14 January 2013

Tanzania: Beer 'Wars' Takes New Twist

THE Fair Competition Commission (FCC) has teamed up with a Dar es Salaam businessman to file a complaint against Mabibo Beer, Wine and Spirit Limited and Tanzania Revenue Authority (TRA) over allegations of monopoly of importation and distribution of Heineken Beer in Tanzania.

Initially, the complaint had been lodged by the businessman, Mr Lucas Mallya, trading as Baraka Stores, on three occasions. But in the FCC complaint, Baraka Stores is neither a party nor an interested party on the matter.

Mabibo Beer, Wine and Spirit Limited, through its International Independent Consultant, Mr James Rugemalira, have already petitioned to the Minister for Industries and Trade, Dr Abdallah Kigoda, to intervene in the matter administratively.

"I request you Honourable Minister for Industry and Trade to add your voice and investigate and satisfy yourself that the recent hastily and irregularly orchestrated moves by FCC in Complaint No. 3 of 2009 are not meant to cover up for tax evaders," Mr Rugemalira states in a letter dated December 29, 2012.

The Complaint No. 3 of 2009 by the FCC, which contain similar facts with those of Baraka Stores for which the Commission is required to determine following a directive by the Fair Competition Tribunal (FCT), was lodged by the FCC within its registry on December 27, 2012.

"I feel compelled to complain to you and to request for your administrative intervention on the mistreatment and abuse of office being unfairly perpetrated by the FCC upon Mabibo," reads part of the letter addressed to Dr Kigoda.

According to the letter, Rule 10 (3) (d) of the Fair Competition Commission Procedure Rules, 2010 provides that a complaint shall not be entertained where the same in whole or in part was previously determined by any court, tribunal, arbitration, judicial or quasi-judicial body.

On November 4, 2010, by letter, Mabibo informed the Director General of the FCC that on October 15, 2010, the Kinondoni District Court issued a decree, prohibiting any person to sell in Tanzania market Heineken Beer which did not bear code number 11330 and Windhoek Beer with no code number MB66.

Such order directed that one could not sell the two products except where specific written consent of Mabibo Beer Wines and Spirit Limited had been sought and obtained. Mabibo Beer Wine and Spirit Limited, therefore, reiterated that the FCC had no jurisdiction to entertain the complaint.

"In a complete new and irregular twist, probably believing it , may confer to itself jurisdiction, which it does not have, the FCC stepped into the shoes of Lucas Mallya trading as Baraka Stores and became the complainant in a statement of Complaint filed by the FCC on December 27, 2012 in Complaint No.3 of 2009," the letter reads.

Mr Rugemalira stated that Mabibo was very concerned that such unusual conduct and hasty move by the FCC to step into the shoes of Baraka Stores when the Commission was aware that Baraka Stores had already filed same complaints which are still pending for hearing by the FCC itself as ordered by the FCT.

"At all material times Mabibo and TRA have provided compelling evidence to the FCC showing Baraka Stores was a cover up name for tax evasion by Jaluma Stores owned by Lucas Malya, may be a new twisted design for covering up a syndicated Tax evasion scheme," the letter says."

In its complaint, which has similar facts with that of Mr Mallya lodged before the FCC since April 30, 2008, to challenge such monopoly, the Commission states that way back in 2003, Mabibo Beer Wine and Spirits Company entered into an exclusive agreement with Heineken Brouwerijen B.V. Holland (Proprietor).

The agreement was on exclusive importation, distribution, marketing and selling Heineken beer in Tanzania and hence, made MABIBO a dominant player in the Heineken Beer Trading in the country with a Heineken Beer market share of 100 per cent.

Around July 2004, Mabibo and TRA, jointly agreed to restrict access of the Heineken Beer market of other players of Heineken Beer by publishing Tanzanian information circular number 13 dated July 27, 2004, which is alleged to have had the effect of restricting other importers, while granting exclusive power to import and sell the Heineken branded products to Mabibo.

In 2007, Mabibo and TRA confiscated two containers of Heineken Beer, which were imported by Baraka Stores and restricted entrance of Heineken Beer imported by Baraka Stores and paid for import taxes by Jaluma Stores into the Tanzania market. Such action is alleged to amount to entering into an anti-competitive agreement and misusing of market power, thus infringing the Fair Competition Act.

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