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