Buy local, competition regulator tells OK as condition for Food Lover’s takeover

OK Zimbabwe must buy 85% of its produce from local farmers under conditions set by the competition regulator for its takeover of three franchises of fruit and vegetable retailer Food Lovers Market.

The company, one of the country’s big two retailers, announced a deal in December to run three Food Lovers outlets; Bulawayo, Avondale and Borrowdale. The deal does not include the Food Lovers outlet at Honeydew in Greendale, which remains independent.

The Competition and tariff Commission (CTC) approved the transaction, but said the supermarket chain must keep current agreements with suppliers in place and make sure that most of the produce on the shelves of Food Lovers is locally sourced.

According to CTC, OK must “maintain or improve the existing trading agreement conditions with wholesalers and farmers that include inter-alia delivery and payment terms; procure at least 85% of its fruits & vegetable requirements from local farmers.”

The company must also “maintain or improve the existing employment contracts of (Food Lovers Market) employees at least for two years”.

OK is buying the fresh produce retailer as part of an attempt to step up its presence in what it called the “premium” retail market.

Its CEO Max Karombo said: “The group also welcomes access to promising supply chain synergies within the Food Lovers Market ecosystem and the rest of the OK Zimbabwe Limited Group. Our expectation is to build economies of scale in supporting local farmers and food processors to serve a wider range of stores.”

According to the CTC, the transaction does not bring a significant shift in market share between the merged entity and OK’s biggest rival, Pick n Pay.

However, CTC says it is important to avoid “monopsony”, where a market is dominated by one buyer.

Says CTC: “Monopsony power exists when a single buyer, OKZL in this instance, can dictate prices paid to suppliers, or control other aspects of the relationship that exists between themselves and their suppliers. It is therefore important to consider the possibilities of the merged entity engaging in such practices.”

OK Zim’s Food Lovers ordered to buy local

Notice of an investigation into alleged restrictive practices in the medical sector by CIMAS Medical Aid Society in Zimbabwe

IT is hereby notified in terms of section 28 of the Competition Act [Chapter 14:28] that the Competition and Tariff Commission (hereinafter called the “Commission”) has commenced an investigation into an alleged restrictive practice, as defined in terms of section 2 of the Act, by Cimas Medical Aid Society. Section 28 of the Act empowers the Commission to undertake an investigation into any restrictive practice which the Commission has reason to believe exists or may come into existence.

It is alleged that Cimas Medical Aid Society (“Cimas”) deregistered Family Medical Clinic from the New Health 263 direct payment system. It is further alleged that, apart from the deregistration of Family Medical Clinic from the New Health 263 direct payment system, Cimas is neither reimbursing its members nor honouring claims for treatment of its members at Family Medical Clinic. Deregistration of Family Medical Clinic from New Health 263 direct payment system resulted in Cimas members having to pay cash for treatment at Family Medical Clinic. The Commission established that Cimas is a medical aid society which also operates a clinic in Masvingo, Cimas Clinic. Cimas is alleged to be indirectly referring its members to its own facility, Cimas Clinic.

The Commission has preliminary concerns that the alleged practice may result in members’ choice of healthcare being limited to Cimas Clinic and other healthcare providers preferred by Cimas where their medical aid cards are accepted. The practice may also create barriers into entry and expansion of Family Medical Clinic and other deregistered healthcare providers who may not compete fairly with healthcare providers that are paid by Cimas in real time using the New Health 263 direct payment system. The alleged practice may prima facie constitute a restrictive practice as defined in terms of section 2 of the Act.

It should be noted that the commencement of an investigation neither pre-supposed that the conduct being investigated is anti-competitive not that Cimas has violated the provisions of the Act. The Commission will, in accordance with the provisions of section 28 of the Act conduct an investigation in the medical sector focusing on the provision of medical aid services to determine whether the alleged practices directly or indirectly restrict competition.

Any interested person may submit written representations to the Commission stating how they have been affected by the issues under investigation, not later than 14 days from the date of publication of this Notice. Emails may be sent to director@competition.co.zw and/or enquiries@competition.co.zw or hard copies submitted to the Director, Competition and Tariff Commission, 23 Broadlands Road, Emerald Hill, Harare, Zimbabwe.

Any further enquires or clarification on any aspect of the Commission’s investigation may be directed to Mr. T. Mawundike, on Tel (+263) 773385035 or (+263) 853127-32, or email: tmawundike@competition.co.zw

CTC receives 7 merger applications… sets tough conditions for Bikita Minerals, Sinomine deal

THE Competition and Tariff Commission (CTC) received seven merger applications for approval during the third quarter of last year from the manufacturing, finance, insurance, agriculture and mining sectors.

These transactions, contained in the latest CTC report, include Lafarge Cement Zimbabwe’s purchase by Fossil Mines, the acquisition of Ndoro Microbank Bank by InnBucks, the purchase of Fifty-Four Plymouth Road by Surjay, and the purchase of Macro Enterprises by Crail Enterprises.

