tanzania


What is the relevant competition legislation and who are enforcers?

The relevant legislation is the Fair Competition Act, 8 of 2003 (the “Act”). The Act is enforced by the Fair Competition Commission (“the Commission”), the Fair Competition Tribunal and the Court of Appeal.


A merger is required to be notified to the Commission if it (i) constitutes a merger (as defined in the Act); and (ii) meets the relevant thresholds. For the purposes of the Act, a ‘merger’ is defined as an acquisition of shares, a business or other assets, whether inside or outside Tanzania, resulting in the change of control of a business, part of a business or an asset of a business in Tanzania.

A merger is prohibited if the effect of the proposed transaction is to create or strengthen a position of dominance in a market.

The thresholds are set by the Commission and, currently, a merger is notifiable if it involves turnover or assets above a threshold amount of 800 million Tanzania Shillings (TZS), which is based on the combined market value of the assets of the merging firms. The current threshold is set out in the Fair Competition (Threshold for Notification or a Merger) Order, 2006, which came into effect on 19th March, 2006.

Parties to a notifiable merger may not implement the merger unless they have, at least 14 days before doing so, filed with the Commission a notification of the proposed merger, supplying such information as the Commission may by Order require to be included. The Commission shall then decide whether the proposed merger should be investigated. If it is determined that the merger should be examined, such merger or acquisition will not be permitted to take place for a period of 90 days to allow the Commission to conduct and complete its examination. It is an offence to give effect, whether intentionally or negligently, to a notifiable merger that has not been notified to the Commission at least 14 days prior to its implementation.

The legislation does not specifically refer to joint ventures. Joint ventures that are classified as mergers fall to be notified to the Commission if they meet the thresholds for mandatory notification. The Act provides that a person shall not make or give effect to an agreement if the object, effect or likely effect of the agreement is to appreciably prevent, restrict or distort competition. Therefore, although a transaction may not be construed as a merger nor meet the relevant thresholds, it may still be prohibited in terms of the Act.

The Act regulates prohibited practices and specifically prohibits certain horizontal restrictive practices (unlawful conduct between competitors). The Act prohibits any agreement (whether an arrangement or understanding, formal or unwritten) that has the object, effect or likely effect of appreciably preventing, restricting or distorting competition, including (i) price fixing between competitors; (ii) collective boycott by competitors; (iii) restricting output between competitors; or (iv) collusive bidding or tendering.

The Act provides that where a person commits an offence under the Act, a fine of not more than 10% but not less than 5% of the offender’s annual turnover may be imposed. The Act also provides for compliance and compensatory orders. Further, if the Commission is satisfied that a monetary value can reasonably be placed on the damage including loss of income suffered by a person as a result of an offence under the Act, the convicted person shall, in addition to any other penalty which may be imposed, be liable to a fine of twice such monetary value, which the Commission shall order to be paid to the person suffering the damage.

Where a person charged with an offence under the Act is a corporate entity, every person who, at the time of the commission of the offence, was a director, manager or officer of the corporate entity, may be charged jointly in the same proceedings with such corporate entity and where the corporate entity is convicted of the offence, every such director, manager or officer shall be deemed to be guilty of that offence unless he/she proves that the offence was committed without his/her knowledge or that he/she exercised all due diligence to prevent the commission of the offence.

Any partner of a firm shall be jointly and severally liable for the acts or omissions of any other partner of the same firm done or omitted in the course of the firm’s business.

The legislation confers broad investigative powers on the Commission, including the power to subpoena any person who is believed to be able to furnish information or to be in possession or control of any document that may assist the Commission in performing its functions. Additionally, the Commission has broad powers of search and seizure.
The Act prohibits the abuse of a dominant position. A person is considered to be dominant in a market if (i) acting alone, that person can profitably and materially restrain or reduce competition in that market for a significant period of time; and (ii) that person’s share of the relevant market exceeds 35%. In determining, inter alia, whether a person holds a dominant position in a market, the following, in addition to other relevant considerations, shall be taken into account: (i) competition from imported goods and services supplied by persons not resident or carrying on business in Tanzania; and (ii) the economic circumstances of the relevant market, including (a) the market shares of persons supplying or acquiring goods or services in the market; (b) the ability of those persons to expand their market shares; and (c) the potential for new entry into the market. A person holding a dominant position in a market is prohibited from using his/her position of dominance if the object, effect or likely effect of the conduct is to appreciably prevent, restrict or distort competition.

Any person who intentionally or negligently abuses a position of dominance in a market commits an offence under the Act.

The Act also provides for compliance and compensatory orders. Further, if the Commission is satisfied that a monetary value can reasonably be placed on the damage including loss of income suffered by a person as a result of the offence against the Act, the convicted person shall, in addition to any other penalty which may be imposed, be liable to a fine of twice such monetary value, which the Commission shall order to be paid to the person suffering the damage.

Where a person charged with an offence under the Act is a corporate entity, every person who, at the time of the commission of the offence, was a director, manager or officer of the corporate entity, may be charged jointly in the same proceedings with such corporate entity and where the corporate entity is convicted of the offence, every such director, manager or officer shall be deemed to be guilty of that offence unless he/she proves that the offence was committed without his/her knowledge or that he/she exercised all due diligence to prevent the commission of the offence.

Any partner of a firm shall be jointly and severally liable for the acts or omissions of any other partner of the same firm done or omitted in the course of the firm’s business.

Therefore, penalties, compliance orders and/or compensatory orders to consumers or bodies
that suffered loss attributable to the offence
may be imposed on firms for the abuse of a dominant position.

East Africa Law Chambers
Plot No. 483 Phase II Area
Off Garden Road, Mikocheni
P.O. Box 38192
Dar es Salaam, Tanzania
Tel: +255 22 2771885
Web: www.ealawchambers.com


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