Tanzania raises market dominance threshold in law review

Dar es Salaam. Two companies seeking to merge into a single entity will no longer be compelled to abide by the 35 percent market dominance rule, Parliament heard on Tuesday.

Moving the Fair Competition Amendment Bill, 2024, Industry and Trade minister Selemani Jafo proposed amendment of sections 5 and 8 of the Fair Competition Act, 2003 with a view to raising the market dominance threshold from 35 to 40 percent.

This also means that a single entity will be allowed to control up to 40 percent of the market it specialises in.

“Sections 5 and 8 are proposed for amendment to introduce the concept of ‘Joint Holding’ and to increase the market holding threshold from 35 percent to 40 percent,” Dr Jafo said.

He said the purpose of the proposed amendments was to impose restrictions against the misuse of market holdings involving multiple individuals and to align with the economic and developmental changes occurring at the national, regional, and international levels.

Parliament’s Industry, Trade, Agriculture and Livestock Committee endorsed the move, saying it will help the country attract investors.

“The committee was informed that the increased threshold will encourage investment in the country and that it aligns with other developing countries due to economic changes and developments occurring at the national, regional, and international levels. The committee agreed with the government’s proposals,” committee chair Deodatus Mwanyika said.

Apparently, the government may have learnt a thing or two from the challenges it went through when Scancem International DA (Scancem) – a subsidiary of Heidelberg Cement AG – applied to the Fair Competition Commission (FCC), seeking to acquire Tanga Cement which was at that time owned by AfriSam Mauritius Investment Holdings Limited.

Though the FCC had initially endorsed the deal, some industry stakeholders went to the Fair Competition Tribunal (FCT), opposing the move on the ground that the merger would create a company whose market share would surpass the 35 percent threshold.

It took a great deal of debate, including in the Parliament and a protracted legal battle and manoeuvres to finally get the deal done.

The legal battle took over one year and it was only in November last year (2023) when the FCT three-member bench decided to clear the air over their differing earlier rulings on the matter.

It is in apparent reaction to some challenges witnessed in the past that the government has now moving that decisions of the FCC and the FCT should be challenged at the High Court.

“Sections 61 and 84 are proposed for amendment so that a person dissatisfied with decisions made by the FCC can appeal to the High Court, where the case will be heard by three judges. The aim of these amendments is to provide an opportunity for individuals dissatisfied with the Commission’s decisions to seek justice from a higher judicial body,” Dr Jafo said.

Among other notable changes in the law, the government is proposing to repeal and rewrite Section 17 and the Amendment Schedule in paragraph ‘B’ to include a requirement for sellers of goods or services to display the price of each item on offer.

Additionally, Dr Jafo said, the section sets conditions that prevent sellers from charging customers more than the price stated as the actual price of the goods or services. The purpose of the proposed amendments is to protect consumers from being overcharged and to ensure price transparency for consumers before making a purchase.

But according to Mr Mwanyika, the Committee differed with the government on the amount that was proposed as penalty for those violating the provision which has initially been proposed at not less than Sh300,000 and not exceeding Sh1 million.

The committee, Mr Mwanyika said, expressed concern about the implementation of the section, particularly for small entrepreneurs, including food vendors in informal settings such as food vendors, motorbike taxi operators and vendors of small items in informal markets.