Author Archive competition

Warning to Schools on the Imposition of Suppliers for the Sale of Face Masks and Sanitizers

The Competition and Tariff Commission (‘the Commission’) is a statutory body established in terms of the Competition Act [Chapter 14:28] (the “Act”). Its mandate, as espoused in the Act, is the promotion and maintenance of competition in all sectors of the Zimbabwean economy. The ultimate goal of competition regulation is to improve consumer welfare through creating an environment where economic actors interact freely leading to creation of wealth at individual and business level.

The Commission notes that Government announced the re-opening of schools on the 14th of September 2020 for Cambridge examinations classes; and on the 28th of September 2020 for ZIMSEC examination classes. It also approved that ZIMSEC examinations commence on the 1st of December 2020. In this respect, the Commission advises all stakeholders – including schools, parents, guardians and scholars, that the practice of imposing a supplier of face masks and sanitizers on schools, pupils, parents, guardians, is an anticompetitive practice prohibited in terms of section 2 of the Competition Act [Chapter 14:28 ]. The practice negatively impacts on consumer welfare as it limits guardians and parents’ choice of buying masks and sanitizers from alternative cheaper or quality suppliers. 

The Commission will not condone such exploitation of the vulnerable society during the Covid-19 pandemic period; and will not hesitate to undertake enforcement actions against any school found to contravene the Competition Act, pre- and post- the opening of schools. Stakeholders are therefore requested to approach the Commission with information on any forced sale of face masks and sanitizers during this Covid-19 pandemic period as parents, guardians  and scholars exercise their right to make choices of where to purchase face masks and sanitizers.

Stakeholders can contact the Commission at Number 23 Broadlands, Emerald Hill or email director@competition.co.zw or on WhatsApp number +263 71 590 5651

PRESS STATEMENT ON PROVISION OF SERVICES AT THE COMPETITION AND TARIFF COMMISSION IN THE WAKE OF A SURGE IN CORONA VIRUS (COVID -19) CASES

The Competition and Tariff Commission is closely monitoring the coronavirus (COVID -19) outbreak and its impact on business continuity in Zimbabwe. Of concern is the sharp increase in local transmissions in the last few months, which led His Excellency, the President of the Republic of Zimbabwe – Comrade Emmerson Dambudzo Munangagwa to tighten the national lockdown, with the objective of curbing the further spread of the disease. Against this background, the Commission has taken the decision to limit face-to-face interactions in order to protect both its staff and stakeholders from COVID-19. Accordingly, the Commission will therefore adopt the following:-

  1. Merging parties must download and complete merger notification forms from the Commission’s Website
  2. Firms seeking tariff assistance must download and complete tariff relief application forms from the Commission website
  3. Firms seeking to apply for protection against any unfair trade practices (e.g. dumping) must download and complete unfair trade practices application forms from the Commission website
  4. Firms applying to seek advisory services from the Commission must do so through email;

All completed scanned copies of applications must be emailed to the following emails;

director@competition.co.zw or selina@competition.co.zw or tzengeni@competition.co.zw

Notwithstanding this, the Commission’s Offices at number 23 Broadlands Road Emerald Hill, Harare, manned by critical staff, will remain open from 0800 hours to 1500 hours to serve Covid-19 related complaints, until further notice. However, stakeholders and affected businesses in the supply chain can still report their concerns to the Commission through contact details available on its website www.competition.co.zw, or at director@competition.co.zw or on WhatsApp number 0715 905 651. The contact person is Mr. T. Zengeni reachable at 0773 256 384 (WhatsApp and SMS) or  tzengeni@competition.co.zw.

