Procedural Aspects Of Mergers In Tanzania
  • Concept of mergers in Tanzania
  • Notification procedures for a merger
  • Process of examination as assessment of mergers
  • Consequences of Breach of merger approval conditions or obligations

1. Introduction

A merger means an acquisition of shares, a business, or other assets, whether inside or outside Tanzania, resulting in the change of control of a business, part of a business, or an asset of a business in Tanzania.

The Competition Rules of 2018 provide Merger Notification Requirements by stating that any person who intends to acquire, control, or be acquired or controlled through a merger shall notify the Commission of that intended merger by filing a notification under section 11(2) of the Fair Competition Act (the “Act).

A merger, (under the said section of the Fair Competition Act), is notifiable if it involves turnover or assets above threshold amounts specified by the Fair Competition Commission (the “FCC) from time to time by Order in the Gazette. The current specified threshold is Tanzanian Shillings Three Billion Five Hundred Million Only (TZS 3,500,000,000/=).

The Fair Competition (Threshold for Notification of Merger) Amendment Order of 2017 provides that the calculation of the threshold shall be based on the combined market value of the assets or turnover of the merging firms.

The Corporate and Commercial Department at MAK Africa Legal has prepared this article to provide procedural requirements for mergers in Tanzania as provided by law.

Notification

The notification of a merger must be made in the prescribed form FCC. 8 set out in the First Schedule to the Competition Rules and has to be accompanied by application fees prescribed under the Rules.

Where an applicant considers that the merger notification is confidential, such claim shall be supported by a written statement on Form FCC. 2 set out in the First Schedule to the Rules explaining why the information is confidential.


The Applicant shall then submit one original and three copies of Form FCC. 8 and all the supporting documents to the Commission. The supporting documents shall be either in originals or certified copies of the originals.

It should be noted that where notifications are signed by representatives of persons or of firms, such representatives shall produce written proof that they are authorized to act on behalf of the Applicant.

NOTE:
The parties to a merger are prohibited from implementing that merger until it has been approved, with or without conditions, by the Commission under the Act.

2. Information And Documents To Be Provided

The notification shall contain the information, including all documents requested in the applicable forms set out in the First Schedule to these Rules.

The Director General may dispense with the obligation to provide any particular information on the notification, including documents, or with any other requirement specified in the prescribed form where it is considered that compliance with those obligations or requirements is not necessary for the examination of the case.

3. Review Of Notification


Upon receipt of a Merger Notification, the Director responsible for mergers shall deliver to the filing firm either a notice of Complete Filing or a notice of Incomplete Filing.

The Notice of Complete Filing shall be given if the merger appears to fall within the jurisdiction of the Act and all the requirements set out in the Competition Rules have been satisfied; and in the case of a subsequent filing by the firm, all the requirements set out in that form have been satisfied.

A notice of incomplete filing is issued if the merger notification fails to meet the aforementioned criteria. Within five working days after receiving the Notice of Incomplete Filing, the acquiring firm may refer the matter to the Commission for an order setting aside any requirement set out in that notice and the Commission shall make an order accordingly.

NOTE: Where the filing firm neglects within the stipulated time to provide any missing information or documents as the Commission may require, the Commission shall consider the merger as abandoned and the rules on abandonment shall apply.

4. Merger Review Period And Extensions


If the Commission determines that a merger shall be examined, or otherwise not prohibited; it shall notify the person within the initial period. The initial period is the period of fourteen days allowed under the Act to determine whether the merger shall be examined.

Any proposed merger shall be prohibited for a period of ninety (90) days, during which it shall be examined. In prohibiting the merger, the Director responsible for mergers shall issue a copy of the Prohibition Certificate to a party who notified the merger. However, the Commission may extend the period of 90 days for a such further period not exceeding thirty (30) days as the Commission sees fit.

In extending the period, the Commission shall issue a copy of the Extension Certificate to a party who notified the merger. The initial period and any extension once begun shall continue without any interruption.

