THE Fair Competition Tribunal of Tanzania has issued injunctive orders, restraining the intended merger between Scancem International DA and Tanga Cement Public Limited Company.
It is yet another blow for Scancem International DA, parent company of Twiga Cement, which has recently been trying to acquire majority shares of Tanga Cement.
“The intended merger between Scancem International DA and Tanga Cement Public Limited Company as advertised by the 1st Respondent on the Daily Newspaper of 11th February 2023, is hereby restrained, pending hearing of this Application inter parties,” the Tribunal ruled in it’s judgment delivered on March 24, 2023.
The Tribunal restrained any other merger processes by other authorities pending the hearing of an application lodged by Peter Hellar, an Appellant, against the protracted deal.
“In the event the said merger had been granted or is about to be granted, or will be granted in the course of hearing of the application, the other agents in process of consummating the impugned merger, namely the Business Registration and Licensing Agency (BRELA), Capital Markets and Securities Authority (CMSA) and the Dar es Salaam Stock Exchange (DSE) are hereby restrained from continuing with any process in due course to facilitate the transfer of 68.33 per cent of the shares of Tanga Cement Company PlC to Scancem International DA,” ordered the Tribunal chaired by Judge Salama Maghimbi.
The Tribunal said it was of utmost importance that the injunctive order was issued until after it satisfied itself whether the act of the Fair Competition Commission, the 1st Respondent, to re-open what was specifically prohibited by this Tribunal amounts to a disobedience of orders of this Tribunal hence contempt.
In it’s decision of September 23, 2022, the Tribunal had prohibited the merger between Scancem International DA and Tanga Cement but the FCC issued a public notice on February 11 on the intended merger, which apparently contravened the Tribunal’s decision.
The Appellant, Hellar lodged an appeal on March. 16, 2023 in response to the notice, in which four respondents are listed; FCC as 1st Respondent, Scancem International DA as 2nd Respondent, Fayaz Bhojani as 3rd Respondent, William Erio as 4th Respondent and Hakan Gurdal as 5th Respondent.
In his submission, Mr Hellar, who was represented by his advocate James Bwana, argued that the order of the Tribunal has never been challenged whatsoever so it remained intact.
The appellant pointed out that all the Respondents in his application were present either in person or by virtue of their representatives in the Consolidated Appels which resulted into the referred judgment.
He submitted further that while being aware of the judgment, on February 11, 2023 the fourth Respondent in the Application who is the Director General and Chief Executive Officer of the 1st Respondent, issued a notice on a newspaper, expressing the intention of the 2nd Respondent who is Scancem International DA to acquire and control an entity known as Tanga Cement Limited Company.
The pointed out that the said public notice involves the same parties and same issues that were decided in the Judgment of this Tribunal, adding: “The notice failed to make any reference whatsoever of the said Judgment, neither does it mentioned of indicated existence of any econometrics in the market that are different from what was prohibited in the Judgment.’
The Appellant further submitted that notice does not show that the current Application is different from the other Application which was prohibited by the judgment while it is a separate Application after the earlier one was prohibited
In it’s ruling, the Tribunal said: “since the matter was lodged under a Certificate of Urgency and in cognizance of the fact that this Tribunal had decreed the intended merger as prohibited, we found it important that we afford the applicant herein an ex-parte audience to address the Tribunal on the urgency of the matter.”
Last year, the FCT overturned the Fair Competition Commission’s approval of the proposed 137.33 billion takeover deal in which Scancem International DA, a subsidiary of Heidelberg Cement AG, which owns Twiga Cement, would have acquired a 68.33 per cent stake in Tanga Cement, owned by AfriSam Mauritius Investment Holdings Limited.
Chalinze Cement Limited and Consumer Advocacy Society had appealed against the Fair Competition Commission’s approval with conditions of the intended acquisition of Tanga Cement majority shares by Scancem.
In its verdict delivered on September 23, 2022 by Lady Justice Salma Maghimbi, Dr Godwill Wanga and Mr Boniface Nyamo-Hanga, the Fair Competition Tribunal held that the conditional approval should not have been granted by FCC and declared it void.
The Tribunal held that the takeover, if approved, would have contravened the Fair Competition Act (FCA) that prohibits a company to exceed 35 per cent of the market share.
The Tribunal held that the takeover, if approved, would have contravened the Fair Competition Act (FCA) that prohibits a company to exceed 35 per cent of the market share.
