Competition and Tariff Commission

MISSION

“To promote and maintain competition and fair trade in all sectors of the economy of Zimbabwe”

VALUES

• Professionalism
• Integrity
• Transparency
• Innovation
• Timeliness
• Teamwork

Statutory Functions of the Commission

The statutory functions of the Commission in terms of section 5 of the Competition Act [Chapter 14:28] are:

1. to encourage and promote competition in all sectors of the economy;
2. to reduce barriers to entry into any sector of the economy or to any form of economic activity;
3. to investigate, discourage and prevent restrictive practices;
4. to study trends towards increased economic concentration, with a view to the investigation of monopoly situations and the prevention of such situations, where they are contrary to the public interest;
5. to advise the Minister of Industry and Commerce in regard to all aspects of economic competition, including entrepreneurial activities carried on by institutions directly or indirectly controlled by the State, and the formulation, co-ordination, implementation and administration of Government policy in regard to economic competition;
6. to provide information to interested persons on current policy with regard to restrictive practices, acquisitions and monopoly situations, to serve as guidelines for the benefit of those persons;
7. to undertake investigations and make reports to the Minister of Industry, Commerce and Enterprise Development relating to tariff charges, unfair trade practices and the provision of assistance or protection to local industry;
8. to monitor prices, costs and profits in any industry or business that the Minister of Industry, Commerce and Enterprise Development directs the Commission to monitor, and to report its findings to the Minister; and
9. to perform any other functions that may be conferred or imposed on the Commission by the Act or any other enactment.

Divisions

Competition

The Competition Act [Chapter 14:28] lists two main types of restrictive business practices:-

1. restrictive practices that are considered using the rule-of-reason approach; and
2. unfair business practices that are per se prohibited.

• Restrictive Practices

Restrictive practices as defined in terms of section 2(1) of the Competition Act [Chapter 14:28] include anti-competitive agreements, and other concerted action, and unilateral conduct of an abusive nature. Abuse of dominance, or monopolisation is implied in the definition. Section 32(2) of the Act provides that “… the Commission shall regard a restrictive practice as contrary to the public interest if it is engaged in by a person with substantial market control over the commodity or service to which the practice relates …”. Prohibited restrictive practices are of both exclusionary and exploitative nature, and include:-

1. restricting the production or distribution of any commodity or service;
2. limiting the facilities available for the production or distribution of any commodity or service;
3. enhancing or maintaining the price of any commodity or service;
4. preventing the production or distribution of any commodity or service by the most efficient or economical means;
5. preventing or retarding the development or introduction of technical improvements in regard to any commodity or service;
6. preventing or restricting the entry into any market of persons producing or distributing any commodity or service;
7. preventing or retarding the expansion of the existing market for any commodity or service or the development of new markets therefor; and
8. limiting the commodity or service available due to tied or conditional selling.

The de minimus non-viral lex rule is covered in the definition of the term ‘restrictive practice’ in the Act in that the practice must materially restrict competition for it to be prohibited. The rule-of-reason approach used by the Commission in investigating restrictive practices is crucial in that an attempt is made to evaluate any efficiency or pro-competitive features of the restrictive practice against its anti-competitive effects to decide whether or not the practice should be prohibited.

The stages involved in the investigation of restrictive practices:

• Step 1: Allegation considered by the initial screening committee.
• Step 2: Commencement of an investigation by the Directorate’s Competition Division upon receipt of a competition complaint, referrals from other authorities, or at the Commission’s own initiative.
• Step 3: Information and evidence gathering.
• Step 4: Assessment of the competitive effects of the alleged or suspected restrictive practices to determine their materiality.

TARIFFS OPERATIONS

The Commission’s trade tariffs operations primarily involve provision of assistance or protection to local industry through, inter alia,:-

1. the raising of tariff charges on imported commodities or services that compete with commodities or services provided by local industry;
2. the lowering of tariff charges on imported commodities or services that are used by local industry;
3. the splitting of tariff lines to provide for an explicit description;
4. the implementation of legislative or administrative measures for the purpose of countering unfair trade practices; and
5. the technical assistance to Government in the conclusion of arrangements with other countries for the benefit of local industry.

• TARIFF CASES

The handling of tariff cases by the Commission is governed and guided by the provisions of Part IVB of the Competition Act [Chapter 14:28] on ‘investigation of tariff charges, unfair trade practices and provision of assistance or protection to local industry’. The term ‘tariff charge’ is defined in terms of section 34B of the Act to mean “any duty, tax or charge levied by the State in connection with commodities or services imported into or exported from Zimbabwe”, while the term ‘unfair trade practice’ is defined to mean “the dumping of imported commodities”, “the granting of a bounty or subsidy with respect to imported commodities” and “any other practice in relation to the importation of commodities or services of the sale of imported commodities or the provision of an imported service where such practice is declared to be unfair (by the Minister of Industry and Commerce)”.

• Tariff Relief Applications

The most common tariff relief applications are for import duty reduction on raw materials and tariff protection on finished local products. Requests for duty reduction on raw materials are more favorable to the Commission than those for tariff protection. Tariff protection is generally found to be inconsistent with trade liberalization obligations under the Common Market for Eastern and Southern Africa (COMESA) and the Southern African Development Community (SADC), however, are considered in exceptional cases involving the viability, and imminent closure, of the applicant company. It also negates import competition, which encourages enterprise efficiency.

Tariff relief applications are considered by the Commission in three basic steps, as follows:

• Step 1: Tariff relief request submission or identification;
• Step 2: Internal investigation and assessment in the Commission;
• Step 3: Recommendations to the relevant Government authorities.

Legal & Corporate Services

The Division is headed by the Commission Secretary, who is an Assistant Director level. It is manned by lawyers and a public relations expert. The Legal & Corporate Services Division provides internal legal services to the Board of Commissioners and the Directorate.

The Division’s operational mandate includes:

1. the provision of secretarial services to the Board of Commissioners;
2. the enforcement of Commission’s orders, determinations and other resolutions; and
3. corporate governance and public relations.

Research Unit

The Unit is responsible for the following:

1. providing research services to all Operational Divisions
2. maintaining the Commission’s Database

Finance & Admin Services

This department provides a financial and administrative service to the Commission’s other operational Divisions, which are essential for the effective undertaking of the Commission’s operations. The many administrative support functions of the Department include human resources management, maintenance and effective allocation of physical assets, and control and efficient utilization of financial resources. The Department, in particular, has the crucial role of assisting the Director in the performance of her statutory functions in terms of section 17 of the Competition Act [ Chapter 14:28] of “administering the Commission’s affairs, funds, and property”. The Department is headed by a Manager and is manned by staff with financial and administrative.

References