Dar es Salaam. The Fair Competition Tribunal (FCT), in its October 16, 2023, ruling, nullified the decision by the Fair Competition Commission (FCC) of February 28, 2023, to allow Scancem International D.A, trading as Twiga Cement, to acquire 68.33 per cent of the shares of Afrisam Mauritius Investment Holdings Limited in Tanga Cement PLC.
FCT made the ruling in a case between Mr Peter Hellar, a Tanzanian citizen, and FCC, its Director General William Erio, Scancem International D.A, its Chief Executive Officer Hakan Gurdan, and the company’s leading counsel in the acquisition process, Mr Fayaz Bihojani.
In his application, Mr Hellar prayed that FCT summons the respondents for the alleged contempt of court by violating the Tribunal’s judgment of September 23, 2022, that quashed FCC’s decision of April 6, 2022, which allowed Twiga’s acquisition of Tanga Cement.
In its 2022 ruling, FCT prohibited the proposed merger, arguing that the post-merger effect would create a position of dominance in the relevant market as the combined market shares of the merging firms at the time would exceed the statutory threshold of 35 per cent.
The case involved Chalinze Company Limited, Scancem International D.A., the Tanzania Consumer Advocacy Society, and the FCC. But just three months after the FCT’s ruling, on December 22, 2022, Scancem International D.A. submitted a fresh merger notification, which the FCC approved without any condition.
Against this background, Mr Hellar, who was not a party in the earlier case, filed his application for civil contempt.
The FCT, which sat under the chairmanship of Judge Salma B. Maghimbi, with Dr Onesmo M. Kyauke and Dr Godwill G. Wanga as members, first established Mr Hellar’s right to file the application with the Tribunal and its jurisdiction to rule over the matter.
In its ruling, FCT noted that the law in Tanzania is not clear on whether a person whose merger transaction had been prohibited by the Tribunal could still submit a fresh merger notification to FCC or not.
It ruled that Twiga cannot be blamed for submitting a fresh notification to the FCC to amount to civil contempt.
It also ruled that the FCC cannot be blamed for entertaining the merger, “although we would have expected more research in this area of law from other jurisdictions” by the regulator.
However, the Tribunal noted that there cannot be two conflicting decisions from two authorities – FCC and FCT–on the same merger transaction, ruling that FCC’s and Twiga’s innocence notwithstanding, the two decisions cannot co-exist in the same market.
“We find it necessary, and we hereby nullify the decision by [FCC] dated February 28, 2023, in Merger Application No. CBC. 127/359/144,” the Tribunal ruled.
However, the Tribunal said it finds it “just and fair” to provide a solution to the matter, granting FCC and Twiga a leave to move the Tribunal under Rule 50(1) of the Fair Competition Tribunal Rules of 2012.
The decision would allow the Tribunal to review its decision in the previous merger of September 23, 2022, based on the alleged change of the relevant market in a period beyond the set time of one year.
In its ruling, the Tribunal set a one-year duration as a reasonable period of time for a firm to make a fresh notification of a previously prohibited merger.
The decision was informed by the traditional means and common practices around the world of weighing and gauging changes or growth annually, it said.
“The review, if any, may be lodged in this Tribunal within twenty-one days from the date of this ruling [October 16, 2023],” the Tribunal ruled.
The Tribunal warned that its decision does not intend to cause inconveniences or unnecessary delays to potential investors, pointing out its role in ensuring effective competition in trade and commerce and protecting consumers from unfair and misleading market conducts.
It said it always makes decisions that align with the government policies that are meant to attract and retain both local and foreign direct investments and do away with bureaucratic attitudes that discourage potential investors.
“However,” the Tribunal noted, “the rule of law should not and will not be compromised for the sake of attracting investors.”