The Fair Competition Commission (FCC) wishes to confirm and clarify the statement made by the Honourable Prime Minister, Mizengo K. P. Pinda (MP) in the Parliament while responding to the impromptu question by Busega MP, Dr. Raphael Chegeni (CCM) Member of Parliament for Busega on Thursday, 29th October, 2009, as reported by the media. The question by the Honourable Member of Parliament was whether the Government was aware of the on-going beer wars between Tanzania Breweries Limited (TBL) and Serengeti Breweries Limited (SBL) and what the Government was doing to prevent the continuation of the nasty acts between the two.
The FCC wishes to confirm the answers by the Honourable Prime Minister that the Government is aware of the wrangle and that the FCC, which is the appropriate institution for dealing with competition issues, is handling the problem.
A. THE WRANGLE BETWEEN TBL AND SBL IS AT THREE LEVELS:
1. TBL and East African Breweries (EABL)
In 2002 TBL and EABL agreed to divide up the beer market between Kenya and Tanzania so that they do not compete in their respective areas of dominance. This union was blessed by Government even though there was no merit except that of monopolizing their respective markets. As a result of that union, there ensued many negative effects: Kibo Breweries Limited closed down with employees in excess of 800 being made redundant in Moshi; TBL had about 96% of the Tanzania beer market and the consumer had to suffer several increases of beer prices.
Meanwhile, SBL, which had about 4% of the Tanzania beer market share, was increasing their production capacity. At the moment they have about 16% of the Tanzania beer market which is nearly the market share which Kibo Breweries Limited held before they were closed down.
2.SBL and EABL
EABL and SBL have been trying to enter into agreement which is similar to the TBL/EABL agreement. The attempted EABL and SBL has been the bone of contention between TBL and EABL. This dispute is being dealt with outside Tanzania.
3.TBL and SBL
SBL through their advocate filed a complaint against TBL with FCC in September 2009 accusing the latter for abuse of dominant position in the market. Upon receipt of the said Complaint, FCC immediately wrote to TBL attaching SBL’s Complaint and requesting them to respond to SBL’S allegations.
TBL through the services of their Advocates responded to the allegations.
The FCC is still investigating the facts of the case. However, this is a matter pending before the Commission and therefore, under the sub-judice rule, it will not be proper to comment on it as this will interfere with the judicial process.
Suffice is to state that once the case has been determined, FCC will give a statement of the facts and whosoever is aggrieved with the decision of the Commission will be at liberty to appeal to the Fair Competition Tribunal.
B. REMOVAL OF SBL ADVERTISEMENTS
There is another important issue, which FCC wishes to clarify as matter of urgency. This is about the removal of SBL advertisements or anybody’s advertisements for that matter.
The unlawful removal of advertisement in public place is a destruction of somebody’s property. This is an offence under the Penal Code Act (Cap 16 Re 2002).
Section 326(1) of Penal Code states as follows:- “any person who willfully and unlawfully destroys or damages any property is guilty of an offence, which, unless otherwise stated, is a misdemeanor, and he is liable, if no other punishment is provided, to imprisonment for seven years.”
This is a criminal offense which is penal and should not await the FCC determination of the competition issue. Therefore the unlawful removal of advertisement should be reported to the appropriate authorities and the necessary action taken immediately in order to maintain peace and order in society.
C.ROLE OF CONSUMER
Further, it is important to state here that the Tanzanian beer consumer has a role here. What is being fought here is their custom. Consumers have the right to choose and the obligation to make their views heard through their respective consumer associations/organisations and thereupon take up the challenge of defending their right to choose the beers of their preference in the marketplace.
Therefore it is upon them to decide who is serving their long term interests, the one who is allowing the last consumer to choose what to drink or the one who is curtailing even the display of goods for consumers to choose.
D.ROLE OF WHOLE SELLERS, DISTRIBUTORS AND RETAILERS
The whole-sellers and beer retailers also should show leadership and genuine service to consumers. They should not accept monetary incentives not to stock competitors’ products when they know by so doing they are annoying some of their consumers and also are helping to break the law.
E.THE ROLE OF COMPETITION IN A MARKET ECONOMY
The ultimate goal of effective competition in the market is to enhance efficiency at all levels of production and distribution of goods and services. It is through competition that prices, services and consumer choices can be assured. Also it is through competition that innovation in production, distribution and management is automatically generated. Therefore, any efforts which curtail competition pressure in a given economy affect sustainable development of that economy. Such efforts affect even the sustainability of Government revenues. In short the social welfare is highly compromised. Tanzanians need not go further to learn the effects of rampant monopolies in the economy because that is where we have just come from.
Business community should strive to serve the wider consumer interests and uphold to competition rules rather than inclining to serving the narrow interests of the competitors.
The choices of consumers strongly affect business behavior and their products. Consumers respond negatively to corporations involved in malpractice.
Godfrey E. Mkocha
DIRECTOR GENERAL
Saturday, 31st October, 2009
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