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									 Anticompetitive practices in sub-
saharan Africa: Myth, Reality and
          Perspectives
                  Simon Evenett
          Said Business School, Oxford
                  Frederic Jenny
     Professor of Economics , ESSEC France
  Chairman of the OECD Competition Committee
CRC 3rd International Conference: Pro-Poor Regulation
And Competition: Issues, Policies and Practices


         Capetown, 7-9 September 2004
                                                 1
  Anticompetitive practices which hurt
        consumers directly (I)

-Soft drinks ( Kenya, Sth Africa, Uganda, Zambia, Zimbabwe)

-Beer and alcoholic beverages (Kenya, Namibia, Malawi,
Mozambique, Tanzania, Uganda, Zambia)

-Sugar (Ghana, Kenya, Malawi,Tanzania,Uganda,
Zambia)

-Flour and bakers products (Malawi, Namibia, Zambia,
Zimbabwe)
                                                         2
   Anticompetitive practices which hurt
           consumers directly;
Example: Vertically integrated monopoly in
      the sugar industry in Malawi
 From « Spine chilling experiences of anti-competitive practices
 in Malawi », CUTS and Consumer Association of Malawi (CAMA), 2003


« The Illovo Sugar Company is a vertically integrated monopoly
operation extending from the growing of sugar through refining to
distribution. The wholesale distribution of sugar is subjected to a
private licensing system operated by Illovo, which adds a further
layer of restriction to the vertically integrated monopoly. These
licenses are granted sparingly, and those who hold them are
therefore in a position to extract a monopoly rent from the
                                                               3
market ».
        The cost of the millers’ cartel in
                     Zambia
 The Post ( Zambia), January 23 2002


« The government should not allow millers and traders to form
a cartel in their effort to ensure that the price of mealie meal is
kept at a high rate, Zambia’s Congress of Trade Unions (ZCTU)
secretary General Sylvester Tembo has appealed.
Tembo said government should not take a soft approach to the
problem because the milling industry was strategic and sensitive
since it centered around the country’s staple food. He said the
majority of Zambians were too poor to afford the prices
ranging from K33,000 to K50,000.
« Even in a free market economy, governments must not
abrogate its responsibility of protecting its citizens from
price sharks, » Tembo said ».                                  4
Anticompetitive merger in the beer sector in
                 Malawi
   From « Spine chilling experiences of anti-competitive practices
   in Malawi », CUTS and Consumer Association of Malawi (CAMA), 2003

« In this sector, there were three major companies namely,
Carlsberg Breweries, Chibuku and Napalo Ukana Breweries.
However, stiff competition came from Chibuku and Napalo Ukana
as they both brew local beer ( Masese). To avoid this competition,
the two companies have since merged to create a monopoly in
local beer. Since the Competition Law is still not enforced and the
Commission is not in operation the matter has neither been
investigated nor taken to court ».
(« The Malawi Investment Promotion Agency indicated that (…) brewers make a
practice of providing chilling cabinets to retailers, on condition that these cabinets are
not used to stock rival products ».
                                                                                     5
  Anticompetitive practices which hurt
        consumers directly (II)

Industrial products bought by consumers:

-Cement (Egypt, Madagascar, Malawi, South Africa, Zambia,
Zimbabwe etc…)

-Petroleum (Ghana, Kenya, Malawi, Tanzania, Uganda,Zambia)




                                                     6
   Anticompetitive practices which hurt
  consumers directly, An example : Price
fixing in the distribution of oil in Kenya II
Nairobi, Panafrican News Agency, November 30, 2000
Kenyan authorities have deplored a sudden hike in the prices of petrol and
petroleum products announced by major petroleum dealers, describing the rise as
unjustifiable. Commuters on their part have also added voice to the protest,
accusing the oil companies of forming a cartel to fix prices in order exploit
commuters and other consumers. Energy minister Francis Masakhalia Thursday
(…) dismissed the contention by the oilmen that they were forced to hike their
prices due to a similar action by oil producers, (…)"How can all of them increase
or adjust their oil pumps using the same tariff unless they collaborated," asked the
Chairman of the Kenya Commuters and Consignors Association (KCCO), Ngeny'
Obbayi. The Chairman of the "matatu" (minibus) taxis association, Dickson
Mbugua, on his part called for the immediate regulation of oil prices to save the
transport industry from collapse. He ( charged that) the six multinational oil
companies (operating in Kenya) (…)had formed a cartel to exploit the transport
industry players.                                                             7
    Anticompetitive practices which hurt
consumers directly; An exemple:Cartel in the
           oil sector in Uganda
Kampala (New Vision, July 13, 2000)

MPs yesterday decried escalating fuel prices and called for
government intervention to stem the tide (…). The legislators (…),
also urged the Government to find ways of breaking the
monopolistic cartel of oil companies operating Dr. Shanon
Kakungulu (Masaka Municipality), warned of possible mass civil
disobedience if appropriate measures were not taken to address the
peoples' anger over skyrocketing fuel prices. Petroleum prices have
steadily risen with the price of petrol now standing at sh1,450 per
litre. (…) MPsdismissed attempts by ministers Francis Babu (State
for Energy) and Prof. Mondo Kagonyera (General Duties) that the
                                                                 8
high prices are a result of high world prices.
     Anticompetitive practices which hurt
     consumers directly : An exemple: the
         cement monopoly in Malawi
« Malawi’s only cement company was recently sold to the
Commonwealth Development Corporation (CDC), which already
owns cement companies in Zambia and Tanzania. This created a
regional power where there had previously been a degree of
cross-border competition. Subsequently, the CDC sold its
controlling stake to a French company, Lafarge, which had
presence in other countries as well and hence making it a
regionally dominant power ».


