Author Archive competition

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Notice of commencement of investigations in terms of Section 28 of the competition Act [Chapter 14:28]

Competition and Tariff Commission Commences Investigation into the Distribution of Stock feeds and Day Old Chicks

Notice is hereby given to all interested stakeholders and the general public that pursuant to Section 28(2) of the Competition Act [Chapter 14:28](the “Act”), the Competition and Tariff Commission (the “Commission”) has commenced an investigation into an alleged restrictive practice into the distribution of stock feeds, as defined in Section 2 of the Act.It is alleged that distributors of day old chicks are making the sale of chicks conditional upon one buying a particular number of stock feeds bags.

Section 28 of the Act empowers the Commission to undertake investigations into any restrictive practice which the Commission has reason to believe exists or may come into existence. Prima facie, the practice by distributors of day old chicks and stock feeds may constitute a restrictive practice in terms of the Act,with the likely effect of i)restricting the entrance and expansion of players into the stock-feed market, and/or ii) preventing or retarding the expansion of the existing stock-feed market, and/oriii) limiting the commodity or service available due to tied or conditional selling.

The commencement of investigations neither pre-supposes that the conduct being investigated is anti-competitive nor that any of the alleged companies has violated theprovisions of the Act. The Commission will, in accordance with the provisions of Section 28 of the Act, conduct an investigation into the distribution of day old chicks and stock feeds to determine whether the practicerestricts competition directly or indirectly to a material degree.

In view of the foregoing, the Commission hereby gives notice to all interested stakeholders and the general public to submit their representations to the Commission by emailing them to director@competition.co.zw or submit hard copies to:

The Director

Competition and Tariff Commission

 Block One, 2nd Floor, Unit L

Celestial Office Park Offices

1908 Borrowdale Road

Borrowdale, Harare.

All representations should be submitted to the Commission no later than the 29 November 2018.

If you wish to seek further details and/or clarifications on any aspect of the Commission’s investigation, you may contact Mr Polite Mukombo, on Tel: (+263) 853127-32 | (+263) 8644137945) or e-mail: pmukombo@competition.co.zw

All representations submitted to the Commission will be treated in strict confidence, and will only be used for the purposes of this investigation. 

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ACF elects new committee

22 October 2018

The African Competition Forum (ACF) held its 2nd biennial conference on 11 – 12 October 2018 at
Marrakech, Morocco, hosted by the Competition Council of Morocco. At the conference, a new
Steering Committee was elected with South Africa as Chairperson and Tunisia and Mauritius as
Vice Chairperson, respectively.
The new Steering Committee comprises of Algeria, Botswana, eSwatini, Kenya, Mauritius,
Senegal, South Africa, The Gambia, Tanzania, Tunisia and Morocco.
ACF comprises 31 members and five regional competition agencies. The body was established
in 2011 in Nairobi, Kenya by 19 founding members. ACF is an informal network of African national
and multinational competition authorities. It aims to promote the adoption of competition principles
in the implementation of national and regional economic policies of African countries, in order to
alleviate poverty and enhance inclusive economic growth, development and consumer welfare by
fostering competition in markets, and increase investment, productivity, innovation and
entrepreneurship.
The ACF thanks the Competition Council of Morocco for hosting the conference, which was a
great success.

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Director appointed Commissioner

Chronicle

Ellen Ruparanganda

 

Ellen Ruparanganda

Prosper Ndlovu recently in Lusaka, Zambia
ZIMBABWE’s Competition and Tariff Commission director, Ms. Ruparanganda E, has been sworn in as one of the nine commissioners for the Common Market for Eastern and Southern Africa (Comesa) Competition Commission.

She will serve the regional body’s specialised unit for a term of three years. Ms Ruparanganda took her oath of office during the 20th Comesa Heads of States and Government Summit, which ended on Thursday at Mulungushi International Conference Centre in Lusaka, Zambia.

The Comesa Competition Commission is an international organisation established by Comesa Competition Regulations, which were issued in the Comesa Official Gazette Vol. 9 No.2 as Decision No. 43 of Notice No 2 of 2004. The Commission promotes and encourages competition by preventing restrictive business practices and other restrictions that deter the efficient operation of markets, thereby enhancing the welfare of the consumers in the common market, and protecting consumers against offensive conduct by market actors.

Other new commissioners include; Mr Ali Hamadou Ali Kako from the Republic of Djibouti, Mrs Thembelihle Precious Dube nee Dlamini from the Kingdom of Eswatini, Mr Michael Teklu Beyene (Federal Democratic Republic of Ethiopia), Danson Buya Mungatana (Republic of Kenya), Mrs Charlotte Wezi Malonda (Republic of Malawi), Mr Francis Lebon (Republic of Seychelles), Mr Islam Tagelsir Ahmed Alhasan (Republic of Sudan and Mr Brian Muletambo Lingela (Republic of Zambia).

In its final communique, the summit commended member states of Comesa that have enacted national competition legislation aimed at enhancing competition and fair trade within the bloc. They urged remaining member states that have not yet enacted national competition legislation to do so. This year’s summit ran under the theme; “Comesa: Towards Digital Economic Integration”.

