Friday, December 11, 2009

Beer market: players urged to uphold spirit of competition

Thursday, 01 October 2009 16:23 Written by Administrator

The beer market war going on in the country is most likely not to have any negative impact on revenue collection, Tanzania Revenue Authority (TRA) has said.

The beer market war that have been prompted by the East African Breweries Limited's (EABL) interest to buy major stake in Serengeti Breweries (SBL) and in doing so to quit its partnership with Tanzania Breweries (TBL) will not affect the inflows of the government revenue.

According to Tanzania Revenue Authority (TRA) commissioner-general, Harry Kitillya, “as long as the volume of beer consumption in Tanzania does not decrease, the country's economy will not be adversely affected in terms of revenues.”

Kitillya stressed that the Revenue Authority is looking for growth in beer consumption regardless of who teams up with who in the industry. Growth in consumption will consequently increase production and sales thereby enabling TRA to collect more revenue.

Daimon Mwakyembe, a former director-general of the Tanzania Bureau of Standards (TBS), is of the opinion that application of the rules of competition in respect of anti-competitive cross-border business conduct should be looked into.

Mwakyembe, who is also the chairman of the Tanzania Consumer Advocacy Society (TCAS), said while consumer groups need to support and encourage action to raise public awareness of competition issues, the proactive contribution which consumers can make through their shopping choices and their rights if they are the victims of restrictive practices.

Furthermore, he said that there are two things one needs to take note in analyzing the merger between SBL and EABL; one is the fallout between EABL and TBL with their contractual obligation; the second thing is the market impact on the merger between EABL and SBL.

“When it comes to the pros and cons of the merger between SBL and EABL,” Mwakyembe stressed, “Tanzanians have all the rights to share their feelings on the issue as at the end of the day consumers are the ones going to benefit or suffer based on decisions going to be made.”

Speaking in a different vein, the TCAS chief, Bernard Kihiyo, told this paper that, in a free market economy, competition with other players in the market is not an option; what matters is fairness of the competition – no matter how big or small the player is.

Kihiyo – who is also the CEO for Parasol Real Estate Agent & Developer Ltd – that countries which are in the East African Community (EAC) should establish a sub-regional competition tribunal that would enforce harmonized competition legislation.

Kihiyo nonetheless says “consumers are aware of TBL’s strong dominance in the beer market in Tanzania, which is believed to be more than 60 per cent. Any merger now would further reduce competition in the industry – and increase beer prices.”

In any case, observers are of the general view that beer prices in Tanzania “are no longer determined by market forces – but at the whim of company accountants. prices have increased threefold since the wars started,” Kihiyo elaborated.


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