Merger Control Developments | Tanzania | Africa Competition Guide

Have any notified transactions been prohibited by the competition authority in your jurisdiction since January 2021? If so, on what basis?

Local counsel are aware of one prohibited notified transaction that relates to automobile industry on the basis of exceeding market threshold (dominance).

Are there official proposals to amend merger filing fees and/or monetary thresholds or have such amendments been affected?

Local counsel are not aware of any proposals for amendments to filling fees/monetary thresholds. However, the government of Tanzania has expressed its plans to amend the entire competition law regime as the regime has “started to show its age”. Local counsel cannot say whether such amendments will also include the threshold for merger notification.

Is the submission of a merger notification suspensory and mandatory in your jurisdiction? If so, has the authority brought any cases against entities accused of gun-jumping and/or prior implementation of a notifiable transaction? If so, kindly provide details.

Submission of a merger notification is mandatory and suspensory under section 11(2) of the Fair Competition Act, as long as a threshold of TSH 3.5 billion (approx. USD 1,507,321) is met. Failure to notify a merger (gun-jumping) is, in itself, an offence. After a merger application has been lodged, the merger’s consummation is prohibited (standstill obligation) until a final decision is made.

The FCC has once dealt with Tanga Fresh for gun-jumping. Tanga Fresh, a significant dairy factory, had acquired several smallscale dairies, thereby eradicating competition in the region. It appealed unsuccessfully to the Fair Competition Tribunal as the Tribunal held that Tanga Fresh was bound by notification requirement and had breached that obligation (gun-jumping) for proceeding without first being cleared by the FCC. (See Tanga Fresh v FCC, Tribunal Appeal No 5 of 2014, Fair Competition Tribunal, Dar es Salaam.)

In 2021, the FCC announced investigating the transformation and restructuring of one of the top football teams in Tanzania, Simba Sports Club, for allegedly breaching merger notification, but the decision is yet to be made.

Is the submission of a merger notification non-suspensory and voluntary in your jurisdiction? If so, has the authority brought any cases against entities for failure to notify a transaction post-completion within the stipulated time period? If so, kindly provide details, including details of instances where the authority has specifically requested notification of mergers.

Notification of a merger that does not meet the threshold of TSH 3.5 billion (approx. USD 1,507,321) is not mandatory. There are no records where the FCC has specifically requested notification of such a merger.

Please describe any cases in which the competition authority fined any entity for failing to comply with merger conditions.

The Tanga Fresh case mentioned above is a good example. The FCC fined Tanga Fresh 5% of its annual turnover for failure to comply with merger regulations (gun-jumping). The fine amounted to TSH 460,945,000 (approx. USD 198,512) derived from the total annual turnover of TSH 9,210,900,000 (approx. USD 3,966,795) of its audited accounts of the year 2009.

In 2021, the FCC announced investigating the transformation and restructuring of one of the top football teams in Tanzania, Simba Sports Club, for allegedly breaching merger notification, but the decision is yet to be made.

Please describe any cases in which the acquisition of shares or assets of another firm was interdicted by the competition authorities in your jurisdiction, as well as the basis for this.

Local counsel are aware of one case of share or asset acquisition of one firm that was interdicted by the FCC on the grounds of exceeding the market threshold.

Please describe any cases in which parties (acquirer and target) did not have physical presence in your jurisdiction and the transaction was nonetheless notified. For example, where either party makes sales and derive some turnover in your jurisdiction do not have any subsidiaries or assets in the country, what is the local nexus test /local effects test to establish merger review jurisdiction?

Local counsel are not aware of such cases. Most mergers involve at least one party operating in Tanzania, even indirectly through a subsidiary or a representative. Further, section 3 of the Fair Competition Act, limits the law to acts and conduct happening throughout Tanzania. Reading this provision and other relevant corporate laws, one can conclude that a firm must have a point of presence in Tanzania, however minimal, to be caught within Tanzania’s competition regime.

