Archives 2022

CTC sets tough conditions for Capri deal

THE Competition and Tariff Commission (CTC) has directed Zimbabwe Stock Exchange-listed conglomerate, Innscor Africa Limited, to divest from Capri within six months for its deal with Annunaki Investments to be approved.

“The commission reviewed its decision subject to the condition of divesture. Considering this, the final decision of the commission was that: The acquisition by Annunaki Investments (Pvt) Ltd of an indirect interest in Capri be approved on condition that Innscor Africa Limited completely divests from Capri within six months of receiving the commission’s decision; the penalty paid of $848 464,48 for consummating the merger without approval of the commission, be maintained,” CTC said in its latest newsletter.

In February 2020, CTC received a notification of a merger involving Annunaki Investments and Innscor’s appliance manufacturing unit, Capri.

The merger was an acquisition of a 25% stake in Capri by Annunaki. Annunaki is an investment vehicle, wholly-owned by SSCG Africa Holdings. It controls Deilennar Investment, a commercial refrigeration leasing company; Mafuro Farming, a dairy farming business; and Aqua Aura, an agriculture centre-pivot distribution business.

SSCG is incorporated in Mauritius and Zimbabwe.

It has investments in fast-moving consumer goods, tourism, human resources recruitment, agriculture, mining, packaging, financial services, equipment leasing, restaurants and clothing industries in Zimbabwe.

Capri manufactures household refrigerators and is a distributor of electrical appliances.

CTC said the proposed transaction was classified as of a conglomerate in nature. Conglomerate mergers, by definition, do not pose serious competition concerns, however, in this instance competition concerns were in the indirect market of fund management because the merger had the effect of neutralising competition between two major competitors through indirectly uniting them.

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https://www.newsday.co.zw/business/article/200004695/ctc-sets-tough-conditions-for-capri-deal

Role of Competition Policy and Law in Mitigating Climate Change

Introduction

The international community commemorates the World Competition Day on the 5^th of December, the day when the United Nations Conference on Restrictive Business Practices approved the United Nations Set of Multilaterally Agreed Equitable Principles and Rules for the Control of Restrictive Business Practices in 1980. The aim of the World Competition Day commemorations is to ensure that stakeholders globally, realise the potential benefits from an effectively implemented competition regime, and also play their role in making competition regimes work worldwide. This year’s celebrations are running under the theme “Competition Policy for Mitigating Climate Change”. Climate change is threatening our existence on mother earth and developing countries are bearing the brunt of its impact. This article discusses how competition policy can be used to mitigate climate change.

Legal and Policy Framework

Over the years, Zimbabwe has made significant strides to incorporate climate change issues in its national development agenda as witnessed by the signing of the United Nations Framework Convention on Climate Change (UNFCCC) in 1992 at the Rio Earth Summit.  Zimbabwe is a signatory to the Kyoto Protocol entered into force on 16 February 2005 and operationalized the UNFCCC by committing industrialized countries and economies in transition, to limit and reduce greenhouse gases emissions in accordance with agreed individual targets. The Kyoto Protocol also established a rigorous monitoring, review and verification system, as well as a compliance system to ensure transparency and hold Parties to account with regards to emission targets. The expiration of the Kyoto Protocol in 2020 necessitated the need for a new binding agreement to guide future efforts to address climate change, which saw the adoption of the Paris Climate Agreement which is a legally binding international treaty on climate change. It was adopted by 196 Parties at Conference of the Parties (COP) 21 in Paris, on 12 December 2015 and entered into force on 4 November 2016, with the goal to limit global warming.

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CTC urges more competition in Aviation Sector

The Competition and Tariff Commission (CTC) has encouraged more competition in the aviation sector saying this will lead to low ticket prices and the provision of quality services.

Competitiveness in the aviation sector is a critical factor in promoting economic growth, especially in the tourism sector.

According to the Commission, a reduction in air ticket prices has been witnessed globally post-deregulation since 1978, leading to an increase in entry and competition i the sector.

“There are numerous benefits arising form competition in the provision of air transportation services for both travellers and economic development of any country,” it said.

“Worthy noting is that by the dictates of theory, airlines mainly compete on price and quality of service,” said CTC.

“First, competition in the sector leads to low ticket prices as airlines compete for customers.”

The Commission said competition in the sector encourages ease of doing business, especially in promoting domestic tourism. “In Zimbabwe’s case, a reduction in air ticket prices will promote domestic tourism. Since air transport is fast, lower prices make it affordable for travellers to move from one tourist destination to another,” said the Commission in its latest newsletter.

It also spurs international tourism to other local tourist destinations like Kariba and Hwange provided air tickets are cheap, thereby promoting tourism.”

At the regional level, given the geographic position of Zimbabwe, which is centrally located in Southern Africa, low air ticket prices can strategically position the country to become the regional aviation hub where travellers from the region connect flights to different parts of the world. -@SikhulekelaniM1

Manufacturing sector dominates 2021 mergers, acquisitions

ZIMBABWE’S manufacturing industry accounted for the bulk of mergers and acquisitions in 2021, the Competition and Tariff Commission (CTC) said last week.

In its 2021 annual report, CTC said 33% of the mergers and acquisitions were in the manufacturing sector.

It said the mining, quarrying, agriculture, forestry, fishing and financial and insurance service sectors were also among leading industries sought-after by investors.

The report said 22 mergers and acquisition transactions were approved without conditions in 2021, while two deals were approved with conditions.

In the period under review, notable approvals were Delta’s purchase of Mutare Bottling Company from telecoms giant Econet Wireless, and the big deal in which Sotic International Limited swooped into Bindura Nickel Corporation, taking over 74,73% shareholding.

The Zimbabwe Stock Exchange-listed leisure chain, African Sun Limited acquired Dawn Properties during the period.

Mergers and acquisitions approved during the period also included the acquisition of up to 100% of issued ordinary shares in Adapt IT Holdings Limited by Volaris Group Inc, as well as the acquisition of Ascendis Vet, Ascendis Animal Health, Kyron Laboratories and Kyron Prescriptions by Sun Valley Estates.

The commission also approved the Dairibord Zimbabwe/Tavistock Estates deal and the acquisition of 100% shareholding in DSI Underground by Sandvik Holdings.

CTC director Ellen Ruparanganda said in 2021, the commission pursued its mandate of promoting and maintaining competition in all sectors of the economy and providing trade tariff assistance.

She said four restrictive practice cases were investigated in the school uniforms market, banking sector, central securities depository market and distribution of day-old chicks.

“Identified anti-competitive practices in the respective markets were resolved through negotiations, instituting enforcement orders and encouraging business to enter into compliance agreements,” she said in her statement accompanying the report.

To proactively maintain competition in Zimbabwe, Ruparanganda said 18 transactions were notified through Common Market for Eastern and Southern Africa Competition Commission.

She said advisory opinions were issued to parties with regards to the notifiability of six transactions, based on facts submitted in line with the Competition (Advisory Opinion) Regulation, 2021.

This assisted stakeholders to interpret and apply the Act accordingly, she said.

CTC chairperson Benedict Moyo said mergers which significantly lessened competition were prohibited.

However, he said merger transactions remained sustained and decisions or determinations were provided timeously to merging parties.

“Concurrently, delays in reviewing merger notification fee thresholds that had been impacted by currency developments affected (CTC) operations through lower revenue generated,” Moyo said.

https://www.newsday.co.zw/business/article/200003905/manufacturing-sector-dominates-2021-mergers-acquisitions