Procedural Aspects Of Mergers In Tanzania

5. Examination of Mergers

a. Preliminary Investigation (First Stage Investigation)

Under the first stage of the investigation, the Director responsible for mergers investigates the merger with a view to establishing whether it has any major economic impact. The Director responsible for mergers in consultation with a lawyer and an economist carries out an assessment to decide whether the relevant merger is likely to harm competition. A report on such assessment is thereafter submitted to the Director General of the FCC.

If it appears that there is little or no possibility that the merger under assessment is likely to harm competition, the parties involved shall be given a “no objection” to the merger. If it is decided that the merger in question is likely to harm competition, further investigation shall be conducted by the Director responsible for mergers, and third parties to the merger may be informed of that decision.

b. Further Examination of the Merger (Second Stage Investigation)

A third party with sufficient interest in a merger may submit his interest notifying the FCC of their interest to participate in the merger. This is to ensure that any question that may be useful to the examination of the merger is adequately put to both main parties and third parties.

c. Assessment of Report.

After the second stage of investigation is complete, the Director responsible for mergers produces a report setting out the economic and legal arguments as to: –

  1. Why a breach of the Act is likely to take place; and
  2. If so, whether an exemption under section 13 of the Act may be justified because of the existence of benefits.

If the Director responsible for mergers decides that the case be presented to the Commission, he shall present the report of the case setting out the economic and legal arguments as well as the findings as proposed.

The Commission shall then conduct a hearing by considering prior issues of whether there is likely to be a breach of the Act and whether an exemption is warranted and make a decision thereafter.

d. Completion of Investigation

After completing the investigation and consideration of the merger, the Commission shall: –

  1. Approve the Merger
  2. Approve the Merger Subject to conditions; or
  3. Declare the Merger prohibited.

Depending on the decision reached by the Commission, it shall issue either a Clearance Certificate or a Notice of Prohibition to the firm that filed the Merger Notice. The Commission shall also provide a copy of its reasons for the decision to the parties and publish a notice of its decision in the Gazette or the Commission’s official website.

6. Abandonment of A Merger

If an acquiring firm intends to abandon its intention to implement a merger, it is required to notify the Commission in the prescribed form that it has abandoned the intended merger transaction. Upon abandonment of the merger, the parties to the merger shall remain in the same position as if the merger had never been notified; and the filing fee paid in respect of that merger shall be forfeited to the Commission.

7. Breach of Merger Approval Conditions or Obligations


If a firm has breached an obligation that was part of an approval or conditional approval of the merger, the Director responsible for mergers shall deliver to that firm a Notice of Apparent Breach in the prescribed form before taking any further action to revoke that approval or conditional approval.

The firm in receipt of a Notice of Apparent Breach is required, within ten (10) working days of such receipt; to either apply for settlement and submit to the Commission a settlement plan to remedy the breach or request the Commission to review the notice of the apparent breach on the grounds that the firm has substantially complied with its obligations with respect to the approval or conditional approval of the merger.

8. Revocation of Approval Merger


The Commission may revoke its own decision to approve or conditionally approve a merger where: –

  • The decision was based on incorrect information for which a party to the merger is responsible
  • The approval was obtained by deceit; or
  • The firm concerned has breached an obligation attached to the decision

9. Conclusion


The law has stipulated the requirements for merger notifications lucidly. It is therefore incumbent for firms and other stakeholders to familiarize themselves with the procedural aspects of mergers to ensure strict compliance with the procedures laid down under the law.

Important Notice:

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. No representation or warranty (express or implied) is given as to the accuracy or completeness of the information contained in this publication, and, to the extent permitted by law, MAK Africa Legal its members, employees, and agents do not accept or assume any liability, responsibility or duty of care for any consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this publication or for any decision based on it.

Leave a Reply

Your email address will not be published. Required fields are marked *