Has the authority approved any mergers subject to novel or otherwise noteworthy conditions?

No.

Please indicate whether the competition authority has required notification of internal restructurings (that do not involve a change in ultimate control) and, if so, on what basis.

Internal restructuring that do not involve a change in ultimate control are not caught by the merger control regime. However, a notification obligation will exist if such restructuring involves acquiring shares or transferring any company assets or liability.

Please indicate whether an obligation to notify could be triggered as a result of a change in direct control over an entity through the interposition of a new entity within the group, albeit that the restructure does not result in a change in ultimate control.

Yes. Such cases will trigger notification obligations.

Please describe cases of mergers that have been approved subject to public interest grounds since January 2021 and kindly describe the nature of these public interest grounds.

The law does not recognise public interest as relevant ground. However, when granting exemptions of mergers, public interest can be considered.

Please describe cases where the competition authority has prohibited a merger transaction based on public interest grounds alone.

Local counsel are not aware of any such cases.

Describe the circumstances in which ‘greenfield’ / joint ventures mergers are caught under the merger review regime, and kindly provide instances of such mergers that have been notified to and considered by the competition authority.

There have been no joint ventures caught under the merger review regime in Tanzania.

Please indicate whether there are any circumstances in which non-controlling minority share acquisitions that have been found to constitute a notifiable merger and the basis for this.

The test for merger notification does not depend on whether the parties involved have any controlling powers. On the contrary, the test is whether the combined value of the merging firms or their total assets amount to TSH 3.5 billion (approx. USD 1,507,321) and above. Thus, a non-controlling minority share acquisition that meets this threshold is subject to merger notification.

On average how long does the authority in your jurisdiction take to approve a non-complex transaction? What about a complex one?

Non-complex mergers take between 45 to 60 days. Complex mergers take 75 to 120 days. This time frame depends on other factors, such as the cooperation accorded by involved parties or the availability of required information for proper assessment. Depending on the complexity of the matter and parties involved (e.g., their physical location and size and nature of their businesses, for example), a review of a merger can be relatively more prolonged than the abovementioned average.

Kindly indicate whether the competition authority enjoys the power to “stop the clock” for the review of a merger and under what circumstances can this happen. If so, please describe cases where the authority has stopped the clock.

Unlike other jurisdictions where competition authorities have strict time limits for merger reviews, the law in Tanzania provides the FCC with relatively sufficient time to review submitted applications. For example, under the Fair Competition Act and Fair Competition Rules of 2018, the FCC has 14 days to decide whether the notified merger will be examined. When it has been decided in favour of further examination, the law gives the authority another 90 days to review and decide on the notified merger. During this time, a standstill obligation exists. The law allows the FCC a further extension of 30 days and second or subsequent extensions if the FCC concludes that the delay has been caused by a lack of sufficient information or cooperation from any of the parties involved. With such provisions, “stop-the-clock” powers are not common in the merger review in Tanzania.

Please indicate whether, legally or in practice, your competition authority allows for “Carve out” / “hold separate” arrangements (this means that where clearance is not obtained in your jurisdiction by a specific date, the acquirer would opt not to take over the company in your jurisdiction but will implement the transaction in countries where approval has been obtained. The target in your jurisdiction may be left behind with the sellers for future disposal separately). If so, kindly describe cases where this has happened.

There are no legal provisions or practical experience for such arrangements.

Please indicate whether, legally or in practice, your competition authority allows for a transaction to close sequentially (for example: the shares in a target company, which triggers a filing requirement in your jurisdiction or which is active in your jurisdiction, will only be transferred after clearance in your jurisdiction has been obtained, while the shares in other companies affiliated to the target and operating in other countries thus do not trigger a filing requirement in your jurisdiction, shall be transferred as soon as clearances in those other relevant jurisdictions have been obtained (irrespectively of whether clearance in your jurisdiction has been obtained). If so, kindly describe cases where this has happened.

There are no legal provisions or practical experience for such arrangements.

Africa Competition Guide

Tanzania

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