HARARE (FinX) – In a significant ruling, the Supreme Court of Zimbabwe has upheld the appeal of the Competition Tariff Commission (CTC) against a previous decision by the Administrative Court that allowed a controversial merger involving Innscor Africa Limited and its associated companies. The Supreme Court’s decision, delivered on October 3, 2024, has far-reaching implications for competition law and market regulation in the country.
The case, identified as Civil Appeal No. SC 569/23, centred around the CTC’s concerns that the merger would create an overwhelming concentration of market power in the stock feed industry, potentially harming competition and consumer interests. The CTC had previously imposed a monetary penalty on the respondents for failing to notify the commission of the merger, which was deemed contrary to public interest.
The Administrative Court had previously ruled (in 2022) that Innscor Africa and its associated companies cannot divest from Profeeds and Produtrade and will not be liable to a 6.43% turnover penalty (based on 2018 results), but only needed to have notified the CTC of the merger.
The Administrative Court noted that the merger was not contrary to the public interest, citing short-term economic benefits and the cooperative nature of the merging parties. The court emphasised that the merger had led to increased operations and profitability for the companies involved, suggesting a positive impact on employment and economic growth.
In its ruling, the Supreme Court criticised the lower court for not adequately assessing the long-term implications of the merger. The court noted that the Administrative Court relied on a relatively short operational period of just over three years to conclude that the merger was beneficial to the public interest. The Supreme Court emphasised that such a timeframe was insufficient to evaluate the merger’s potential impact on market dynamics and competition.
Justice Tendai Uchena, delivering the judgement, stated, “The court a quo did not correctly assess the facts of the case before it. It failed to recognise that the respondents, aware of their unlawful conduct, may have engaged in practices designed to present themselves in a favourable light during the period in question.”
The Supreme Court’s decision effectively reinstates the CTC’s judgment. The court ordered that the judgement of the Administrative Court be set aside, allowing the CTC to proceed with its original findings and penalties against the respondents.
