Legal and institutional framework for competition in Tanzania

 

INTRODUCTION

 

Competition is an inevitable concept in almost all aspects of life ranging from business, education, health, science, technology, production of commodities etc. Competition is not prohibited in almost all countries, but restricted in a way that it does not affect economy. Competition is a term which is defined by various sources include our domestic legislations. Competition is the activity or condition where by a firm or business entity is making great efforts to gain or win something by defeating others and by establishing supremacy over others in a particular area or market[1]. As per section 5(2)(a) and (b) of the Fair Competition Act[2], ''Competition'' means competition in a market in Tanzania and refers to the process whereby two or more persons, “supply or attempt to supply the same or substitutable goods or services to the persons in the same relevant geographical market, or acquire or attempt to acquire the same or substitutable goods or services from the persons in the same relevant geographical market”.

In business perspective, competition can be categorized into two categories which are fair and unfair competition. Fair Competition means[3], firms or business entities in a market are operating in an equal environment and in a reasonable manner where by no entity maliciously interferes operation of other business. In case of unfair competition[4], business firms employ wrongful business tricks in market for personal benefits. Wrongful business practices include, false advertising of goods or services, interference with other firm’s trademarks, false free gift offers, noncompliance with manufacturing standards etc. It is within the public interests that businesses shall be conducted in an equal and fair environment so as to guarantee healthy economy, to trigger more investments and production of affordable consumer products[5]. When business firms employ wrongful business practices, it affects other participants in the market and it increase price of commodities which will likely harm economy. Most countries include Tanzania, has established a legal regime governing how business firms seek customers in the market without employing deceptive or wrongful business tricks or practices. This article provides an overview of the legal and institutional framework for competition in Tanzania.

HISTORICAL BACKGROUND

The Ujamaa and Self-reliance policies of Mwalimu Nyerere, were developed and implemented between 1964 and 1985[6]. Ujamaa was a social and economic policy by Mwalimu, based on collective farming and villagization. Nyerere argued that, the urbanization which was introduced by colonial administration was economically driven by wage labor, citizens were attracted and migrated from villages to town areas seeking employment opportunities in industries and other colonial production areas. The end of colonialism left all African laborers without jobs in towns hence it was necessary for the government to introduce Ujamaa policies to reinstate the disrupted traditional rural African society and life style[7]. Ujamaa policies intended to move people from urban cities to Ujamaa villages so as to establish agricultural economy by supplying them with materials and equipment for production. These policies also intended to bring together scattered citizens into small communities so as to enable the government to provide social services easily because it was a time when country was economically struggling. When implementation of these policies began, people were left to choose willingly to go to Ujamaa villages, but most of citizens were reluctant to go back to villages. Then to enforce the policies, government started to order arrests and deportation of citizens who seems jobless and wandering in towns to Ujamaa villages. Until 1980s, Ujamaa policies proved a significant failure because the policies were not in hand with global economic changes and free market economy.

During 1985, Mwalimu Nyerere resigned and replaced by President Ali Hassam Mwinyi[8]. President Mwinyi was not interested with failed Ujamaa policies, he introduced free market economy which was limited during Ujamaa policies. Free market was an economic system where by prices of goods and services were left on hands of sellers and buyers without interference from government[9]. People are left to conduct free business, in a free market without being regulated on what to produce, how to produce and whom to trade with. Apart from all these advantages of free market economy, there are several challenges which are associated with free market. When Tanzania entered into free market economy, firm’s competition in production and maximization of profits led to production of less quality commodities. Large business firms increased its powers and dominated markets hence were capable of exploiting suppliers by squeezing their prices down, and exploiting consumers by selling commodities at higher price. Importation of harmful goods increased and unfair competition in business became a threat to economy.

This was the time when government realized the need to enact laws governing fair competition in business as a tool for promoting economic growth, efficiency, and protecting consumers from the abuse of market power. The country's legal and institutional regime for competition undergone significant transformation during 1994 when the government of United Republic of Tanzania decided to enact the Fair-Trade Practices Act[10]. The statute was later replaced by Fair Competition Act by being ambiguity with no clear provisions and with outdated provisions. The Fair-Trade Practices Act, was the first law in the country specifically designed to regulate competition in business areas and other industries. The statute established the Trade Practices Tribunal which was given powers to monitor trade practices and it was a court where trade practices related matters were instituted. The statute contained the restricted trade practices which were not allowed to be performed in commerce and it’s breach was likely to attract suit before the tribunal. Tribunal was given powers to convict, sentence and execute its own decisions.

