The need by companies to consolidate their financial positions post-dollarisation has given rise to mergers and acquisitions. NewsDay Business Reporter Byron Jele (ND) spoke to the Competition and Tariff Commission (CTC) director Alexander Kububa (AK) about acquisitions and mergers. Below are excerpts of the interview.
ND: Nine months into the year, how many mergers and acquisitions has your organisation approved? AK: So far this year the Commission’s Board of Commissioners has considered four transactions involving mergers and acquisitions, as follows:
- Acquisition of ReNaissance Merchant Bank Limited by National Social Security Authority
- Acquisition of National Foods Limited by Innscor Africa
- Acquisition of Zimbabwe Online (Pvt) Limited (ZOL) by Data Control&Systems (1996) Limited (t/a Liquid Telecom)
- Acquisition of Pelhams Limited by TN Holding Limited.
ND: What are the challenges besetting the economy and industry from the CTC point of view? AK: Challenges besetting the economy and industry, from the competition and trade policy point of view include: abuse of dominant position, or monopolisation, by undertakings with market power through engagement in anti-competitive practices of both exploitative and exclusionary nature, such as excessive pricing, predatory pricing, and discriminatory treatment; collusive and cartel-like behaviour between competing undertakings to fix prices, share markets, and rig tender bids; lack of long-term capital; besetting high interest rates; (import competition; erratic power supply; and high utility charges.
ND: What is the CTC doing to level the playing field? AK: The commission is doing all it can, within its powers under the Competition Act (Chapter 14:28) to level the playing field for effective competition, which is crucial and imperative for industry and economic efficiency. In that regard, the Competition Act empowers the commission to: prevent and control restrictive practices, and monopoly situations, which distort competition in the market; prohibit unfair business practices that prevent competition, and have no redeeming efficiency or economic benefits; and regulate mergers and acquisitions to ensure that no anti-competitive transactions are allowed to proceed.
So far this year, the commission’s Board of Commissioners has considered six competition cases involving restrictive and unfair business practices, as follows:
- Allegations of restrictive practices by the Innscor Africa Limited group of companies in the baking industry
- Allegations of restrictive practices by Cimas Medical Aid Society in the pathological services sector
- Allegations of abuse of monopoly position by the Municipality of Harare in the provision of municipal services
- Allegations of abuse of monopoly position by the Municipality of Bulawayo in the provision of municipal services
- Allegations of restrictive practices by Zesa in the provision of electricity to the cement manufacturing industry
- Allegations of abuse of dominant position by Econet Wireless in the mobile telecommunications services sector.
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While two of the cases were closed for lack of serious competition concerns, or lack of evidence to support the allegations (the Zesa-cement industry case, and the Econet Wireless case), the commission agreed to hold full-scale investigations requiring public/stakeholder hearings in the rest of the cases to enable it to take the necessary remedial and corrective action.
The commission will soon be holding stakeholder hearings into full-scale investigation into allegations of collusive and cartel-like behaviour in the bread making industry. Currently, the commission is undertaking preliminary investigations into five allegations of restrictive and unfair business practices, as follows:
- Allegations of unfair business practices in the agricultural implements manufacturing industry (to separate investigations)
- Allegations of restrictive practices by the Makoni Rural District Council
- Allegations of restrictive and unfair business practices in the meat processing industry
- Allegations of restrictive practices in the fuel distribution industry
- Allegations of restrictive practices molasses distribution industry.
With regard other business concerns that are related to industrial and trade policy, the commission makes recommendations to the relevant government authorities, through the Industry and Commerce ministry, aimed at assisting and protecting local industry.
