Fair Competition Tribunal Sets Landmark Precedent on Merger Control in Scancem–Tanga Cement Appeals (Nos. 6, 10 & 12 of 2022)

In a landmark decision rendered in 2022, the Fair Competition Tribunal of Tanzania (the Tribunal) adjudicated on consolidated appeals arising from the conditional merger approval granted by the Fair Competition Commission (FCC) in respect of Scancem International DA’s (SID) proposed acquisition of a controlling stake in Tanga Cement Plc (Tanga Cement).

The Tribunal’s decision in Appeals Nos. 6, 10 & 12 of 2022 has established a precedent-setting interpretation of merger control and emphasised the legality, enforceability, and economic viability of merger conditions, while firmly embedded consumer welfare and market fairness into Tanzanian competition jurisprudence.

Background

The proposed merger, under which SID would acquire a 68.3% stake in Tanga Cement, was approved by FCC pursuant to Rule 42(13)(b) of the Fair Competition Rules (the FCC Rules). The approval was accompanied by a series of extensive and prescriptive requirements intended to safeguard competition and protect the public interest. These conditions included:

(a)    That SID maintain existing branding, ensure operational continuity, and retain current employees;
(b)    That SID implement measures to pass cost savings through to consumers;
(c)    That SID not appoint shared directors or management across its subsidiaries;
(d)    That SID undertake debt restructuring and liquidate related entities, including Mivumopi Biofarm Ltd; and
(e)    That SID guarantee post-merger capacity utilization levels exceed those recorded prior to the merger.

The decision by FCC triggered three consolidated appeals, each brought by distinct yet critically interested parties: Chalinze Cement Ltd, a direct market competitor challenging potential anti-competitive implications, the Tanzania Consumer Advocacy Society (TCAS), acting in defense of consumer rights and public interest, and Scancem International DA (SID), contesting both the legal foundation and practical viability of several conditions imposed by the FCC. Recognizing the overlapping legal and factual matters, the Tribunal merged the appeals into a single proceeding and distilled the dispute into five core issues for determination, each pivotal to the legality, fairness, and economic consequences of the FCC’s decision. 

Issues

(a)    Whether Chalinze Cement Ltd. and the Tanzania Consumer Advocacy Society (TCAS) possessed the requisite legal standing to institute these proceedings under Section 61(3) of the Fair Competition Act, 2003 (the FCA);
(b)    Whether the Fair Competition Commission’s (FCC) approval of the merger complied with applicable legal standards and was supported by a proper factual basis;
(c)    Whether the FCC’s economic assessment of the merger was consistent with established principles of competition economics and sound regulatory analysis;
(d)    Whether the conditions imposed by the FCC were legally valid, proportionate, and within the scope of its statutory authority; and
(e)    Whether the conditions imposed were practical in application, economically feasible, and capable of effective enforcement.

Tribunal Findings

Standing of competitor and consumer groups

The Tribunal firmly rejected SID’s objection to the standing of Chalinze and TCAS. It held that both competitors and consumer advocacy groups have a statutory right under Section 61(3) FCA to challenge merger decisions without the requirement to substantiate detailed harm at the appeal stage. Citing persuasive authority from the European Court of First Instance (IECC v Commission of the European Communities [1998] ECR II-3645), the Tribunal affirmed a liberal interpretation of standing to encourage participatory and inclusive competition oversight.

Flaws in FCC’s substantive review

The Tribunal found significant deficiencies in the FCC’s assessment of the merger, ultimately rendering its decision both legally and economically flawed. First, the FCC incorrectly based its market dominance analysis on installed production capacity rather than actual sales volume, contrary to the FCA, which mandates a sales-based approach for determining market share. 

When properly assessed using sales data, the merged entity exceeded the 35% dominance threshold, thereby requiring enhanced regulatory scrutiny that the FCC failed to apply. Additionally, the Tribunal found that, the FCC disregarded consumer welfare by omitting it from its benefit-harm analysis and excluding consumer participation from the review process. The Tribunal also held that the FCC improperly accepted a “failing firm” defense, despite Scancem International DA not meeting the stringent legal requirements necessary to invoke such an exception under competition law. These substantive and procedural shortcomings undermined the legitimacy of the merger approval.

Legality and economic viability of conditions

While the Tribunal affirmed the FCC’s statutory authority to impose conditions on merger approvals, it found that several of the conditions imposed in this case were legally and economically defective. Many were deemed ultra vires or disproportionate, exceeding the scope of the FCC’s mandate. Others were considered economically unrealistic when viewed against the operational realities of Tanzania’s cement industry, and several lacked the clarity, measurability, and enforceability necessary for effective regulatory oversight. For instance, the requirement that the merged entity maintain capacity utilization above pre-merger levels for a five-year period were found to be economically unfeasible and insensitive to market fluctuations. Similarly, the imposed obligations concerning ex-factory price reductions were unsupported by any credible economic modelling or objective pricing benchmarks, rendering them vague and impractical.

Conclusion

This landmark decision raises the bar for merger control in Tanzania, reinforcing that approvals must be evidence-based, legally sound, and firmly rooted in consumer welfare. It affirms the participatory rights of stakeholders, limits regulatory overreach, and sets a lasting precedent for transparency, accountability, and economic realism in competition law enforcement.