The Tanzania Government has passed the Fair Competition (threshold for Notification of a Merger) (Amendment) Order, 2017 (“the Order”) made under section 11(2) of the Fair Competition Act, Cap, 285 of the Laws of Tanzania (Act No. 8 of 2003). The Order which came into force on the 2nd June, 2017 amends the Fair Competition (Threshold for Notification of a Merger) Order, 2006 which sets out the thresholds for a merger that are notifiable to the Fair Competition Commission (the FCC) as well as the mechanics of calculation of that threshold.
The Order, changes the minimum merger notification threshold from TZS 800 million (approx. USD 360,000) to TZS 3.5 billion (approx. USD 1.6 million). The principal Order is amended by deleting paraph 2 and replacing it with following:
“2(1) It is hereby specified that the threshold for notification of a merger is Tanzanian Shillings Three Billion Five Hundred Million only (TZS 3, 500,000,000). (2) The calculation of the threshold shall be based on the combined market value of assets or turnover of the merging firms”
This is a positive and welcomed change as it stems from numerous requests and recommendations that have been put forward to the FCC to have the threshold increased as it had previously captured most transactions that were taking effect despite that fact that their impact to competition was minimal if at all existed.
The amendment to the threshold order will mean that the mergers and acquisition applications that will be reviewed by the FCC will be of entities that have been in business for a significant amount of time and have grown a business that can impact the economy in one way or another. This will mean that new companies that will have managed to generate a turnover of TZS 800 million will not be subjected to making applications to the FCC and paying the hefty application fees which can be strenuous to an already struggling company.
Expanding the threshold net will hopefully attract a lot more transactions from the East African region from midsize companies who can freely trade and make investments in Tanzania without the worry of having to comply with the merger clearance laws.
This publication has been prepared for general guidance on matters of interest only, and does not constitute professional advice. You should not act upon the information contained in this publication without obtaining specific professional advice. For more information please contact the author listed below or firstname.lastname@example.org.
Josephine Mbuya, Senior Associate