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IMPLEMENTATION OF COMPETITION POLICY AND LAW AND ITS BENEFITS

IN TANZANIA

13th FEBRUARY, 2013

By Fair Competition Commission (FCC)www.competition.or.tz

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OUTLINE

i. Introduction: Scope of Competition policy and Law Establishment of FCC

ii. The role of FCC

iii. What FCC has done

iv. Challenges

v. Conclusion

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INTRODUCTION: MEANING AND SCOPE OF COMPETITION POLICY AND

LAW

Competition in the ordinary sense means a contest between individuals or groups for the purpose of certain gains.

Competition = the process of rivalry between business firms for customers.

Competition policy and law protects the competition process and subsequently the consumer.

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Introduction: Establishment of FCC

Fair Competition Commission came into operation in 2007. Established by Fair Competition Act, 2003 (Act No.8):-

What Competition Policy and Law wants to achieve:-

• Increase economic efficiency in production, distribution and supply of goods and service.

• Protect consumers.• Promote innovation.• Maximize the efficient allocation of resources.

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THE ROLE OF FCC

Promote Competition;

Competition has three main issues: anti-competitive agreements, mergers and acquisitions and abuse of dominance.

Consumer protection;

Consumer rights and obligations, as consumer is docile. Fight against counterfeit products. False name or initials in the sale of goods, False trade descriptions, Forged and deceptive trade marks.

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1. Anti-competitive agreements

Price fixing between competitorsCollective boycott by competitorsOutput restrictions between competitorsCollusive bidding and tenderingMarket allocation

FCC investigates and brings culprits to the law.

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2. Mergers and Acquisitions Mergers are of interest where they bring two or more

firms that were formerly competitors under common control, thereby substantially increases market concentration or position of dominance.

Companies have to apply and FCC makes economic assessment of the application and can approve, disapprove or approve with conditions.

Applicants can argue on benefits to the public.Greater efficiency, promoting technical & economic

progress, environmental issues, BUT no more than harm.

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3. Abuse of Dominance Dominance if attained on merit – no problem, dominant

position in a market used to prevent, restrict or distort competition is outlawed.

35% market share in Tanzania means dominant position. Some of the abuses (misuse of market power)

Predatory pricing - “meet or beat the competition without regard to cost”,

Charging excessive prices, and resale price maintenance.

Price discrimination, refusal to deal, tie-in salesExclusive dealing, etc.

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What FCC has done

Advocacy activities- 9 stakeholders’ awareness seminars in regions and

special groups (covering competition, consumer and counterfeits issues)

2 Regional Consultative Meetings 95 mergers application have been dealt with. 11 cases have handled Received and advised redress to consumers regarding

various complaints.

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What FCC has done Conducted radio and television programmes geared

towards sensitizing consumers on competition, consumer protection and counterfeit goods.Consumer basic rights advocated include-

Right to access basic needsRight to safetyRight to be informedRight to choiceRight to be heardRight to redress Right to health and sustainable environmentRight to consumer education

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What FCC has done

Commission has teamed up with Consumer Consultative Councils of Multi-sectoral Regulatory Authorities into an Inter-consumer Consultative Councils’ Network (Inter-CCC) which focuses its attention on addressing cross-cutting consumer protection challenges.

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What FCC has done

As regards to fighting against counterfeit products:- Daily inspection at the Port and Inland

Containers Depots (ICD) particularly Dar es salaam region.

Upon request from brand owners FCC conducts raids in any part of the country in the mainland Tanzania.

Destruction of the goods and/or bringing to the law the culprits

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ChallengesEconomics is important and is the basis for competition

analysis, hence FCC needs solid base on sound and robust economic expertise.

Sound economic reasoning leads to proper analysis of the theory of harm. The test of harm is based on evidence provided or established. Hence research and investigative skills necessary both internal and external.

Low Level of Competition Culture (across stakeholders).

Advocacy being key more resources needed.

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Conclusion The attendant benefits of effective implementation of

competition include:- Increased consumer welfare, as consumers are able to

purchase goods and services at affordable prices. Availability of wider choice of goods and services to

consumers. Better quality products at lower price. Checks hurdles to fair competition Opportunity for new businesses (removal of barriers to

entry).

Hence competition is pro-poor and certainly for private sector development.

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Thank You