets, often advising on cross-border financings for working capital, acquisitions, and other purposes. A profile published by Crain’s highlighted his recent representation of a major US bank on multiple transactions, including as lead agent/arranger and lender in US$2 billion revolving credit facilities for a global health care company and related financings for its European operations. Crain’s also noted his role on the advisory board of the Kellogg Institute for International Studies at the University of Notre Dame.

Branch, a member of Latham’s Capital Markets and Latin America Practices, advises on capital markets transactions, with a focus on securities offerings by non-U.S. issuers. His published profile featured Branch’s recent representations of IEnova, Mexico’s largest private-sector energy company, in an US$800 million bond offering, Aon in a US$1 billion senior note financing, Hyatt Hotels in bond financings of US$1.65 billion, and Cars.com in its debut US$400 million high-yield financing. Branch is the immediate past Chicago office leader of Latham’s Hispanic/Latin American Lawyers Group, and he leads the firm’s International Visiting Associate program, through which law firm associates join Latham full time for a year. In 2020, Branch was also named to the Chicago Symphony Orchestra board of trustees.

Fernandez, a member of Latham’s Real Estate Practice, specialises in financings, acquisitions, dispositions, joint ventures, commercial leasing, and real estate development. His profile in Crain’s noted his recent advise to institutional investors on joint ventures in connection with multifamily, student housing, industrial, and large mixed use developments. For example, he advised a hedge fund in connection with a large office tower lease in Chicago, and a real estate investment and hospitality management company on a joint venture to acquire a Las Vegas hotel and casino. Fernandez is a member of Latham’s Global Diversity Leadership committee and is Chicago office leader of the firm’s Hispanic/Latin American Lawyers Group. He also serves on the Civic Federation board in Chicago.

In addition to the trio being selected among the 2019 Notable Minorities in Accounting, Consulting, and Law honourees, Bokhari and Branch were also previously included in Crain’s predecessor lists of the Most Influential Minority Lawyers in Chicago in 2017 and 2018.

DLA Piper helps build pro bono culture in Colombia

New Perimeter, DLA Piper’s non-profit affiliate that provides long-term pro bono legal assistance in under-served regions around the world, recently taught an online seminar on pro bono to more than 30 undergraduate law students at the Universidad del Rosario in Bogotá, Colombia.

During the course, which was held on November 18, Lisa Dewey, DLA Piper’s pro bono partner and director of New Perimeter, and Sara Andrews, senior international pro bono counsel and assistant director of New Perimeter, spoke to the participating students about the importance of pro bono legal work and how they can get involved in pro bono over the course of their legal careers.

The project is part of an eight-year relationship between New Perimeter, the Universidad del Rosario and Fundación Pro Bono Colombia to encourage and help create a culture of pro bono in Colombia. Over the course of the collaboration, New Perimeter has sent lawyers to Colombia to teach law students and practicing lawyers about legal social responsibility, the use of pro bono to address unmet legal needs and increase access to justice, and the history of pro bono in the United States and around the world. This is the first time New Perimeter connected virtually with Colombian students.

“It is always a pleasure to speak to Colombian law students about pro bono,” Dewey said. “Even though we weren’t able to be there in person this year, it was exciting to connect virtually to hear about the important issues the students are passionate about and how they plan to use their legal degrees to make a difference in Colombia.”

Practical Completion and Defect Liability Period Under Nigerian Law

Though the date of practical completion is of great importance to a building project, it does not have a unanimous definition. Generally, the date of practical completion is not merely the date in which the Client takes over possession of the building. In fact, practical completion may be achieved without the Client taking over physical possession of the building.

Technically and legally, practical completion is the date when the responsibility of insurance, security and maintenance of the building passes from the Contractor to the Client; the Client pays the contract retention sum to the Contractor and the defect liability period begins to run.

A Construction Agreement may provide for practical completion of a building or it may be inferred from the conduct of the parties or deemed upon the happening of an event. The defect liability period is a period for the Contractor to rectify the latent defects it discovers in the building or brought to his attention by the architect or Client’s agent on the building project.

Practically, the date of practical completion of the building is the date in which the works are reasonably ready for its intended use even though there may be outstanding snags or defects. In essence, practical completion is achieved where construction is completed and there are no patent defects in the construction of the building.

It is easier to ascertain the date of practical completion where the Construction Agreement clearly spells out same. Most Construction Agreements usually provide for the architect or the Client’s agent on the project to issue a Certificate confirming practical completion of the works under the Agreement. But what happens where there is no Agreement defining the date or medium to signal practical completion or the architect or Client’s agent on the project refuses to issue a Certificate of practical completion of the construction works in the building even though same has been achieved?

In such an instance, practical completion would be deemed from the intention of the parties which can be inferred from their conducts. For instance, if the Contractor informs the architect or Client’s agent on the project that he has completed the construction works and the architect or Client’s agents submits a list of latent defects on the project to the Contractor, practical completion is deemed to have taken place and the defect liability period shall begin from that date.

Upon completion of the rectification works submitted to the Contractor by the architect or Client’s agent, the defects liability period shall come to an end and the Contractor will ordinarily not be liable to carry out further maintenance works on the building.

However, where there are patent defects on the project, it is the responsibility of the Contractor to rectify the patent defects on the building before practical completion will be deemed and the defect liability period begins. For instance if Mr Tanko Ahmed employ Main Construction Limited to construct a 4 storey building and upon completion of construction, the parties discover that the walls are cracked or the ceilings are licking, Main Construction Limited would have to effectively rectify the cracked walls and licking ceilings before practical completion will be deemed and the defect liability period would begin.

Again where there is no Agreement on the duration of the defect liability period, it may be deemed from the conducts of the parties. For instance, if upon practical completion, the Client informs the Contractor that he will take over possession of the project after the rainy season. The rainy season constitutes the defect liability period. The end of the rainy season signifies the expiration of the defect liability period and the Contractor will no longer be liable to carry out maintenance works on the building.

This is because the Contractor cannot maintain the building project indefinitely. Even the law does not expect that. In such a circumstance, after the rainy season, the Contractor should advise the Client to immediately take possession of the building because practical completion of the building has been achieved and the defect liability period has ended. The Contractor is legally entitled to withdraw from the building and send the keys of the building to the architect or Client’s agent.

Oxana Balayan named among the Top 30 Women in Law

Hogan Lovells partner Oxana Balayan has been named in the ‘Women Who Will’ 2020 report by Obelisk Support and Next 100 Years who champion the talent and potential of women in law around the world. The award recognises the top 30 women of the legal in-house community, private practice and other change makers from within the industry, with nominations being accepted from senior General Counsel and other senior leaders in law.

Clients, including LSE listed Polymetal International plc, a global leader in the production of gold and silver, nominated Oxana Balayan for her ‘inspiring leadership’, ‘fantastic and innovative achievements’ and ‘legendary dedication to clients’.

Hogan Lovells commitment to diversity and inclusion is integral to our success as a global law firm. Oxana Balayan has been a poster-woman for gender equality in Europe and Russia for many years. Oxana leads the Corporate and Finance practice in Russia and CIS at Hogan Lovells, is a successful business woman, a mother of two great children, a marathon runner and a relentless gender equality fighter.

At Hogan Lovells, we fully support this report which aims to shine a light on talented individuals and on the gender diversity of leadership in law and why it matters. Hogan Lovells vision is to become the market leader in D&I, and to create an inclusive environment where people of all backgrounds have the opportunity to thrive and belong.