18 February 2013

Tanzania: Heineken Dispute Goes to FTC

THE Tanzania Revenue Authority (TRA) and Mabibo Beer Wines and Spirit Limited (Mabibo) are contesting against a move by Fair Competition Commission (FCC) to double as a complainant and judge in a dispute regarding exclusive rights of importation and distribution of Heineken beer in Tanzania.

The duo which describes FCC's decision to lodge the complaint on the alleged monopoly before it, while it is required to adjudicate the same matter, as a fatal irregularity, has thus referred the issue to the Fair Competition Tribunal (FCT) for intervention and revision.

The FCC, according to the application, is standing for businessman Lucas Malya, alias Baraka Stores, who is the complainant against Mabibo and TRA in Complaint Number 3 of 2009, instead of remaining a neutral judicial body to determine the dispute in question.

"FCC's move is a gross and unprecedented miscarriage of justice," reads the application. Respondents in the matter are FCC, Baraka Stores and S.H. Amon Enterprises Company Limited (S.H. Amon). In the application, TRA and Mabibo are asking the Tribunal to examine all the proceedings and orders made after October 28, 2011 with a view to determine the irregularities and illegalities that led to miscarriage of justice and abuse of the office of the FCC.

Mabibo and TRA are also requesting the Tribunal to revise, quash and set aside all the proceedings, directions and orders made by the Commission in the complaint and declaring that the FCC has no jurisdiction to hear and, or to determine the matter.

The applicants state further that the ground on the issue of Mabibo having statutory exclusive importation rights of the beer brand had been conclusively decided by a judicial body with competent jurisdiction. According to a copy of the decree included in the application dated February 14, 2013, the issue was determined by Resident Magistrate Sudi Fimbo on October 15, 2010, at the Kinondoni District Court in Dar es Salaam in favour of Mabibo.

Consequently, Mabibo is also seeking a declaration barring Lucas Pius Mallya trading as Baraka Stores and S.H. Amon, and their Agents from importing and, or selling Windhoek Beer in Tanzania which does not bear code MB66 without written consent of Mabibo.

In addition, the applicants are asking the Tribunal to hold that the FCC has demonstrated bias and prejudice thereby denying itself of all and any residual inherent jurisdiction to adjudicate the complaint. Furthermore, Mabibo and TRA request, the respondents be directed to deposit before the Tribunal 2bn/- as security for costs if they pray and insist that the complaint be heard and determined on its demerits by the Tribunal.

The joint supporting affidavits by James Burchard Rugemalira and Juma Beleko for Mabibo and TRA, respectively, Baraka Stores lodged the complaint for the first time on October 2, 2009, against the applicants. Thereafter, according to the affidavit, Mabibo and TRA filed their defences, objections and counter claims.

The FCC dismissed the preliminary objections that had been raised by the applicants and refused to entertain the counterclaims against Baraka Stores on grounds that it had no jurisdiction to hear and determine unfair competition conduct arising from tax evasion.

MABIBO and TRA were dissatisfied with the decisions of the FCC. They took the matter before the FCT on separate appeals which were subsequently consolidated by consent of counsel of all the parties to the dispute. On October 28, 2011, the FCT allowed the consolidated appeal by quashing and nullifying all orders that had been made by the FCC in Complaint No. 3 of 2009.

The affidavit further states that the Tribunal directed the FCC to rehear the complaint, but, the FCC never summoned the parties to appear before it for litigating the complaint as ordered. Instead, on December 27, 2012, the FCC gave notices to Mabibo and TRA, revealing that it had decided to become both a complainant and a Judge on behalf of Baraka Stores, the deponents stated.

They also stated that exclusive franchising Agreements by brand owners cannot be regarded as restricting competition: more so in this particular case where the combined market shares of the Heineken Beer and the Windhoek Beer Brands in Tanzania is less than two per cent.

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