CHAPTER ONE

INTRODUCTION TO FAIR COMPETITION LAW

You should be familiar with the following areas

  • Meaning Competition
  • Terminologies
  • Historical Background
  • Development of Competition Law in Tanzania
  • Objectives
  • Scope

1.1  MEANING OF COMPETITION AND COMPETITION LAW

1.1.1 Competition

Competition means revalry among sellers trying to archive such goals as increasing profits, markets share and sales volume by valuing the element of the marketing mix that is price, distribution, and promotion.

OR

Competition means the effort of two acting independently to secure the business of the third party ((consumers) by offering the most favorable terms. Competition in energizes firms to seek productive efficiency gains and produce at lowest unit costs or risk losing sales to more efficient rivals. It is competition which promotes the production of quality goods against the rivals. It is only the supply and demands set the price in competitive market; it is an assumption of perfect competition. This means all firm in the market are the price takers. Perfect competition is a market in which there are many firms selling identical products with no firm large enough, relative to the entire market to be able to influence market price, a single firm cannot influence the price of the product in perfect competition market not only many firm but also buyers.

1.1.2 Competition Law/anti-trust Law

Is a law that promotes or seeks to maintain market competition by regulating anti-competitive conduct by companies. Competition law is implemented though public and private enforcement.

OR is the body of legislation intended to prevent market distortion caused by anti-competitive practices on the part of business.

1.2 TERMINOLOGIES

(a) Competitive equilibrium: it is a supply equals to demand and therefore consumers are satisfied. In case where there is excess supply in quantity of supply than demand equilibrium, if there is more …

(b) Consumer: is one that buys good for consumption and not for resale or commercial purpose. The consumer is an individual who pays some amount of money for the thing required to consume goods and services.

(c) Markets: is a place where two parties can gather to facilitate the exchange of goods and services. The parties involved are usually buyers and sellers.

(d) Free markets: is one where voluntary exchange and the laws of supply and demand provide the sole basis for economic system, without government intervention. OR is a system in which the prices for goods and services are self regulated by the open market and by consumers.

(e) Supply and Demands: is relationship between the quantity of a commodity that producers wish to sell at various prices and the quantity that consumers wish to buy. It is the main model of price determination used in economic theory. The price of commodity is determined by the interaction of supply and demand in market.

1.3 HISTORICAL BACKGROUND OF COMPETITION LAW 

The history of competition law goes back to the Roman Empire where business practices trader’s guilds and government, however…. Therefore the modern competition law involved on the country level to promote and maintain competition in the market principally within the territorial boundaries of nation states national competition law usually covers the territorial borders unless it has significant effects some countries may allow for extra territorial jurisdiction in competition based on the effects doctrine in Tanzania section 36 allow extra territorial. While the development of competition law in Europe in the 19th century in 1889 Canada enact what is considered to be the Act of the modern time known as the Prevention and suppression combination formed in Relation of trade Act, it was passed one year before the US enact The Sheman Act of 1890 ,  it was called Sherman Act

The Sherman Act of 1980 attempt to outlaw the restriction of competition by the large companies who operated with rivals to fix outputs, price ad market shares, initially through pools and later through trust the fact which shows that there is no fair competition, since the enactment of the Sherman Act enforcement of competition law based on the various economic theory adopted by various economic theories adopted by the government, section one of the Sherman Act declared illegal any contract in form of trust or otherwise in restraint of trade (prohibit fair competition in the market)  also following the enactment of Sherman Act the US.

1.4 DEVELOPMENT OF COMPETITION LAW IN TANZANIA.

The price control Act of 1973 said to have an elements of competition law which seems to protect consumers, but the fair trade practices Act of 1994, under section 51-93 of the said Act the act protect consumers by prohibiting unfair trade practices, misleading advertisement, however the act is said to have some weaknesses such as:

  1. It accorded unbalanced discretion to the minister of industries and trade in regulation of certain cased, example: section 31-40 of the Act the minister had power to identify unwarranted concentration of economic power, also the ministers approval was needed for major and take (the task done by the fair competition commission nowadays) over also the minister had power to fix prices,

The proper implementation of competition policy and laws had to be done by the commission as the result the government presented the law in the parliament for changes then they came up with the fair competition Act of 2003, these changes are regarded as the first and major in the history of competition policy and laws in Tanzania.

The fair competition Act of 2003 repealed the fair trade practice Act and attempts articulate the shortcomings of the Act, by establishing the fair competition commission under section 62 and giving it power to hold an inquiry and impose direct sanctions for sever infringement under section 68 of the Act.

1.5 OBJECTIVES OF COMPETITION LAW

Section 3 of the fair competition Act provides for objectives, Competition law or anti-trust law has three major elements which are:

  1. Prohibit agreement/practice that restrict free trading and competition between business
  2. It burns abusive behavior by a firm dominating the market or anti-competitive practice that tend to lead to such dominant position
  3. Supervision of major and acquisition of large corporation 

1.6 SCOPE OF COMPETITION LAW

The fair competition Act regulates all business undertaken in Tanzania mainland from sole traders to large companies. The competition law focuses on agreements mergers and other practices that may have competition in the market. When  it comes in agreements these are few exceptions:

  • Not covers agreements which may affects sales abroad
  • Agreements which related to employments
  • Agreements which requires adherence to technical standards

1.7 THE LEGAL AND INSTITUTIONAL FRAME WORK OF FAIR COMPETITION IN TANZANIA

                   The fair competition in Tanzania is rich in laws and every authority is established by the act of the parliament. FCA, 2003 establishes two organs which are

  1. Fair competition commission–: established under section 62 as a corporate body, exercising its power independently and partially, functions are provided under section 65, one of them is to promote and enforce compliance with the Act.
  2. Fair competition Tribunal–: is established under section 83 and its function is under section 85, it acts as appellate body coming from regulatory body like fair competition commission, SUMATRA, EWURA, TCRA. Regulatory body means the all authorities FCC and FCT, they are working concurrent with FCC in their respective sector to promote competition and protect consumers.