Competition law in Africa - Recent updates
Tanzania
The recently issued Finance Bill, 2020 (Bill) seeks to amend, amongst other things, section 60(1) of the Fair Competition Act (FCA) which provides for penalties in respect of offences committed. Presently, the Fair Competition Commission (FCC) may impose on an offending person, “a fine of not less than 5% of his annual turnover and not exceeding 10% of his annual turnover”.
There is no specification or limitation in this FCA provision that the penalties apply to local turnover only, and therefore, the FCC was free to interpret it to apply to global turnover. The Bill offers welcomed clarity by replacing the words “of his annual turnover and not exceeding 10% of his annual turnover” with “but not exceeding 10% of his annual turnover which has a source in Mainland Tanzania”.
The Bill’s proposed amendment will exclude annual turnover which has its source outside Mainland Tanzania when computing a fine to be paid for contravention of offences referred to in that section (including anticompetitive agreements and prior implementation of notifiable mergers).
Zimbabwe
In terms of newly issued Statutory Instrument 126 of 2020, Competition (Notification of Merger) Regulations, 2020 (Regulations), the financial thresholds for mandatory merger notification in Zimbabwe have been amended as follows:
Given that the value of ZWD 10 million is the equivalent of some USD 27,631.94 (converting at the exchange rate on 29 June 2020), the Regulations appear to significantly lower the threshold for mandatory merger notification thereby extending the ambit of transactions subject to review. It is not clear to us whether the full impact of the conversion from USD to ZWD has been considered by the Zimbabwean Competition and Tariff Commission (CTC).
The merger filing fee payable is still 0.5% of the combined annual revenue or the combined gross value of assets in Zimbabwe of the merging parties’ (whichever is higher). Notably however, the filing fee is now capped at a maximum of ZWD 800,000 (previously USD 50,000, now approximately USD 2,210) with a minimum filing fee of ZWD 100,000 (previously USD 10,000, now approximately USD 276.32). This decrease in filing fee payable for merger notifications may temper the consequence of an increased number of transactions subject to competition.
These modifications to Zimbabwe’s merger control regime are key when considering that the failure to notify/prior implementation of a notifiable merger attracts a penalty of up to 10% of either or both merger parties’ annual turnover in Zimbabwe. The CTC has displayed a keen willingness to address such offending behaviour as was evidenced by its recent prohibition of Innscor Africa Limited’s (Innscor) acquisition of control over Profeeds Proprietary Limited (Profeeds) which was implemented in 2015 prior without requisite competition approval, the latter only being sought in 2019. This was coupled with the CTC ordering an immediate divestiture of Profeeds and payment of approximately 6.43% of Innscor’s annual turnover (approximately ZWD 40,591,483) for contravening Zimbabwean Competition Act merger notification provisions.
The information and material published on this website is provided for general purposes only and does not constitute legal advice. We make every effort to ensure that the content is updated regularly and to offer the most current and accurate information. Please consult one of our lawyers on any specific legal problem or matter. We accept no responsibility for any loss or damage, whether direct or consequential, which may arise from reliance on the information contained in these pages. Please refer to our full terms and conditions. Copyright © 2024 Cliffe Dekker Hofmeyr. All rights reserved. For permission to reproduce an article or publication, please contact us cliffedekkerhofmeyr@cdhlegal.com.
Subscribe
We support our clients’ strategic and operational needs by offering innovative, integrated and high quality thought leadership. To stay up to date on the latest legal developments that may potentially impact your business, subscribe to our alerts, seminar and webinar invitations.
Subscribe