Stakeholders are urged to note that the Commission does not condone exploitation of the vulnerable consuming public during the lockdown period. Conspiracies against consumers violating the Competition Act[Chapter 14:28] such as:-

i)    price fixing by trade associations,

ii) misleading advertisements,  

iii) distribution of commodities above advertised prices,  

iv) tying and bundling;

are out rightly prohibited during the pandemic period. Businesses are reminded to comply with the provisions of the Act, as non- compliance will be subject to maximum penalties and sanctions.  The Commission also encourages all its valued stakeholders to remain vigilant and adhere to health guidelines laid down by the Ministry of Health and Child Welfare .i.e. avoiding unnecessary traveling, practicing social distancing, wearing of masks and frequent sanitization of hands.

For Economic Recovery Through Fair Business and Trade Practices

PRESS STATEMENT ON PROVISION OF SERVICES AT THE COMPETITION AND TARIFF COMMISSION IN THE WAKE OF THE CORONAVIRUS(COVID -19)

On the 17th of March 2020, His Excellency, the President of Zimbabwe – Comrade Emmerson Dambudzo Munangagwa declared the COVID-19 pandemic a national disaster, and further to that, on the 27th of March 2020 – announced the enforcement of a nationwide lockdown for 21 days, effective from midnight Sunday, the 29th of March 2020. Prevention is now the focus of all initiatives and efforts in the country.

The Competition and Tariff Commission is closely monitoring the coronavirus (COVID -19) outbreak and its impact on business continuity in Zimbabwe. Given the nationwide lockdown, the Commission has taken the difficult decision to significantly scale down its operations, but prioritising all COVID-19 related matters. During this period, the Commission will only accept the following COVID-19 pandemic related cases:-

  1. trade tariff relief applications;
  2. merger and acquisitions transactions;
  3. authorisations; and
  4. abuses of dominance or such exploitative practices complaints.

Staff will therefore work from 1000 hours to 1300 hours  at its Offices at number 23 Broadlands Road Emerald Hill, Harare, and  will only attend  to matters outlined above, until further notice. Stakeholders and affected businesses in the supply chain can report any concerns to the Commission through details available on its website www.competition.co.zw, or at director@competition.co.zw or on WhatsApp number 0715 905 651. The contact person is Mr. T. Zengeni who can be contacted at 0773 256 384 (WhatsApp and SMS) or immediately through e-mail at tzengeni@competition.co.zw.

Anti-competitive practices during the lock down period, such as tying and bundling, excessive pricing, conditional selling  and any other practice that violates the Competition Act[Chapter 14:28] which exploit consumers are outright prohibited,  unless with the express authorization of the Commission. The Commission therefore stands ready to guide companies on acceptable cooperation agreements during this coronavirus pandemic. In the interim, it would like to urge businesses to comply with the provisions of the Act, as non- compliance will lead to punitive penalties, once reported or comes to the attention of the Commission.  

Please remember to wash your hands regularly with soap for a minimum of twenty seconds and please stay at home. On behalf of the entire Competition and Tariff Commission Team, we wish you and your loved ones a safe and healthy three (3) weeks of lock down.

The Competition and Tariff Commission

23 Broadlands Road

Emerald Hill

Harare

director@competition.co.zw

www.competition.co.zw

WhatsApp: 0715 905 651

SETTING PRICE RANGES TO BE CHARGED BY RETAILERS/WHOLESALERS BY PRODUCERS /MANUFACTURERS

The Competition and Tariff Commission (“Commission”) is a statutory body that administers the Competition Act [Chapter 14:28] (the Act), mandated to promote and maintain fair competition in all sectors of the Zimbabwean economy. It has come to the attention of the Commission that some producers and/or manufacturers are publishing recommended price ranges within which retailers/wholesalers must trade their goods/services, in the guise of cushioning consumers from likely exploitation by unscrupulous retailers. Whilst the initiative is deemed noble by consumers, however from the Commission’s perspective such an initiative can be used as a platform of operationalising a cartel – the worst evil of all conducts in competition policy law and enforcement circles.

