Tanzania Breweries could pay $22m in beer war

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Tanzania Breweries Ltd, the country’s largest brewer, could end up paying millions of dollars in damages to its rival Serengeti Breweries Ltd over widely publicised sabotage accusations in the battle for customers

TBL, which commands a 70 per cent share of the market and is a subsidiary of the world’s second biggest brewer SABMiller, is accused of anti-competitive branding agreements with outlet owners and removing SBL’s posters and signage in the market. The two brewers have taken their competition wars to the Fair Competition Tribunal of Tanzania (FCT). (See: EABL set to sell off its 10pc stake in Tanzania brewer)

In September 2009, SBL lodged a complaint at the Fair Competition Commission (FCC) against TBL for allegedly restricting competition in the beer industry.

Following the hearing, the Commission penalised TBL and ordered it to pay a fine of five per cent, refrain from removing SBL poster materials at the outlets and directed that all branding agreements between TBL and outlet owners be declared null and void.

FCT has already started proceedings against the company for anti-competitive behaviour, and the penalty could be worth up to five per cent of TBL’s turnover for the year of its latest audited accounts.

Going by the results for the year ending March 2011, when TBL’s turnover stood at $455 million, the firm could pay up to $22.7 million in damages.

TBL has subsequently filed an appeal at the FCT on two grounds; that it has not been given a reasonable opportunity to be heard and that FCC failed to conduct its investigation fairly.

Battles between manufacturers and distributors of consumer goods has been on the rise in East Africa’s second biggest economy, reflecting the fierce competition for customers.

On December 13, 2010, upon an application made by TBL, the tribunal granted the appellant leave to add FCC as a respondent in Appeal No. 4 of 2010 and accordingly an amended memorandum of appeal was duly lodged in the tribunal on December 17, 2010.

Upon hearing the matter, chairperson of the tribunal Justice Razzia Sheikh, noted that FCC had objected to Appeal No. 4 on the grounds that the amended memorandum of appeal was bad in law for non-compliance with the provisions of the Fair Competition Act No. 8 of 2003, the fair Competition Commission Procedure Rules, 2010 and the FCT Rules, 2006.