July 23, 2018 Business

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OVERVIEW OF THE iEPA

The Competition and Tariff Commission is a statutory body that operates under the guidance of the Competition Act (Chapter 14:28). One of the functions of the Commission is to undertake investigations and make reports to the Minister of Industry, Commerce and Enterprise Development relating to tariff charges, unfair trade practices and the provision of assistance or protection to local industry. The Commission also gives technical adviceto the Ministry on tariffs in trade negotiations.

Zimbabwe is signatory to the African Caribbean Pacific (ACP) and European Union (EU) Cotonou Agreement signed in 2000 and will expire in 2020. This framework agreement governs trade, economic and development relations between the two regions. In terms of trade, these agreements were characterized by non-reciprocal preferential market access for ACP products into the EU market. However, these non-reciprocal trade preferences under this Agreement were set to expire in 2007 and the ACP and EU launched EPA negotiations in 2002. EPAs are designed as reciprocal trade arrangements leading to establishment of a free trade area between the ACP countries and EU.

By December 2007, the Eastern and Southern Africa (ESA) States had not concluded a comprehensive agreement and therefore embracing the interim Economic Partnership Agreements (iEPA,) was meant to prevent trade disruption; pending the entry into force of the full EPAs. In December 2007, a Market Access Regulation (MAR 1528/2007) was adopted by the EU to provisionally apply EPA preferences as from 1st January 2008. This was from the EU to countries that concluded such a deal, but are yet to sign, ratify and implement their agreements. In May 2013, the EU amended the MAR to exclude countries that have not taken the necessary steps to ratify the EPA.

Zimbabwe signed the iEPA together with Mauritius, Madagascar and Seychelles under the ESA regional configuration in 2009. Zimbabwe ratified the Agreement in March 2012. The iEPA aims for a progressive removal of tariffs and other trade restrictions between the EU and the ESA countries. Under the iEPA, commencing 1 January 2008, EU now offers duty-free, quota-free market access to all exports from the four ESA States. However, ESA countries were not in a position to table a common regional market access offer and each country presented an individual offer based on its specificities. The tariff offer for ESA countries involved gradually opening up of their markets to EU exports over a 15 year period, with some exceptions for products that ESA countries consider sensitive. In this respect Madagascar liberalized 81%, Seychelles 98% Mauritius 96% and Zimbabwe 80%. Zimbabwe decided to exclude 20% of tradable products which includes products of animal origin, cereals, beverages, paper, plastics and rubber, textiles and clothing, footwear, glass and ceramics, consumer electronic and vehicles. The country will gradually liberalize her imports from the EU within 15 years (ending in 2022).

The iEPA contains provisions concerning trade regime for goods, rules of origin, development cooperation, fisheries, trade defense instruments and dispute settlement. The iEPA contains a rendez-vous clause providing for continued negotiations on trade in services, investment, agriculture, rules of origin, sanitary and phytosanitary provisions and technical barriers to trade, customs and trade facilitation and trade-related rules. All these issues are subject to further discussions in the full EPA.

Of major interest are the objectives of cooperation in the area of trade which are:-

  1. the provision of full duty and quota free market access conditions for goods originating in the ESA States into the market EC Party market on a secure, long term and predictable basis;
  2. the promotion of trade between the Parties and the acceleration of export led growth to enable the integration of ESA countries into the global economy;
  3. the progressive and gradual liberalisation of the goods market in ESA States in accordance with the modalities established in this Agreement (80% liberalization and 20% sensitive goods); and
  4. the preservation and improvement of market access conditions to ensure that all ESA States are better and not worse off.

The major benefits that can be derived from the iEPA include:-

  1. Its potential to increase Zimbabwe’s productivity and contribute to GDP growth, by allowing local companies access to cheaper inputs, newer and modern technologies, and fostering competition and innovation.
  2. Implementation of an effective, predictable and transparent regional regulatory framework for trade and economic cooperation, which also promotes regional integration, economic cooperation and good economic governance; and
  3.  Increased competition resulting in lower prices; however this might result in a paradox whereby the local industry will be forced out of the market as they will not be efficient and competitive with European products. The ultimate benefit will be the emergence of efficient and competitive domestic industries able to compete globally.

In terms of implementing its iEPA tariff commitments, Zimbabwe was supposed to have commenced its first tranche of liberalisation in January 2013 for raw materials and capital goods, most of which were already at zero percent. It was to commence tariff phase down for intermediate and final products by 2014, till 80% liberalization is reached by 2022.

Zimbabwe did not immediately begin the process of gradual liberalization of the tariff applicable to EU goods entering Zimbabwe due to macro-economic challenges and low capacity utilization facing local industry. Despite having signed in 2009 and ratifying the iEPA in 2012, it was not until the 7th of October 2016 that Zimbabwe gazetted the first EPA tariff schedule for 2016 through Statutory Instrument (SI) 117 of 2016, Customs and Excise (European Community (EC) and Eastern and Southern Africa States (ESA) Economic Partnership Agreements) (Suspension) (Market Access Offer) Regulations, 2016. This was done after the EU and the Government of Zimbabwe agreed on a revised tariff scheme, allowing for catching up scenario with the initial schedule so that 80% liberalization would be achieved by 2022.

