Tanga Cement saga: Respect tribunal ruling, says TLS chief

Dar es Salaam. The Sh137 billion Tanga Cement acquisition saga took a new turn yesterday when Tanganyika Law Society (TLS) president Edward Hoseah commended the ruling by the Fair Competition Tribunal (FCT) on the matter and urged all parties to respect it.

“In my view, the September 23, 2022 ruling by the FCT bench chaired by Lady Justice Salma Maghimbi is good and must be respected. The ruling took into consideration the need to protect consumers’ rights,” Prof Hoseah told journalists in Dar es Salaam.

He said being a lower middle-income nation, Tanzania needs a robust law to guard its economy against unfair competition.

“I know how much we need investors and our President, Her Excellency Samia Suluhu Hassan, has been doing a commendable job in opening up Tanzania to investors. However, existing laws must be respected,” he told journalists in Dar es Salaam.

The merger in question dates back to October 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, issued a joint statement that they had finalised the terms upon which the former would acquire a 68.33 percent stake in Tanga Cement.

The Fair Competition Commission (FCC) had initially approved the proposed Sh137.33 billion takeover, but with the caveat that the acquiring firm should not shut down Tanga Cement; that it should continue to produce and promote the Simba Cement (Tanga Cement) brand, and that it was barred from laying off existing employees at Tanga Cement.

However, some players were opposed to the decision on the grounds that allowing the acquisition to go ahead would prevent, restrict, or distort competition in the market, contrary to the Fair Competition Act, 2003.

Chalinze Cement Company Limited and the Tanzania Consumer Advocacy Society (TCAS) lodged an appeal with the FCT, which quashed the planned merger through its verdict delivered on September 23, 2022.

The judgment by the quasi-judicial FCT, delivered by Lady Justice Salma Maghimbi, Dr Godwill Wanga and Mr Boniface Nyamo-Hanga, said in part, “Pursuant to the provisions of Section 11 (1) of the FCA (Fair Competition Act), having quashed and set aside the decision of FCC, the Tribunal prohibits the merger between Scancem International DA and Tanga Cement.”

According to Prof Hoseah, the ruling was in accordance with the FCA.

“I commend the ruling. It seeks to protect Tanzanian consumers against the outcomes of unfair competition in the market. It has also tries to balance the interests of various stakeholders, including cement producers,” he said.

Prof Hoseah, who is due to step down as TLS president next month after serving two one-year terms in line with the society’s constitution, said the ruling also compels FCC to consider all conceivable factors when making a decision.

“So in short, I commend the ruling for considering the interests of consumers and other stakeholders,” he said.

Prof Hoseah, who is a former Prevention and Combating of Corruption Bureau (PCCB) director general, said the ruling should serve as an eye-opener for those handling investment matters and consider reviewing the relevant laws and their impact on businesses.

“If our laws are in conflict with our desire to attract investments, then let’s amend them, but meanwhile the existing ones must be protected and respected. We need investors in our quest to develop this country and we must view such rulings as an eye-opener as far as review of the relevant laws is concerned.”

Prof Hoseah added that Tanzania needs all the investment it can muster and that the country should have laws that strike a balance between the interests of businesses and those of consumers.

Despite the FCT’s ruling, on February 11, 2023 the FCC placed an advertisement in which it said it had begun reviewing and investigating afresh Scancem International DA’s intention to acquire control of Tanga Cement Plc.

The review and investigation, the FCC said, were meant to establish whether the acquisition was likely to harm competition or not.

However, Prof Hoseah said parties aggrieved by the September 23, 2022 ruling could go back to the FCT and request a review.

“The side that prevailed in the matter could also go to the FCT to apply for execution of decree,” he added.

Prof Hoseah was also of the view that the different parties in the case could alternatively seek a negotiated position on the way forward.

Prof Hoseah aired his views four days after the matter was brought up in Parliament when some lawmakers warned that allowing the deal to proceed would result in a monopoly that would have far-reaching consequences on cement prices across the country.

Debating the 2023/24 budget estimates of the Prime Minister’s Office, some MPs said the planned acquisition would lead to price spikes, especially when the manufacturer undertakes routine factory maintenance.

“I have read in the papers about the planned merger between Twiga Cement and Tanga Cement. If it (Twiga Cement) acquires a controlling stake in Tanga Cement, this problem (of price increases) is bound to be recurring in November because we will have a single manufacturer which will be capable of fixing prices,” said Mr Kenneth Nollo (Bahi-CCM).

He said Tanzanians would not be able to build decent houses if cement would be a luxury, and asked the government to provide a detailed explanation on the matter.

Mr Elibariki Kingu (Singida West-CCM) rose on a point of order, and said according to the Fair Competition Act, no company was allowed to control more than 36 percent of the market.

“The merger the honourable MP is talking about will create a market monopoly that surpasses the threshold in line with the law that was approved by this august House, and Tanzanians should thus brace for tough times insofar as cement prices are concerned,” he said.