On 15th of February 2023, A Bill for an Act to amend the Fair Competition Act to make better provisions for its effective implementation was read for the first time in Tanzania’s National Assembly. The Bill seeks to “amend the Fair Competition Act, Cap. 285 in order to address some challenges which have been encountered during its implementation.” Further, the Bill seeks to enhance the main objective of the Fair Competition Act, which is geared at promoting and protecting effective competition in trade and commerce and the protection of consumers against unfair practices.” When passed, this Bill will amend the Fair Competition Act, No. 8 of 2003, the principal legislation governing fair competition and consumer protection in Tanzania.

Below is a summary of major proposed changes;

1. More powers to Fair Competition Commission (FCC): The Bill proposes to replace the words “courts” and “court of competition jurisdiction” with the “Commission” so that the FCC will have powers to enforce consumer protection claims. Prior to these proposed changes, the FCC had no mandate to enforce consumer protection claims.

2. Definitions of new terms: The Bill proposes to amend section 2 of the Act by defining key concepts that were missing in the Fair Competition Act. These include terms such as “essential facility,” “cross-subsidisation,” “loyalty discount and rebate,” “margin squeeze,” “re-sale price or condition maintenance” and “vertical agreement”. These terms are essential in understanding the fair competition framework in the country.

3. Abuse of Dominance Reviewed: The Bill proposes to amend Sections 5 & 8 by introducing a more comprehensive definition of abuse of dominance, with specific acts of abuse of dominance defined. Additionally, the market threshold for abuse of dominance has been increased to 40%. Further, a new concept of joint dominance has been introduced. All these changes are essential in redefining the concept of “abuse of dominance” in Tanzania, and to “recognise abuse of dominance practices by more than one person, and to align with economic changes and development taking place at national, regional and international levels.”

4. Introduction of leniency programs: The Bill introduces a leniency programme under Section 9A. The leniency program will most likely increase compliance as it will “assist the Commission to detect anti-competitive arrangements, ease investigation process and to promote corporation against combating of anticompetitive practices.”

5. Prohibition of vertical agreement: The bill introduces Section 10A to prohibit of vertical agreements. Such prohibition was not explicitly provided for in the Fair Competition Act. The introduction of these provisions would now prohibit acts likely to foreclose competition between undertakings that are vertically integrated.

6. Mergers with substantial public benefits: Section 11A is introduced to regulate mergers with substantial public benefits. These changes permit the Commission to approve a merger prohibited under section 11(1) upon satisfaction that the proposed merger is likely to result in substantial benefits to the public, which would outweigh any detriment caused by the proposed merger on preventing, restraining or distorting competition. In determining the substantial public benefits under subsection (1), the Commission shall consider the following factors: (a) the extent to which the proposed merger shall contribute to the greater efficiency in the allocation of resources; (b) the extent to which the proposed merger would, or is likely to, promote technical or economic progress and the transfer of skills, or otherwise improve the production or distribution of goods or the provision of services in Mainland Tanzania; (c) the extent to which, the target firm faces actual or imminent financial failure and the proposed merger offers the least anti- competitive alternative use of the assets of the business; (d) the extent to which the proposed merger shall boost exports from Mainland Tanzania or employment in Mainland Tanzania; (e) the extent to which the proposed merger shall affect a particular industrial sector or region; (f) the extent to which the proposed merger may affect the ability of national industries to compete in regional and international markets; and (g) the extent to which the proposed merger may affect the ability of small businesses to become competitive.”

7. Increased protection to consumers against unfair marketing practices: Section 17 of the Act was repealed and replaced in order to protect consumers against unfair marketing practices. For example, Section 17(1) requires a person who sells goods or services to indicate or display in a conspicuous manner the price of the goods or services. Section 17(2) states that a person shall not charge a consumer more than the price indicated or displayed on goods or services. All these provisions intend to add more protection to consumers.

8. Right to appeal to the High Court of Tanzania: A person aggrieved by the decision of the Fair Competition Tribunal may now appeal to the High Court of Tanzania, which is composed of three judges. Currently, the Fair Competition Tribunal has appellate and final jurisdication on competition matters.

It is hoped that these proposed amendments would bring the Act to speed with global trends and developments. Yet the Bill leaves out key matters such as the introduction of private enforcement, criminalization of cartels, and consideration of digital developments in regulating and enforcing competition in the country.

Disclaimer

This article is not intended to replace professional advice. No one should rely exclusively on the information provided as a substitute for seeking professional advice. The writers or the Firm are not liable for any use of the information contained herein and do not guarantee the accuracy of its contents from the date of publication to the date of usage.

For contact: temu@africorp.co.tz