Fair Competition Tribunal Partly Overturns FCC’s Prohibition of Anheuser-Busch InBev SA/NV –TDL Merger

In January 2023, the Fair Competition Tribunal of Tanzania (the Tribunal) delivered its judgment on Appeal No. 9 of 2016, a high-profile case concerning the proposed acquisition of indirect control over Tanzania Distilleries Limited (TDL) (the Target Firm) by Anheuser-Busch InBev SA/NV (the First Appellant) through its indirect acquisition of majority shares held by SABMiller PLC Limited and Tanzania Breweries Limited (TBL) (the Second Appellant). The dispute centered on whether the transaction would significantly lessen competition in the Tanzanian alcoholic beverages market.

Background

The Fair Competition Commission (the FCC) had prohibited the merger between the First Appellant and the Target Firm, arguing that it would concentrate market power and undermine competition. It further ordered the Second Appellant to divest its 65% stake in TDL and declared void a longstanding shareholders’ agreement involving TBL, Distell, and SABMiller PLC Limited, citing risks of market concentration, information sharing, and anti-competitive coordination.

The appellants challenged the FCC’s decision, arguing that the FCC had overstepped its legal authority, misapplied key provisions of the Fair Competition Act, 2003 (the FCA), and relied on insufficient or irrelevant evidence. They contended that the FCC had no jurisdiction to continue reviewing the merger after statutory deadlines, improperly required separate notifications for subsidiaries affected by the same transaction, and failed to substantiate claims of dominance or anti-competitive effects. They further criticized the FCC for relying solely on submissions from a third party without giving the appellants a right to be heard, failing to conduct an independent investigation, and ignoring potential consumer benefits and positive effects on competition and investment. The appeal sought to overturn the merger prohibition and any associated orders.

Issues before the Tribunal

The Tribunal distilled the appeal into four key issues:

(a) whether the FCC had jurisdiction to continue assessing the merger notification after the expiry of the statutory review period under Section 11 of the Fair Competition Act, 2003 (the FCA);

(b) whether the FCC erred in applying Section 9 of the FCA (restrictive agreements) within a merger assessment instead of confining its analysis to Section 11 (merger control);

(c) whether the first appellant’s indirect acquisition of the target firm would create or strengthen a position of dominance in the relevant Tanzanian market for spirits, wines, and ciders; and 

(d) whether the FCC was competent and justified in ordering the divestiture of the second appellants 65% shareholding in the target firm as a remedy.

Tribunal Findings

Jurisdiction Limits 

The Tribunal found that the appellants were time-barred from challenging earlier FCC orders requiring separate subsidiary notifications, as they had complied with those orders without filing an appeal within the prescribed period. Although the FCC retained the authority to assess the merger, the appellants could not retroactively dispute procedural steps they had already accepted.

Enforceability of Restrictive Shareholders’ Agreements

The Tribunal upheld its earlier ruling in Distell  Group Limited v. Fair Competition Commission Appeal No. 19 of 2017, confirming that the shareholders’ agreement between TBL, Distell, and SABMiller was void ab initio for contravening Section 9 of the FCA. It emphasized, however, that the existence of an unlawful agreement was not sufficient to block a merger. The relevant inquiry in a merger review is whether the transaction itself would substantially lessen competition, not whether rivals are disadvantaged by pre-existing arrangements.

Substantive Analysis of Market Dominance

The Tribunal diverged sharply from the FCC’s dominance assessment. It noted that AB InBev’s global acquisition of SABMiller did not change TDL’s shareholding structure, which had remained unchanged since 1999. During that period, no competition concerns had been raised. The FCC had not shown how the merger would alter market dynamics, reduce consumer choice, or increase barriers to entry. Instead, its reasoning appeared directed at protecting Distell as a competitor rather than safeguarding competition in the market as a whole. On this basis, the Tribunal found that there was no evidence to justify prohibiting the merger.

Proportionality of Remedies

The Tribunal scrutinized the FCC’s order requiring TBL to divest its 65% stake in TDL. It considered divestiture a drastic remedy that should only be imposed where there is compelling evidence of market harm. No such evidence had been presented. In fact, the Tribunal observed that the existing ownership structure had facilitated consumer benefits, including wider product choice. It therefore overturned the divestiture order, stressing that remedies must be proportionate, rational, and grounded in demonstrable competitive harm.

Conclusion

This decision is significant for Tanzanian competition law. It confirms that merger prohibitions must be based on concrete evidence of harm rather than assumptions or competitor protection. It also reinforces that structural remedies, such as divestiture, should be imposed only when clearly necessary. Overall, the case signals a shift toward a more proportionate, evidence-driven approach to merger control in Tanzania.