LEGAL AND INSTITUTIONAL FRAMEWORK FOR COMPETITION IN TANZANIA

I.                    The Fair Competition Act[11]

The Fair Competition Act (FCA) and its regulations, is a major legislation governing fair competition in business in Tanzania. The FCA was enacted in 2003 and commenced on 12^th of May 2004, it replaced the Fair-Trade Practices Act of 1994. The FCA came to fill legal gaps which were noticed in the former competition Act such as cross-border anti-competitive agreements which were not well addressed in line with international practices particularly within the East African Community. The FCA is a two-tier law providing for both competition and consumer protection. These are two different things but the government thought, while promoting fair competition it is necessary to address the issue of consumer protection so as to protect consumer of goods from poor quality and overpriced commodities. The FCA applies to all commercial dealings and institutions which engaged in trade or profit-making activities. The FCA provides for the prohibition of anti-competitive practices, including abuse of dominance, price fixing, bid rigging, and market allocation. The FCA also prohibits mergers and acquisitions that are likely to result in a substantial lessening of competition in a market.

Section 62 of the FCA establishes the Fair Competition Commission (FCC) as the main agency responsible for enforcing competition law in the country. The FCC is a body corporate capable of suing and be sued in its own name, having a common seal and capable of acquiring, possessing and disposing any real and personal property[12]. Since FCC is a body corporate, it may do or surfer consequences in an equal manner as all other corporates, and do hereby, governed by Public Corporations Act[13]. FCC is a body constituted by five members; - a chairman who is appointed by President, three non-executive members appointed by minister and the director general of the commission who is an appointee of the minister. The FCC is given powers to enforce FCA, to promote fair competition, to provide information on consumer rights and to carry research and to provide solutions to findings as provided under section 65 of the Act.

Appointment of members of the commission are done through nomination committee, both President and Minister depend on names nominated by committee from which they can appoint members of the commission.             Before nominating members for appointment to the commission, nomination committee must satisfy itself that, persons to be nominated have required qualifications and skills, together with knowledge relevant to duties they’re going to perform. The members will be in office for a specific period as provided under section 63(7) of the Act. A chairman and Director of the commission will be in office for a period of four years; one member among three will be in office for three years; two other members will be sitting in office for five years only and are eligible for reappointment for another one term. Members of FCC are given immunity from civil suits arising from acts or omission done with good faith while carrying their official duties. Members of the commission may be removed from office by President on grounds stipulated under section 64(1). Members of the commission may be removed from office due to a number of reasons such as;- criminal convictions by court, incompetence and incompatible, by being declared bankrupt or takings personal benefit from public office and embezzlement.

FCC is given powers to settle disputes and complaints submitted to it by other members and capable of instituting suo moto suits against a person or entity alleged to have infringed terms and standards of service as provided under section 69 of the Act. The Commission is given powers to inquire information from any party in a suit, to issue interim orders and to issue any legal instruction that parties must follow. While performing all its duties, the commission is required to abide to principles of confidentiality and impartiality. A commission is required to keep public register of all business firms registered before it and all other information concerning daily activities of the commission. The register of the commission is open for public inspection after payment of required fees. FCC is mandated to keep records of proceedings of complaints heard by the commission and if necessary to forward the available proceedings and other necessary documents to Fair Competition Tribunal for appeal if requested by a party to a suit or by a tribunal itself.

Section 83(1) of FCA establishes Fair Competition Tribunal[14] to hear appeals from decisions of the FCC. FCT is made up of a chairman, who is a holding the office of a Judge of the High Court appointed by the President after consultation with the Chief Justice and he serve on temporary basis. The tribunal is also made up of six other members who are appointed by the President after consultation with Attorney General among members nominated by the nomination committee. A nomination committee which is referred here is the one established under subsection 4 of section 83 and not a nomination committee stated under section 63. Members of the Tribunal must be people of high reputation and integrity, acquainted with disputes resolution methods and procedures. Members of the Tribunal will hold an office for a period of three years and as provided in the appointment instrument unless a member of a tribunal dies before three years, or removed from office by President. The judgments or orders of the Tribunal are final and cannot be appealed. The judgments or orders of the Tribunal are good as orders of the High Court and can be executed or enforced in a same manner as High Court orders.

