Tanzania’s leading beer manufacturer Tanzania Breweries Limited (TBL) suffered its biggest blow of its time yesterday when it was ordered to pay its major competitor for abusing markets powers by preventing and restricting fair competition in the beer market.
The Fair Competition Commission (FCC) ruled yesterday that TBL should pay its main rival, Serengeti Breweries Limited (SBL) an equivalent of its five percent of annual turnover basing on the current audited accounts of the company.
The decision by FCC comes as salvage to SBL which has for nearly a decade complained of being excluded in the market through anti-competitive practice by TBL.
The fine has to be deposited with the commission in 28 days unless the giant beer manufacture files an appeal against the decision.
The decision by FCC follows a complaint filed in September last year by SBL that sought intervention of the Commission over unfair trade practices by TBL that prevented and restricted competition in the beer market.
SBL, with about 17 per cent of the market share, has for long time been accusing its competitor of running a systematic campaign of removing its signage and posters from retail outlets countrywide in order to prevent its visibility to the public.
It alleged that the act by TBL, with over 80 per cent market share, was grossly unfair and amounted to abuse of dominance by restricting competition.
SBL had also accused TBL of entering into agreement with retail outlets managers on a countrywide scale for exclusive branding of TBL’s products with a condition of removal of any existing brand adverts of its competitor.
TBL had, throughout the case, denied the anti-competitive allegations and maintained that the agreement between them and outlet owners were competitive.
But in a decision lasted for two hours yesterday, FCC chairman Mr Nikubuka Shimwela said the commission was satisfied that SBL made their case to the required standards as regard to the issue of removing SBL posters and signage (POS).
He said testimonies of five SBL’s witnesses were sufficient to prove several incidents of such nature-obstructing their branding appearance in the bars and outlets which are considered as TBL’s brand houses.
An outlet owner had testified before the commission that beside a written agreement he had with TBL, he was also instructed orally to remove SBL table cloth so that he would be supplied with 14 crates of Kilimanjaro beer per week as motivation.
“The commission holds that such agreements were anti-competitive because they had an object effect and likely effects of preventing, restricting ad distorting competition,” FCC said.
FCC yesterday further declared null and void all branding agreement TBL had entered with beer outlet owners countrywide and ordered the dominant beer company to “immediately refrain from removing its competitor’s POS materials at the outlet and entering into anti-competitive branding agreement with outlet owners.
FCC also decided on a cross-complaint lodged by TBL at the beginning of hearing of the complaint in December last year. TBL alleged in the cross-complaint that SBL has been using its crates and bottles in the market. TBL had in 2008 complained before the commission on SBL’s conduct of using crates and bottles belonging to it.
TBL also alleged that SBL had been using its bottles and crates to pack its products and had even gone to the extent of embossing its mark on the TBL’s bottles.
In another complaint, TBL claimed that SBL has never injected new crates and bottles in the market which indicates that SBL is trading on the TBL’s empty crates and bottles.
But the commission observed that not only SBL but also TBL has to be held responsible on the mixed usages of the bottles and crates in the trade through the on-going arrangements and understandings which were going on between them.
With regard to embossment, the commission held that TBL failed to prove that SBL embossed TBL bottles with SBL marks because the alleged embossment of bottles was not what was submitted during the hearing.
The commission yesterday said TBL has failed to prove that SBL has never injected crates and bottles in the trade because SBL proved to be injecting crates and bottles in certain times.
“The understanding and arrangements of TBL and SBL on the usage of the 25 lack crates and the circulating bottles amounted to agreements, which in the judgment of the commission were anti-competitive against each other and therefore unlawful,” FCC said.
FCC yesterday dismissed claim by TBL that SBL misused market powers, saying “SBL was not capable of misuse its markets power because of its minimal market share it has in the Tanzania mainland market.”
FCC further ordered the two companies to publish three times in the three local dailies circulating nationally on working days, (both English and Kiswahili), TV and Radio media explaining how the dispute has been decided by the commission and inform the public about the salient features of each one’s bottles and crates.
The battle between the two companies dates back in 2003 when the two companies adopted a Code of Conduct which, among other, prohibited defacement or removal of competitor’s signage or POS materials of a competitor.
But since 2008, SBL alleged a number of incidences of removal of its posters and signages in Dar es Aalaam, Mbeya, Morogoro, Dodoma, Mwanza, Arusha, Moshi and even in Zanzibar.
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