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ON MAXIMUM RETAIL PRICES

 

The Competition and Tariff Commission (“CTC”) is a statutory body that administers the Competition Act [Chapter 14:28], and mandated to promote and maintain fair competition in all sectors of the Zimbabwean economy. Competition policy and law’s goals are to ensure that markets function effectively through correcting market failure, for the  benefit of consumers. It addresses the supply side of the market so that consumers have adequate and affordable choices.

Following recent announcements of “recommended maximum wholesale and retail prices” for various goods and services, CTC would like to urge all players involved to guard against the likely resultant anti-competitive effects of this conduct. Historically, CTC has observed that whenever a ‘recommended maximum price’ is announced, retailers or wholesalers, have a tendency to all charge that maximum price under the guise of complying with the stipulation. While players may use similar formulas to determine prices at which they sell their products, certainly two or more players cannot charge the same price for identical products, given the different overheads base, capacity utilization levels, economies of scale and other costs incidental to operations. In this respect, inspite  the ‘recommended maximum price’, the Commission expects  all players in any sector with maximum “recommended maximum prices”, to charge significantly different prices, that facilitate the competition process. In instances where players charge exactly the same prices or price fixing, they will be deemed to have colluded – an offence prohibited under the Competition Act [Chapter 14:28].

Concurrently, the CTC has also observed the rampant unsupported price increases on  goods and services, equated to excessive pricing in competition law and policy, to the detriment of consumers. Excessive pricing is defined as a price for a good or service which bears no reasonable relation to the economic value or reasonable relation between price and economic value of that good or service, and higher than that value. Such a conduct leaves consumers with no alternative as all players – producers, wholesalers and retailers –  charging excessive prices eliminate the consequent competitive prices for basic goods and services and product choice associated with a competitive environment.

In competition policy and law, price fixing together with excessive pricing are both conducts which eliminate and/or stifle competition amongst players in a sector. Price fixing defeats the promotion of competition and enhancement of consumer welfare. Excessive pricing is anti-competitive as it rules out the setting of prices according to cognisable competition considerations. In this respect, the Commission will not hesitate to embark on investigations in sectors identified as colluding or price fixing or excessively pricing, with a view to remedy such anti-competitive practices within the confines of the Act. All producers, wholesalers and retailers are therefore expected to comply with the Competition Act with immediate effect or else face the wrath of the law.

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CTC must decentralise, says businesses

Herald: Prosper Ndlovu in Bulawayo—

BUSINESS leaders in Bulawayo have pressed the Competition and Tariff Commission (CTC) to decentralise its operations by opening local offices to effectively assist companies.

Contributing during a public workshop organised by the commission yesterday, business representatives in the city said they were facing numerous tariff and competition-related challenges that could be adequately addressed if CTC was accessible at local level.

Since its establishment 21-years ago, as a statutory body to implement and enforce Zimbabwe’s completion policy and law, as well as to execute the country’s trade tariffs policy, the commission only operates from the capital.

Participants said they were not amused by the requirement to travel to Harare to seek essential business administrative services, saying the practise was not only inconvenient but costly.

“Your offices are only in Harare, so how does one access your products? Businesses all over Zimbabwe need your services and being in Harare only doesn’t serve that intended purpose,” said one participant.

An official from a refrigeration air conditioning company weighed in saying it was critical for CTC to urgently open an office in Bulawayo to meaningfully impact on industry transformation.

The official said the closure of industries in the city in recent years was partly a result of unfair business and tariff practices, which CTC should address to foster re-industrialisation.

Others concurred. “It’s not fair for CTC to continue to operate from one corner of the country 38 years after independence. You should have offices in all provinces and support businesses across board.”

Unless the commission spreads its wings and works closely with businesses at local level, it will remain a liability to the economy, said the participants.

The commission is mandated to regulate competition in all sectors of the Zimbabwean economy, and gives advice on trade tariffs matters. Participants also urged the commission to investigate the beef industry where they claimed cartels were manipulating the market.

They further pointed to the need to regulate wholesale and retail competition and cried foul over unfair competition with cheap imports. Some claimed that Harare-based firms were fraudulently getting tenders ahead of local firms.

The CTC senior leadership led by chairman Engineer Anthony Mutemi and director Ms Ellen Ruparanganda, acknowledged the concerns and pledged to act on them.

“We appreciate the frank and brutal feedback, both good and bad. I can give commitment that the board of the commission will look into that,” said Eng Mutemi.

The CTC, however, highlighted that in the past years its operations were crippled by finance constraints, which limited its capacity.

During the engagements businesses were taken through various presentation sessions to appreciate the structure of the commission and the legal framework that informs its operations.

There was lively dialogue on various subject areas covering merger regulations, tariff adjustments, restrictive business practices and trade remedies among others.

SOURCE: HERALD NEWSPAPER 29 JUNE 2018