Delta commits to fair business practices

Competition and Tariff Commission following the acquisition of Schweppes Zimbabwe.
CTC hailed the commitment by Delta saying it marked an important stage in the promotion of competition and creating a culture of competition in Zimbabwe.

The agreement followed Delta’s acquisition of a 49 percent stake in Schweppes Zimbabwe. Schweppes workers acquired the balance of 51 percent. After Schweppes Zimbabwe – a former competitor of Delta Beverages in the soft drinks market – became an associate of Zimbabwe’s biggest beverages maker, there was need to put in place instruments to avoid abuse of the firm’s market dominance.
CTC acting director Mr Benjamin Chinhengo said competition was the lifeblood of vibrant markets and was key to enterprise development as it forced companies to become more efficient and innovative.
He said competition involved a process of rivalry between firms striving to win customers by achieving the least cost and prices, developing new products, exploiting skills strength and advantages to meet customers’ needs.

“Firms, however, have natural incentives to acquire market power in their quest for increased profits. A firm can obtain discretionary control over prices and related factors determining business transactions,” said Mr Chinhengo.
“Such power may be gained by limiting competition through various means, such as erection of barriers to commerce, entering into collusive arrangements to restrict price increases and engaging in other restrictive practices.”

Zimbabwe’s competition law, which is enshrined in the Competition Act, is aimed at protecting and maintaining competition in the domestic economy.
Preventing and controlling restrictive practices, monopoly, prohibiting unfair business practice and regulating mergers and acquisitions enhances competition.
Delta has reportedly been involved in a number of mergers and acquisitions, which were all approved by the CTC because it was found that they did not substantially lessen the degree of competition in the relevant markets.

Conditions precedent included making sure the Coca-Cola Company maintained Mazoe and Calypso brands in the market in their original state.
That the Coca-Cola Company would not dispose of “the Mazoe and Calypso brands by the sale or otherwise without express approval from CTC” and that the company would not transfer the trademarks of these products.

The firm was also required to promote and develop local suppliers with respect to raw materials necessary to produce finished products subject to the suppliers offering acceptable prices, meeting specifications and standards.
CTC registers its orders with the High Court, making them legally binding.