CTC, Innscor battle continues as Supreme Court allows appeal

HARARE – The Supreme Court has ruled that an appeal by the Competition Tariff Commission (CTC) over the ruling by the Administrative Court regarding the merger between Ashram Investments, Profeeds, Produtrade, and Innscor Africa, would be heard by the court.

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% of 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.

The Supreme Court’s ruling made yesterday (Oct. 3) by Justice Tendai Uchena, Justice Nicholas Mathonsi, and Felistas Chatukuta, allows the CTC to present its case, arguing that the Administrative Court erred in its assessment of the merger’s implications for public interest and competition law. The commission seeks to overturn the previous ruling that permitted the merger and to reinstate the penalties imposed on the respondents for failing to notify the commission of the merger within the required timeframe.

This development is significant as it underscores the ongoing legal scrutiny of the merger and the broader implications for competition regulation in Zimbabwe.

However, the CTC contends that the court’s decision overlooks the potential long-term consequences of the merger, which it argues could lead to monopolistic practices and a significant reduction in competition within the stock feed market. The commission maintains that the merger grants overwhelming control to the fourth respondent, Innscor, raising concerns about its ability to dominate the market and stifle competition.

In its appeal, the CTC argues that the Administrative Court misapplied the principles of competition law by focusing primarily on the immediate benefits to the merging parties rather than the broader implications for market dynamics. The commission insists that the court failed to adequately consider the regulatory framework established to protect consumers and promote fair competition in Zimbabwe.

Furthermore, the CTC is challenging the court’s decision regarding the imposition of penalties on the respondents. The commission believes that the penalties were justified due to the respondents’ failure to notify the CTC of the merger within the legally required timeframe, a violation that undermines the integrity of competition regulations.

The appeal raises critical questions about market competition and public interest in Zimbabwe’s economy. Its outcome could have far-reaching implications for business practices and regulatory enforcement in Zimbabwe, as the overall objective of competition law under free markets is to serve public interest while also balancing economic efficiency in a country where access to finance is quite limited. The case highlights the delicate balance between fostering economic growth through corporate consolidation and ensuring a competitive marketplace that protects consumers and small businesses alike-finx