The Zimbabwean Competition and Tariffs Commission (the “CTC”) is a statutory body which is established under the new Competition Act [Chapter 14:28] (the “Competition Act”). The CTC has two main mandates. Firstly, to implement Zimbabwe’s competition policy and secondly, to execute the country’s trade tariffs policy, with the primary objective of enforcing the Competition Act.

The Competition Act in Zimbabwe regulates interactions between competitors, suppliers and their customers. It is aimed at ensuring that businesses and companies compete fairly with one another. It encourages enterprise and efficiency, creates a wider choice for consumers, helps reduce prices as well as improve the quality of consumer products.

One of the responsibilities of the CTC is to engage in the regulation of mergers and acquisitions. Its aim is to regulate the structure of the economy and markets to ensure that markets function optimally. The CTC warns against and prohibits: mergers that will substantially prevent competition in a market; mergers that will lessen competition in a market; and mergers that facilitate the creation of a monopoly situation that is contrary to the public interest. The CTC must therefore, through a merger examination and assessment process, determine the impact that a merger will have on competition in a market before approving the transaction. Competition law differentiates between three types of mergers: horizontal, vertical and conglomerate.

Horizontal mergers involve the merger of corporations in related product lines. Such mergers lead to the improvement of the efficiency and economies of scale of the acquiring firm. The merging of entities in a horizontal relationship, essentially involve the removal of one competitor by another. They may lead to the reduction of customer choice due to the increase of the market share of the merged entity and could open the door to the abuse of market power. Majority of mergers and acquisitions in Zimbabwe fall under this category, and examples include the merger of TM Supermarkets by Pick n Pay, the acquisition of Makro Zimbabwe by OK Zimbabwe and the acquisition as a going concern of the business of Anchor Yeast by Société Industrielle Lesaffre (which Manokore Attorneys were the transaction advisors on).

Vertical mergers involve the integration of firms in different levels of the supply chain. This entails the integration of companies with a supplier-customer relationship. The main objective of such a merger, would be to ensure sources of supply, reduce marketing expenses, increase profitability and essentially – drive out competition. There is wide global debate in economic literature on the effect of vertical mergers on competition. These economic concerns include input foreclosure and customer foreclosure.

Conglomerate mergers involve the merging of firms in different levels of the supply chain. These firms generally have no apparent economic relationship. The purpose of these transactions is to increase diversification which would result in an increased market share, synergy and productivity.

The Competition Law policy in Zimbabwe is currently undergoing a pertinent upgrade in order to align it to the standards of international best practice, which is undergoing consideration by various stakeholders.