Standard Media Group CEO Orlando Lyomu, who blew Kes17.2 million shillings buying Mt Kenya Star and Pambazuko newspapers, is facing a Kes10 million fine from the competition watchdog.
The Competition Authority of Kenya (CAK) wants to punish the newspaper for acquiring interests, intellectual property rights, titles in and to the trademarks and goodwill in the businesses of Mt Kenya and Pambazuko Newspapers without notifying the regulator.
The antitrust body says the acquisition was in contravention of Section 42(2) of the Act as the prior approval of the respondent had not been sought.
Standard Group, which made a loss of Kes61.2 million in the six months to June last year, is facing a Kes10 million fine and or 5 years in jail as well as a financial penalty of up to 10 percent of the gross annual turnover of the preceding year.
Standard bought out Mt Kenya Star, a monthly newspaper that focuses on agribusiness and enterprise, from former Nation Media Group reporter Steve Mbogo.
The paper, which circulates just about 7,000 copies in 11 counties in Central Kenya, has however gone dormant.
In its wake, it has left a bitter taste for the Mombasa Road-based news outlet having cost it Kes13.7 million.
It also bought coast-based Pambazuko Swahili newspaper for Kes3.5 million as the firm sought to have a presence in the shrinking Kiswahili print media market.
Standard has gone to the competition tribunal where it has obtained temporary relief after the tribunal ordered CAK to conclude its investigations, hearing, and render a final decision as per the law.
The tribunal said Standard Group had not been given a fair hearing and ordered CAK in conducting the investigation and hearing to ensure that it accords the media house and any other relevant party a fair hearing including but not limited to an opportunity for an oral hearing conference.
The paper is arguing that a merger transaction only happens when an acquirer controls the business of the target undertaking and not when they control an asset.