27 November 2012

Tanzania: Fair Competition Act for Review

THE Fair Competition law forming the Fair Competition Commission and Fair Competition Tribunal is up for a major overhaul. It is an exercise that would target institutional weaknesses, agency effectiveness and anti-competitive trade clauses.

The envisaged changes will also target counterfeit, consumer protection issues and effectiveness of the Fair Competition Commission and Fair Competition Tribunal. One such radical move, it is understood, may see a provision that considers introduction of criminal sanctions against shareholders, directors and officers of an enterprise engaged in cartel behaviour.

The imminent changes come in the wake of findings from a UNCTAD Voluntary Peer Review of Competition Law and Policy Tripartite Report on Tanzania, Zambia and Zimbabwe.

Speaking at a workshop to review the findings in Dar es Salaam, the Minister for Industry and Trade, Dr Abdallah Kigoda, said the voluntary Peer Review has come up with recommendations on institutional issues and Agency effectiveness. Subsequently, it has also come up with recommendations on anti-competitive trade practices, counterfeit and consumer protection issues, brought up on comparative basis and affording them an opportunity to reflect on areas for improvement.

Dr Kigoda said a well-functioning competition authority will instill investors' confidence in the market. The Fair Competition Act, 2003, protects and promotes competition for non-network providers of goods and services in the economy and also carries the legal basis for consumer protection.

The Chairman of the Fair Competition Commission, Mr Nikubuka Shimwela, said that while the commission has been working progressively with success, the Fair Competition Act is currently under review and amendments would be tabled in Parliament 'any time from now.'

Giving a candid analysis of the weaknesses in the current Act operational in Tanzaia, the Chief Executive of the Botswana Competition Authority, Mr Thula Kaira, said: 'The thrust of the findings is that effective implementation of competition law needs to be secured sufficient funding as provided for in the law, as well as thrugh some improvements in the legal framework.

The FCC may currently be limited in effective efforcement of the FCA due to express exemptions from the application of the FCA of selected but key regulated sectors." The report on Tanzania notes that while the law calls for punishment to directors and shareholders of a company, there is no mechanism of how these would be dealt with under the FCA.

Some other highlights pointed out by the report are that funding to FCC and the FCT must be predictable and implementable as provided for under section 78(c) of the FCA. "There must be a mandatory provision to deal with remittance of funds to the FCC and FCT and it should not be discretional.

There must be an appeals process to secure the funds,"it notes It also notes that provision for the FCC to appeal to the Minister in case a regulator makes an uncompetitive decision is flawed since it can be politicized.

Some of the anti competitive trade practices, expected to be changed, include inclusion of vertical agreements in the law, enumeration of conduct to be considered misuse of market power, introduce joint or combined dominance in the Fair Competition Act, introduce a new provision to deal with buyer power in the Act to address concerns raised in the agricultural sector and removal of the tying of intention and negligence to cartel conduct under section 9(4) of the Act.

The report also seeks the Act to empower FCC to issue summons when the commission wanted any information. It also wants the application of FCA to the state and state bodies not to depend on whether they are engaged in trade, rather whether their acts, arrangements or behaviour affect trade. Determination of an anticompetitive conduct should not depend on whether the conduct was committed intentionally or negligently.

The review report regarding the implantation of Tanzania's Competition law and policy was discussed during the 12th session of inter-governmental Experts (IGE) on competition law and policy was held in Geneva, Switzerland mid this year. Tanzania's competition law has been reviewed along with competition laws of Zambia and Zimbabwe which share similar economic environment.

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