Why two FCT members struck out appeal on cement firm's merger

 

art of the Tanga Cement Plc factory in Tanga. PHOTO | FILE

By The Citizen Reporter

Media/news company

Mwananchi Communication Limmited

Dar es Salaam. A majority ruling by the Fair Competition Tribunal (FCT) has struck out an appeal where one company was opposing a merger between two cement firms.

 
Two out of three FCT members sided with the Fair Competition Commission (FCC) and struck out an appeal by Chalinze Cement where the firm was opposing FCC’s endorsement of a merger between Scancem International DA (Scancem) and Tanga Cement.

“In the event, and for the foregoing reasons, the preliminary objection raised is sustained. We respectfully find and hold the purported appeal to be incompetent for being lodged by a non-existing entity and we accordingly strike it out with costs,” FCT members, Dr Godwin Wanga and Dr Onesmo Kyauke ruled in their judgement that was delivered on July 6, 2023.
However, the third member, who is also the FCT chairperson, Judge Maghimbi differed with her two colleagues and she instead delivered her dissenting judgement in which she once again nullified a decision by the FCC to approve the merger.
According to section 85 (7) of the Fair Competition Act, No.8 of 2023, a dissenting judgement is not a decision but rather a mere opinion.

In view of this, the same cannot in law nullify the FCC's decision. This suggests that the decision by Dr Wanga and Dr Kyauke is what will have to be implemented.

The issue of the matter dates back to 2021 when Scancem International DA (Scancem), a subsidiary of Heidelberg Cement AG, which owns Tanzania Portland Cement Plc (Twiga Cement), and AfriSam Mauritius Investment Holdings Limited, owner of Tanga Cement, agreed for the former to acquire a 68.33 percent stake in Tanga Cement.

But the Chalinze Cement Company Limited and the Tanzania Consumer Advocacy Society (TCAS) lodged an appeal with the FCT, which quashed the planned merger through its verdict delivered on September 23, 2022.

However, in December 2022, Scancem International applied again to the FCC in a bid to acquire Tanga Cement and the new application was approved by the FCC in February 2023.

As such, Chalinze returned to the FCT to challenge the approval.
But with the Business Registration and Licensing Authority (Brela) de-registering Chalinze from its registry of companies, Dr Wanga and Dr Kyauke ruled that the case should as well be struck out with costs.

“In addition, since the appellant is nowhere to be found as it does no longer exist, the costs would be borne jointly and severally by the two law firms representing the purported Appellant,” the two FCT members ruled on July 6, 2023.

During the case, Chalinze was represented by advocates James Bwana and Dora Mallaba while FCC, which was the first respondent, was represented by the Solicitor General, Dr Boniphace Luhende. Scancem, which was the second respondent was represented by Mr Timon Vitalis and Dr Fayaz Bhojani.

Citing various examples in which the case had to be stricken out after the petitioner/appellant was dissolved, the lawyers representing the two respondents contended that there was no flicker of doubt that the Appellant, Chalinze Cement Company Limited, ceased to exist as a legal person from March, 2023 when the notice striking it off from the Companies' Register was published in the Gazette.

They urged that by being struck out of the Companies' Register, Chalinze was effectively dissolved and therefore, it no longer existed as a legal entity; it no longer had any legal capacity whatsoever and that it could not sue nor bring legal proceedings as it was non-existent.

However, the lawyers from the appellant side argued that the removal of Chalinze Cement from the Companies Register cannot be allowed to nullify proceedings that commenced before that 3rd March, 2023 when the company was deregistered.

It was on that line of reasoning that Judge Maghimbi decided to ruled that the FCC had erred in approving the merger on February 28, 2023 because by doing so, it [the FCC] was usurping the powers of the FCT which ruled against the same merger in its September 23rd, 2022.

Basing on the argument, Judge Maghimbi concluded that the decision of the FCC dated 28th February, 2023 was res judicata of its previous decision dated 6th April, 2022 which was set aside by the Tribunal on 23rd September, 2022.

“For the reasons stated above, I hereby proceed to nullify the decision of the first respondent [FCC] in the subsequent merger dated 28/02/2023….,” Judge Maghimbi ruled.

Judge Maghimbi said she was shocked by the conduct of the FCC which is bestowed with the responsibility to oversee competition in the economy for the benefit of the consumer, to have usurped powers of the Tribunal in the review by proceeding to determine what it [the Tribunal] had already prohibited.