Bid Rigging as Provided for under the Fair Competition Act, 2003 and the Proposed Amendments Presenter: Grace Freedom Nicholas Investigation Department Fair Competition Commission June,

Part I Bid Rigging under the Fair Competition Act,

Bid Rigging in Tanzania is provided for under section 9(1)(d) of the Fair Competition Act, Section 9 provides: “9(1) A person shall not make or give effect to an agreement if the object, effect or likely effect of the agreement is- (a)Price fixing between competitors; (b)A collective boycott by competitors; or (c)Output restrictions between competitors; (d)Collusive bidding or tendering”. 3

Section 9(2)(d) gives an explanation of bid rigging as follows- ““Collusive bidding or tendering” means- (i)To fix or control the prices or terms or conditions of any bid or tender by any of the parties to an agreement at an auction or in any tender or other form of bidding, in competition with any other party to the agreement; or (ii)To prevent a party to an agreement from making a bid or tender at an auction or in any tender or other form of bidding, in competition with any other party to the agreement”. 4

Section 9(4) creates offence for any person who intentionally or negligently acts in contravention of the provisions of section 9. Section 60 provides for penalty which is a fine of not less than five percent and not exceeding ten percent annual turnover. 5

Part II The Proposed Amendments 6

FCC has resorted to propose some amendments (approved by the Cabinet) including introduction of leniency policy (in Section 9) – the most effective tool for detecting cartels and obtaining relevant evidence due to the fact that detecting such offences is not always easy. Secret cooperation between participants of such offences. There is little documentary evidence left behind. 7

Proposed to add a provision to provide for Leniency Programme: “9A –For the purposes of section 9, the Commission may execute leniency programme extinguishing or reducing the applicable penalty pursuant to the terms thereof, for a person that engage in anti- competitive conducts, provided that such person effectively cooperate with investigations and administrative proceedings”. 8

Proposed to add at s. 9(1): “allocation of markets or customers”. and its definition at s.9(2) – “to divide a market between competitors so as to limit the right to do business within a defined geographical territory, a defined product category, or to certain specified customers with result of eliminating or restraining competition between competitors”. 9

Proposed to delete the words “intentionally or negligently”. A person who contravenes the provisions of Section 9 should be liable for committing an offence whether or not the contravention was intentional or negligent otherwise it will seem to imply that the plaintiff must prove intentionality or negligence. That would impose an unwise and unusual burden on the plaintiff. 10

Punishment as provided for under section 60. Section 60 provides- “Where a person commits an offence against this Act (other than under Part VI, part VII or sections 58, 59 or 88) or is involved in such an offence, the Commission may impose on that person a fine of not less than five percent of his annual turnover and not exceeding ten percent of his annual turnover.” 11

Proposed to amend section 60(1) to accommodate contravention of s. 9 by adding- :…and in case of an offence in contravention of section 9, the Commission may impose a fine of not less than fifteen percent of his annual turnover but not exceeding thirty percent of his annual turnover in the preceding business year ”. 12

Proposed to add a new subsection to provide punishment for a natural person – “A director, manager, or officer of a body corporate found to violate this Act shall be personally liable to a fine up to five million shillings or imprisonment for a period twenty four months or, in case of violations of section 9, to a fine of percent of the fine imposed to the legal person or to imprisonment up to a period of 36 months or both”. 13

NB: FCC has drafted: (i)FCC Leniency Policy (ii)FCC Leniency Rules 14

Thank you for your attention! 15