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Changes to competition law

Legal Alert

By Burure Ngocho

On the 17 June 2020, Finance Act No. 8 of 2020 (Finance Act) was passed into law. A number of laws were amended including the Fair Competition Act Cap 285 R.E 2009 (Competition Act).

Prior to the amendment of the Competition Act, section 60(1) read as follows:

“60(1) Where a person commits an offence against this Act (other than under Part VI, Part VII or sections 58, 59 or 88) or is involved in such an offence, the Commission may impose on that person a fine of not less than five percent of his annual turnover and not exceeding ten percent of his annual turnover.”

The Finance Act made a small yet significant change to the Competition Act through the amendment of section 60. The Finance Act has amended section 60(1) by adding the words “which has a source in Mainland Tanzania.”

Under the Competition Act, the Fair Competition Commission (FCC) has extraterritorial jurisdiction and could take action against parties outside of Mainland Tanzania if the action is:

  • by a Tanzanian citizen or a person who resides Tanzania;
  • by a body corporate incorporated in Tanzania or carrying on business within Tanzania;
  • by any person in relation to the supply or acquisition of goods or services by that person into or within Tanzania; or
  • by any person in relation to the acquisition of shares or other assets outside Tanzania resulting in the change of control of a business, part of a business or an asset of a business, in Tanzania.

Prior to the new amendment, the FCC, using section 60(1) could impose a fine on a person who commits an offence of 5-10% of their global turnover, irrespective of source. As such the fines which could be imposed by the FCC were astronomical and in most cases completely disproportionate to the offence committed. The amendment now ensures that any fine imposed by the FCC is based on the benefit the offending part derived from Mainland Tanzania instead of its global turnover.

This amendment is part of the country’s strategy of creating a more conducive environment for commerce to flourish.