Stakeholders commend FCT’s ruling against Tanga Cement takeover

LEGAL experts and other stakeholders have commended the Fair Competition Tribunal for its decision to block Scancem International’s acquisition of Tanga Cement.

Last month, 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, this year 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.

“Having made deliberations, observations and findings, it is our conclusion that the intended merger in question will create a position of dominance in the market,” the FCT ruled.

The Tribunal held that the combined market shares of the merging firms on the basis of the sales volume metric will exceed 35 per cent (with the 47.26 per cent using SID data and 52.11 per cent using FCC data, which is contrary to the law.

Commenting on the judgment, Advocate Jonas Kija described it as a landmark ruling that strengthened the judicial independence and the ability of judges to fulfill their mandate without allowing extraneous influence or pressure by other actors.

“The independence of judicial organs is crucial to ensure trial judges perform their duties to the best of their ability,” he asserted.

“I strongly believe magistrates and judges should be given the power to make decisions independently without influence or interference from anyone,” he insisted.

Alfred Thomas, a lawyer based in Dar es Salaam, pointed out that the FCT’s judgment set the tone for investors to strictly observe the country’s laws.

Some cement stakeholders described the FCT’s ruling as a good move as it would ensure fairness and stability of the cement market and hailed the sixth-phase government for ensuring a conducive environment for investors.

Mr Jabir Sadiq, a wholesaler in Dar es Salaam, described the FCT’s ruling as a good move as it would ensure fairness and stability of the cement market.

“Cement industry is one of the most important components of the country’s construction sector and needs to be well regulated and protected by authorities,” said Mr Sadiq.

“It is important that we don’t allow monopolies in the cement industry as that could cause instability in both supply and prices,” he said adding, “Monopolies are discouraged in free-market economies as they stifle competition and limit substitutes for consumers.”

For his part, Aidan Chota, a cement dealer in Kibaha, Coast Region hailed the government for regulating the cement market efficiently.

“While the price of most construction materials skyrocketed, the price of cement has remained stable, thanks to the government’s interventions. We are buying and selling cement at a government indicative price since most of the cement is locally produced,” he said.

A construction engineer, Salma Khatibu, said the existence of many cement industries was crucial for the country’s industrial drive and for common people.

“With the construction sector growing in leaps and bounds, the demand for construction materials such as cement is going up almost on a daily basis, hence the need for more industries, and we’re grateful that the government is putting in a conducive policy and legal environment for investors,” she said.

“Strong competition in the cement industry would not only guarantee reliable supply of the commodity, but also ensure competitive prices for end-users and that is very important,” Ms Khatibu added