The FCA is supported by several regulations, including the Fair Competition (Threshold for Notification of a Merger) Regulations[15], which set out the financial thresholds for notification of a merger to the FCC. The FCA is also supported by guidelines, which provide guidance on the interpretation and application of the law. The FCC has also issued various orders and directives to implement the law such as Standard Form (Consumer Contracts) Regulations[16] and FCC Procedure Rules[17].

II.                 Tanzania Communication Regulatory Authority Act[18]

The Tanzania Communication Regulatory Authority (TCRA) is a body established under section 4 of the Tanzania Communication Regulatory Authority Act. The authority is given power to regulate telecommunications, broadcasting, postal services and other media related activities. The authority is also empowered to supervise, allocate and manage radio spectrum and other ICTs applications. TCRA is among few public institutions with wide range of mandate imposed over it. Apart from above functions and responsibilities imposed to the authority, TCRA is charged with functions to promote fair competition and economic efficiency in the telecommunication industry, to protect interests of consumers, to promote availability of regulated and quality services as provided under section 5 of the Act. The Tanzania Communication Regulatory Authority (TCRA) replaced Tanzania Communications Commission and the Tanzania Broadcasting Commission.

III.              The Civil Aviation Act[19]

The Act under section 29(1) establishes an authority to be known as Tanzania Civil Aviation Authority which is a body corporate with perpetual succession capable of suing and be sued in its own name. The corporate is capable of possessing and disposing all kind of properties such as real properties and movable properties in a way same as all other companies. TCAA is given official duties under section 30 of the Act to perform a number of functions such as to promote effective competition and economic efficiency, to protect the interests of consumers, to promote availability of regulated service to consumers etc. To ensure fair competition, TCAA is given mandate to establish rules and standards of supply of goods and services. TCAA is given powers to settle disputes between business firms in aviation industry and to govern all other activities imposed to it by Civil Aviation Act and its rules, orders and regulations.

IV.              Energy and Water Utilities Regulatory Authority Act[20]

EWURA Act is a legislation which govern energy and water utilities in United Republic of Tanzania. The Act under section 4, establishes an authority known as Energy and Water Utilities Regulatory Authority, which is a body corporate with perpetual succession imposed with a number of duties concerning firms in energy and water industry. As per section 6 of the EWURA Act, it is the duty of the authority while carrying its functions, to enhance  the welfare of Tanzania society by promoting fair competition and economic efficiency, protecting consumer’s interests, enhancing public knowledge on the regulated sectors together with their rights. EWURA is also given mandate to enhance public knowledge on handling complaints and suits against business firms which infringement consumers rights. EWURA is given mandate to establish rules and standards of supply of goods and services. EWURA is given powers to settle disputes between business firms in aviation industry and to govern all other activities imposed to it by EWURA Act and its rules, orders and regulations.

Energy and Water Utilities Regulatory Authority is governed by two ministries, ministry of energy and ministry of water. The authority may act upon instructions of minister of energy and minister of water because both of them are given authorities of these ministries.

V.                Surface and Maritime Transport Regulatory Authority Act[21]

SUMATRA Act is a major legislation enacted in Tanzania to regulate transport and transportation in a country. The Act applies both in Tanzania main land and island. The authority is established under section 4 of the Act given mandates among other things to promote fair competition and economic efficiency, protecting consumer’s interests, enhancing public knowledge on the regulated sectors together with their rights. In addition, as per section 5 of the Act, SUMATRA is given duty to protect financial viability of efficient suppliers, to promote availability of regulated services to all citizens of all level from low income to higher income. SUMATRA has been doing well in regulating maritime transport but its has proved failure in regulating surface transport such as long trip buses and city buses known as daladala. There has been rapid and unregulated increase of bus fares which affects economy and consumers. The competition is serious and unethical practices are done by transport firms seeking monopoly and control of the market.

CHALLENGES

One of the main challenges facing competition policy in Tanzania is limited resources. The Fair Competition Commission (FCC) has a limited budget and staffing, which can make it difficult to carry out its enforcement and advocacy functions effectively. The FCC also faces challenges in terms of the capacity of the private sector to comply with competition law. Another challenge is the limited understanding of competition policy among policymakers and the private sector. There is a need for more awareness raising and training to build capacity and understanding of competition policy among stakeholders.

