What proposed amendments to competition law seek to achieve

The amendment to the Fair Competition Act seeks to raise the threshold of market share for merging firms to be regarded as market dominance.

The bill, which was presented for the first reading in Parliament last week, seeks to recognise abuse of dominance practices by more than one person and to align with economic changes and development taking place at the national, regional and international levels.

The other notable provision in the proposed amendments is Section 11, which also brings a completely new provision that gives room for the Fair Competition Commission (FCC) to approve an otherwise prohibited merger on the ground of ‘yielding substantial public benefits’.

“The principal Act is amended in Section 11(1) by deleting the words “creates or strengthens a position of dominance” and substituting for them the words “substantially lessens competition”,” the minister for Industry and Trade, Ashatu Kijaji, who tabled the amendment bill in Parliament, said.

In an apparent move to avoid the misuse of the words ‘substantial benefits to the public’, the proposed amendments come complete with a detailed explanation of factors that will be considered as such [substantial benefits to the public].

The factors include the extent to which the proposed merger shall contribute to greater efficiency in the allocation of resources and the extent to which the proposed merger would, or is likely to, promote technical or economic progress, the transfer of skills, or otherwise improve the production or distribution of goods or the provision of services in Mainland Tanzania.

Other factors to be considered include the extent to which the target firm faces actual or imminent financial failure, whether the proposed merger offers the least anti-competitive alternative use of the assets of the business and whether the proposed merger will boost exports from Mainland Tanzania or employment in Mainland Tanzania.

The list of factors also includes the extent to which the proposed merger shall affect a particular industrial sector or region; the extent to which the proposed merger may affect the ability of national industries to compete in regional and international markets; and the extent to which the proposed merger may affect the ability of small businesses to become competitive.

“The purpose of the proposed amendment is to set the correct measure of prohibited mergers to match the reality of the competition environment at the national, regional, and international spheres,” stated Dr Kijaji.

Notably, the expansion of Section 17 of the principal Act mandates that sellers of goods or services must display prices and prohibit them from charging consumers more than the displayed prices. Section 17(4) reads in part, “A person who contravenes this section commits an offence and shall, (a) in the case of a body corporate, be liable to a fine of not less than one million shillings and not exceeding ten million shillings.”

The proposed amendments come at a time when memories of the back-and-forth legal battles involving the acquisition of Tanga Cement by Scancem International DA (Scancem) are still fresh in people’s minds.

The battles began in 2021 when Scancem International DA (Scancem), a subsidiary of Heidelberg Cement AG, which owns Tanzania Portland Cement Plc (Twiga Cement), and AfriSam Mauritius Investment Holdings Limited, owner of Tanga Cement, agreed for the former to acquire a 68.33 percent stake in Tanga Cement.

While the FCC had initially given a conditional green light to the acquisition deal, the same did not go down well with some players in the market who went to the Fair Competition Tribunal (FCT) to challenge the deal.

While the FCT initially quashed the merger, what followed was a protracted legal battle and intense lobbying by both parties [those for the deal and those against it] to the point that, at some point, it almost slashed the Parliament into two sides of opposing views. Ultimately, the deal went through, but it still left FCC and FCT with an in-tray full of assignments to handle going forward.