Players in the downstream – namely retailers and wholesalers, can construe the recommended price ranges as the minimum and maximum prices at which the goods can be sold in the market, disadvantaging consumers. Whilst price ceilings can be viewed as a mechanism to protect consumers from exploitation by unscrupulous retailers, the same cannot be said for the conduct of recommending minimum prices to be charged on goods and services given the likely anticompetitive effects to arise from such initiative. While it is permissible to set maximum recommended prices, the Act views setting minimum resale prices as an unfair business practice, a conduct prohibited in the Act. Part VII of the Competition Act [Chapter 14:28] and related provisions on unfair business practices and minimum resale prices therein state as follows:

Section 42 – Unfair Business Practices

(1) The Acts or omissions specified in the First Schedule shall be unfair business practices for the purposes of this Act.

(3) Any person who enters into or engages in or otherwise gives effect to an unfair business practice shall be guilty of an offence and liable – a) in the case of an individual  to a fine  not exceeding level twelve or to imprisonment for a period not exceeding two years or to both such fine and imprisonment; and b) in any other case to a fine not exceeding level fourteen.

First Schedule – Paragraph 9. Resale Price Maintenance  –

Specifying the minimum  price at which a product must be resold to customers.

Accordingly, specifying minimum and maximum price ranges to be charged by wholesalers/retailers can be construed as setting minimum resale prices, an initiative which stifles competition amongst retailers/wholesalers. Floor price setting acts as a disincentive for efficient operators and innovators, as failure to charge the lowest possible price defeats the whole essence of promoting competition and enhancing consumer welfare.

In such instances, the Commission reserves the right to commence investigations where producers/manufacturers of  products set minimum prices to be charged by retailers/wholesalers. Depending on the outcome of the investigation, it can issue ‘Orders’ in terms of section 31 of the Act. Accordingly, players in the market are therefore urged to desist from recommending minimum and maximum price ranges given the possible negative implications, specifically not the minimum price. The acceptable approach in line with the Act is the recommendation of a maximum price and not a range of prices.

For further details please contact the following

The Director

Competition and Tariff Commission

Unit L, Block 1 Second Floor

Celestial Office Park

1908 Borrowdale Road Borrowdale, Harare.

Tel: 0242-853127-31, 0242-8644137945

Email: director@competition.co.zw

Website: www.competition.co.zw

Mergers and Acquisitions Assessed in the First Quarter of 2019

The Competition and Tariff Commission assessed and approved the following mergers and acquisitions: –

Transaction Details

i) Acquisition of Lancet Laboratories Zimbabwe (Pty) Limited by Cerba Healthcare Africa

The transaction involved the acquisition of 70% of the issued share capital of Lancet Laboratories Zimbabwe (Pty) Limited by Cerba Healthcare Africa. Cerba Healthcare Africa is a joint venture company which was incorporated in 2018 by Cerba Healthcare International and Lancet Services Company (Pty) Limited. Cerba Healthcare Africa was incorporated jointly with Cerba Healthcare International and Lancet South Africa for the purposes of developing a leading network routine laboratories in Africa.
Lancet Laboratories Services Company (Pty) Limited is South African registered company with various subsidiaries in West, East African and Southern African Region where it operates a network of clinical laboratories in these regions.

The transaction was classified as a horizontal merger.

Determination
The transaction was approved without conditions.

Transaction Details

ii) Acquisition of 100% stake in Delta Gold Zimbabwe (Private) Limited by Dallagio Investments (Private) Limited

The transaction involved the acquisition of 100% share in Delta Gold Zimbabwe (Private) Limited by Dallagio Investments (Private) Limited. Dallagio Investments (Private) Limited – the acquiring company is an investment holding company incorporated in Zimbabwe whose aim is to invest in mining industry.

Delta Gold Zimbabwe (Private) Limited, which owns Eureka Gold Mining Project, has not been able to establish a full-scale mining operations from 1999 to 2011 due to financial constraints. Both parties are in the mining sector.

The transaction was classified as a horizontal merger.

Determination

The transaction was approved without conditions.

The Commission would like to thank its stakeholders for their co-operation during consultations.

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. 

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

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.

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.