CONCLUSION

The legal and institutional framework for competition in Tanzania has undergone significant transformation over the last two decades. The government of Tanzania recognizes the importance of competition policy as a tool for promoting economic growth, promoting efficiency, and protecting consumers from the abuse of market power. The Fair Competition Act (FCA) provides for the establishment of the Fair Competition Commission (FCC) as the main agency responsible for enforcing competition law in the country. The FCC is an independent statutory body with the mandate to promote and protect fair competition in Tanzania. Despite the challenges facing competition policy in Tanzania, the country is making progress in building capacity and understanding of competition policy among stakeholders. To achieve its goals, FCC needs more resources and capacity building to its members, increase awareness to stakeholders on existing fair competition policies, to strengthen cooperation with international organizations governing competition and significant amendment to weaknesses.

 

 

 

 

 

 

 

REFERENCE

BOOKS

Adam Smith The Wealth of Nations (Harmondsworth, Eng: Penguine Books) pg 782.

 

STATUTES

Fair Competition Act [ Cap 285, R: E 2009] s. 5(2)(a) and (b).

Fair Trade Practices Act, 1994.

Fair Competition Act [ Cap 285, R: E 2009] section 62(1), and 62(3) (a).

The Fair Competition (Threshold for Notification of a Merger) Regulations 2017

Tanzania Communication Regulatory Authority Act [No 12 of 2003] s.5.

The Civil Aviation Act [ Cap 80, R: E 2020]

 

OTHER

M. D. “Competition.”, https://rb.gy/ec3rm. [Accessed April 7, 2023]

MBN, “Fair Competition”, https://rb.gy/ax0me [Accessed April 7, 2023]

LII, “Unfair Competition “https://www.law.cornell.edu/wex/unfair_competition/ [Accessed April 7, 2023]

IBE, “Fair Competition”. https://rb.gy/65ttr [Accessed April 7, 2023]

Thought Co, “What Was Ujamaa and How Did It Affect Tanzania?”, https://rb.gy/1lz33 [Accessed April 7, 2023]

CUP, “African socialism in post-colonial Tanzania. https://rb.gy/cs4fc [Accessed April 7, 2023]

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[1] M. D. “Competition.”, https://rb.gy/ec3rm. [Accessed April 7, 2023]

[2] Fair Competition Act [ Cap 285, R: E 2009] s. 5(2)(a) and (b).

[3] MBN, “Fair Competition”, https://rb.gy/ax0me [Accessed April 7, 2023]

[4] LII, “Unfair Competition “https://www.law.cornell.edu/wex/unfair_competition/ [Accessed April 7, 2023]

[5] IBE, “Fair Competition”. https://rb.gy/65ttr [Accessed April 7, 2023]

[6] Thought Co, “What Was Ujamaa and How Did It Affect Tanzania?”, https://rb.gy/1lz33 [Accessed April 7, 2023]

[7] CUP, “African socialism in post-colonial Tanzania. https://rb.gy/cs4fc [Accessed April 7, 2023]

[8] Gargan. E.D, “Nyerere Steps Down but Keeps Hands in”. https://rb.gy/0xl6q, Published November 3, 1985

[9] CFI Team, “free market”, https://rb.gy/keap6, [Updated April 3, 2023]

[10] Fair Trade Practices Act, 1994.

[11] ibid

[12] Fair Competition Act [ Cap 285, R: E 2009] section 62(1), and 62(3) (a).

[13] Public Corporations Act [ Cap 257, R: E 2019]

[14] FCT, “baraza la ushindani”. https://www.fct.or.tz/ [Accessed April 7, 2023]

[15] The Fair Competition (Threshold for Notification of a Merger) Regulations 2017

[16] Standard Form (Consumer Contracts) Regulations 2014

[17] FCC Procedure Rules 2018

[18] Tanzania Communication Regulatory Authority Act [No 12 of 2003] s.5.

[19] The Civil Aviation Act [ Cap 80, R: E 2020]

[20] Energy and Water Utilities Regulatory Authority Act [ Cap 414, R: E 2019]

[21] Surface and Maritime Transport Regulatory Authority Act [ Cap 413, R: E 2009]