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Foul play disguised as incompetence at the Competition and Tariff Commission

27 Jun 2022 at 12:12hrs | Views
I am an avid reader and consumer of all things Competition and Anti Monopolies related. I believe in healthy competition and have learnt a thing or two from watching the American Sherman act evolve into the Federal Trade Commission Act and others.

The fines and penalties for breaking the competition and anti trust laws are generally meant to punish the offenders without necessarily hurting them or driving them out of business.

In 2021 these were the highest fines paid in Europe and the charges that the companies faced:

Google - £89m fine - Abuse of dominant position

JPMorgan - £44m settlement - Market abuse

German Steel Forgers - £30m fine - Price-fixing

WWO - £13m fine - Splitting markets

Valve Corporation - £6.7m fine - Bilateral agreements

Roland - £5m fine - Online discounting restrictions

I was baffled by an article appeared on the 24th of June 2022, the headline read: Competition authority says Innscor has too much power , and wants the company to exit Probrands and pay a US$9 million fine.This headline got me pondering at the logic and sanity behind such a move.

The Competition and Tariff Commission by right is meant to preserve free and unfettered competition as the rule of trade. This is standard global practice, the US has what is known as the Sherman Act as well as the Federal Trade Commission Act.

These laws should protect businesses and the consumer from monopolies, anti competition tendencies and other related malpractices.

In Zimbabwe we have a legal entity which is known as the Competition and Tariff Commission. This Commission is governed by an Act of parliament but Zimbabwe remains a land of monopolies and anti competition boundary marking which have gone on for a very long time.

It is baffling that Innscor was singled out , charged and fined for having too much market power. However one might be quick to state that Innscor has found a creative way of achieving forward and backend integration.

Innscor has created many jobs for the people of Zimbabwe and managed to keep food on the tables of the people at an affordable cost.

How then did the Competition and Tariff Commission decide to punish Innscor for being in business?

Where was the CTC when Innscor structured the Probrands transaction?

How did the Competition and Tariff Commission arrive at a US 9 Million figure? Is this figure meant to cripple Innscor or it is a figure meant to take away jobs , harm the food and retail industries at a time when Zimbabwe needs all hands on deck towards economic growth and stability as envisaged by the new dispensation.

CTC has been accused of being incompetent , biased, and having its priorities upside down in its quest to fight monopolies in Zimbabwe.

This has become evident by the decision they made , the timing of the decision and the delicacy of the economy vis a vis inflation and affordability of basic commodities.

Green Fuels has enjoyed a monopoly in the fuel blending industry and the Competition and Tariff Commission has looked on and kept quiet.

The gold buying sector is another sector where only one company has a licence to export gold in the country. This is a monopoly which has gone unchallenged and silently ignored and we have not heard of any fines.

Kuda Tagwirei has also created behemoth entities that stifle competition in various sectors of the economy. Tagwirei has taken over several mining entities and created structures and acquisitions which are clearest and blatantly aimed at creating monopolies in the market. The Competition and Tariff Commission has looked on quietly and let these monopolies and anti competition acquisitions and structures thrive.

The Competition and Tariff Commission (CTC) has exposed itself and should be ashamed of its bias and prejudiced view of competition and monopolies in Zimbabwe.

The CTC does not have offices outside Harare yet the officials drive expensive cars and can afford to go on week long international trips that do not benefit the taxpayers in any form or manner.

The CTC has fined several companies and collected millions in fines without any accountability for the funds.

Why and how are they leaving monopolies in mining , gold buying , fuel blending ,financial payment switches and other industries.

One wonders whether Innscor was targeted for political reasons or CTC was just doing its job. One goes on to wonder if the CTC is accountable to anybody and if they have a strategic vision or direction which will bring value to the economy and help keep things affordable for the tax payer.

The CTC unwittingly displayed bias and prejudice against Innscor. This bias and prejudice needs to be investigated by the Parliamentary portfolio committee responsible for industry, Zimbabwe Anti Corruption Commission and the Commercial Crimes unit of CID. There is foul play disguised as incompetence at the CTC and the Minister of Industry needs to revamp the entire CTC management and structure.

This does not absolve Innscor of any wrong doing. If the company has broken the law it has to be charged and fined within the parameters of the law. 9 Million USD for a company that is selling its products in local currency is exorbitant and unjustified. It is this figure and selective application of the law that got me wondering if government and its entities are singing from the same hymn book.

Thabo Nkiwane
Socio-Economic Analyst

Source - Thabo Nkiwane
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