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Fidelis Munyoro Chief Court Reporter
INNSCOR Africa Limited has lost an appeal against the decision of the Competition Tariff Commission’s intention to penalise it for breaching the regulatory procedures in its acquisition of a majority shareholding in National Foods Limited.
The appeal comes after the commission wrote to Innscor last year in August inviting them to respond to its intention to impose a penalty for breaching the merger notification provisions under the Competition Act.
Administrative Court judge Justice Herbert Mandeya threw out the appeal after hearing preliminary points raised by the regulatory body.
He ruled that Innscor rushed to appeal against a proposed order, when no penalty was imposed on it to justify the appeal.
This was after CTC lawyer Mr James Mutizwa of Chihambakwe, Mutizwa and Partners had objected to the appeal arguing it was not valid at law because it was against an intended order.
Mr Mutizwa said the CTC order could have been varied after receiving Innscor representations on the proposed order.
Justice Mendya ruled in favour of CTC without getting to the merits of the appeal.
“In summary there is no appeal before this court. The appeal is dismissed with costs…,” said Justice Mandeya.
The court heard that CTC issued an order on November 25 2013 while Innscor filed its appeal 81 days before the commission issued the order following its investigations into the operations of the food stuff maker, making the appeal premature.
“The letter expressed an intention to penalise the appellant in future,” said Justice Mandeya. “It certainly was not laying down penalty.”
Justice Mandeya said had Innscor been properly advised it would not have rushed to appeal against a proposed order but waited for the order itself.
Following complaints made against the giant manufacturer of foodstuff in the country, the CTC conducted investigations into the operations of Innscor.
The investigations resulted in CTC being convicted of flouting the regulatory procedures in its acquisition of NatFoods.
According to the Competition Act, if a company does not notify the regulator of a merger or the acquisition of a controlling stake within 30 days, it could be penalised an amount not exceeding 10 percent of its annual turnover.
Innscor increased its shareholding in NatFoods, but failed to notify the relevant authorities, in particular the commission, of the process.
It only gave notification of the acquisition when investigations into the move had already started.
Innscor acquired a 36 percent stake in NatFoods in 2003 and increased it to 49,9 percent in 2011, but later sold around 11 percent in 2012 to Tiger Brands leaving it with 37,82 percent. CTC only received notification of the transactions in 2012.
The probe was instituted in accordance with Section 28 (2) Chapter 14:28 of the Competition Act, under which the conglomerate was being probed for possible restrictive practices and creating unfair trade barriers against potential competition.
Innscor denied the allegations and filed an appeal against the judgment which had not been issued arguing that they had notified the commission before consummating the deal.
The group has in the past few years made several acquisitions under its strategy of backward integration within the fast-moving consumer goods supply chain.
It purchased a 49 percent stake in July 2009 of Irvine’s Zimbabwe, a major producer of chicken and table eggs.
The conglomerate runs a vibrant retail division which consists of the Spar Corporate Store retail operations and the fast foods operations that include Chicken Inn, Baker’s Inn, Creamy Inn and the local Nando’s franchise.
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