The commission also received merger applications involving the purchase of Charles Stewart Day Old Chicks by Shanksville Farming, the purchase of Annunaki Investments by Shanksville Farming and the purchase of Bilboes Gold by Caledonia Mining Corporation.

The acquisition of Bikita Minerals by Sinomine (Hong Kong) Rare Metals Resources Co, and the indirect acquisition of Zuva Petroleum by Tristar Transport LLC were also completed during the period under review.

The commission granted conditional approval for Sinomine (Hong Kong) Rare Metals Resources Co to acquire Bikita Minerals during the quarter. The commission was informed in February 2022 that Africa Minerals (Afmin) and Amzim Minerals Limited (Amzim) would be fully acquired.

Afmin and Amzim control 70,3% and 29,7%, respectively, of the issued share capital of Zimbabwe-based lithium mining business Bikita Minerals (Bikita Minerals). Sinomine is a wholly owned subsidiary of Sinomine Resources Group Co (Sinomine Group), a Chinese provider of mining services.

Through its subsidiaries, it engages in geotechnical services, the development of mineral properties, and the exploitation of rare light mineral resources (lithium, cesium and rubidium).

The CTC set various requirements before approving the US$180 million transaction between Bikita Minerals and Sinomine (Hong Kong) Rare Metals Resources Co.

It mandated that, if it is economically feasible, Bikita Minerals, its subsidiaries, affiliates, and successors-in-title sell lithium concentrates to any user who may be available in Zimbabwe on non-discriminatory terms and conditions.

Additionally, the company was instructed to commit to producing high-purity lithium from lithium concentrates within five years of obtaining the commission’s ruling.

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CTC sets tough conditions for Capri deal

THE Competition and Tariff Commission (CTC) has directed Zimbabwe Stock Exchange-listed conglomerate, Innscor Africa Limited, to divest from Capri within six months for its deal with Annunaki Investments to be approved.

“The commission reviewed its decision subject to the condition of divesture. Considering this, the final decision of the commission was that: The acquisition by Annunaki Investments (Pvt) Ltd of an indirect interest in Capri be approved on condition that Innscor Africa Limited completely divests from Capri within six months of receiving the commission’s decision; the penalty paid of $848 464,48 for consummating the merger without approval of the commission, be maintained,” CTC said in its latest newsletter.

In February 2020, CTC received a notification of a merger involving Annunaki Investments and Innscor’s appliance manufacturing unit, Capri.

The merger was an acquisition of a 25% stake in Capri by Annunaki. Annunaki is an investment vehicle, wholly-owned by SSCG Africa Holdings. It controls Deilennar Investment, a commercial refrigeration leasing company; Mafuro Farming, a dairy farming business; and Aqua Aura, an agriculture centre-pivot distribution business.

SSCG is incorporated in Mauritius and Zimbabwe.

It has investments in fast-moving consumer goods, tourism, human resources recruitment, agriculture, mining, packaging, financial services, equipment leasing, restaurants and clothing industries in Zimbabwe.

Capri manufactures household refrigerators and is a distributor of electrical appliances.

CTC said the proposed transaction was classified as of a conglomerate in nature. Conglomerate mergers, by definition, do not pose serious competition concerns, however, in this instance competition concerns were in the indirect market of fund management because the merger had the effect of neutralising competition between two major competitors through indirectly uniting them.

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Role of Competition Policy and Law in Mitigating Climate Change

Introduction

The international community commemorates the World Competition Day on the 5^th of December, the day when the United Nations Conference on Restrictive Business Practices approved the United Nations Set of Multilaterally Agreed Equitable Principles and Rules for the Control of Restrictive Business Practices in 1980. The aim of the World Competition Day commemorations is to ensure that stakeholders globally, realise the potential benefits from an effectively implemented competition regime, and also play their role in making competition regimes work worldwide. This year’s celebrations are running under the theme “Competition Policy for Mitigating Climate Change”. Climate change is threatening our existence on mother earth and developing countries are bearing the brunt of its impact. This article discusses how competition policy can be used to mitigate climate change.

Legal and Policy Framework

Over the years, Zimbabwe has made significant strides to incorporate climate change issues in its national development agenda as witnessed by the signing of the United Nations Framework Convention on Climate Change (UNFCCC) in 1992 at the Rio Earth Summit.  Zimbabwe is a signatory to the Kyoto Protocol entered into force on 16 February 2005 and operationalized the UNFCCC by committing industrialized countries and economies in transition, to limit and reduce greenhouse gases emissions in accordance with agreed individual targets. The Kyoto Protocol also established a rigorous monitoring, review and verification system, as well as a compliance system to ensure transparency and hold Parties to account with regards to emission targets. The expiration of the Kyoto Protocol in 2020 necessitated the need for a new binding agreement to guide future efforts to address climate change, which saw the adoption of the Paris Climate Agreement which is a legally binding international treaty on climate change. It was adopted by 196 Parties at Conference of the Parties (COP) 21 in Paris, on 12 December 2015 and entered into force on 4 November 2016, with the goal to limit global warming.

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