From « Spine chilling experiences of anti-competitive practices
in Malawi », CUTS and Consumer Association of Malawi (CAMA), 2003   9
    Anticompetitive practices which hurt
          consumers directly (III)
Health Services: (Sth Africa, Zimbabwe)

Professional services(Lawyers, accountants, surveyors): (Sth
Africa, Zambia, Zimbabwe)

Urban Transportation (Taxis, Matutus): (Kenya, Malawi, Sth
Africa)

Airline transportation ( freight and persons): All Africa

Telecommunication services (Nigeria, Sth Africa, Uganda,
Zimbabwe)

Retail trade (food, pharmaceuticals, furniture, books, cars,   10
cigarettes): (Kenya, Sth Africa, Zambia)
    Anticompetitive practices which hurt
consumers directly : an example: Taxi cartels
               in Sth Africa
17 October 2001 Business Day Cape Town

Taxi associations are organised into territories the same way that
gangs cut up the town and rule by fear over the bits of turf they
claim. Because taxis are mobile, competition for turf involves routes.
(…) The taxi associations have come to "own" the routes they serve.
Huge profits were made in the beginning. As the number of taxis
grew, so profits fell. There is now over-trading and owners have
become ruthless. Meanwhile, passengers are left with no choice, are
at risk and remain voiceless. They have to transfer at the dangerous
boundaries between taxi territories. Many are compelled to take
from two to four taxis on every trip to work and back, with long
waits at points between association boundaries.(…)
                                                                11
  Anticompetitive practices which hurt
 consumers directly : an example Private
monopolies in the rail and transport sectors
                in Malawi
From « Spine chilling experiences of anti-competitive practices
in Malawi », CUTS and Consumer Association of Malawi (CAMA), 2003


 « Malawi’s railways are used for freight only. The track is
 state-owned, but the operation of trains is now privatized under
 a 25-year concession. The company running the operations
 enjoys a complete monopoly of rail services, without any form of
 regulation of rates or quality of service; similarly, there is only
 one shipping company operating a monopoly service on Lake
 Malawi ».                                                       12
  Anticompetitive practices which hurt
             farmers (IV)
Fertilizers and Animal Feed:(Sth Africa Kenya, Zambia,
Zimbabwe)

Agricultural Machinery (Kenya)

Traders and Transformers ( cotton, tea, coffee, tobacco, fish):
(Malawi, Zambia, Kenya)

Banking and Insurance: (South Africa, Uganda, Zimbabwe)

Freight Transport and Shipping ( Malawi, Tanzania West Africa)

                                                            13
Anticompetitive practices which hurt farmers, an
Example: Price fixing and Market sharing in the
fertiliser industry, Kenya
                                 Nairobi, Jul 03, 2003 (The East African Standard
The Kenya Tea Development Authority( KTDA) yesterday claimed
that a group of suppliers had organised themselves into a cartel to
control fertiliser tenders. The suppliers, the Authority claimed, were
colluding to minimise competition amongst themselves by
pre-determining who would supply to KTDA each year. KTDA
Managing Director, Mr Eric Kimani (…) noted that a group of
suppliers then emerged who colluded and formed a ring to minimise
competition. " Indeed, there is evidence that the fertiliser was not
necessarily manufactured by the winning bidder," said Kimani. He
said the Board was then compelled to re-advertise the supply tenders
to break the monopolistic tendency that had sprung up and denied
farmers the benefits of lower prices. Kimani said KTDA Ltd
purchases fertiliser worth between Sh1.2 billion and Sh1.4 billion14
every year supplied by one group of manufacturers.
    Anticompetitive Practices which Hurt
      Farmers, an Example:Collusion
        among tea buyers in Malawi
  From « Spine chilling experiences of anti-competitive practices
  in Malawi », CUTS and Consumer Association of Malawi (CAMA), 2003




« The Ministry of Agriculture and the Malawi Export Promotion
Corporation indicate that there is a small number of traders and
processors in the market to buy tea in Malawi, and that they
collude in setting their purchasing prices».



                                                                15
    The unraveling of a buyers’ cartel: the
         case of cotton in Zimbabwe1
« Zimbabwean peasant cotton farmers are smiling all the way to
the bank in the aftermath of a bitter price war that erupted last
week between rival marketing companies vying for their crop;

The price war was sparked off by Farmer’s World, a new marketing
company which started operations two weeks ago when it moved
into Muzarabani and other major producing areas offering farmers
instant cash and higher rates than what Cottco and Cargill had
pegged for this year’s crop. Farmers instantly changed their
allegiances in droves, forcing the two traditional cotton marketing
companies to adjust prices upwards to beat off the challenge from
the new comer.
The farmers often complained that the traditional buyers
under-graded their crop and paid mower price for their produce.
                                                           16
  Anticompetitive Practices which hurt
  Farmers, an Example: Price fixing by
     purchasers of cotton in Malawi
From « Spine chilling experiences of anti-competitive practices
in Malawi », CUTS and Consumer Association of Malawi (CAMA), 2003


« The National Economic Council expressed the concern that there
are very few companies in the business of purchasing raw cotton
from growers, one of which is the Agricultural Development and
Marketing Corporation of Malawi ( ADMARC) and its subsidiary
David Whitehead and Sons and Cotton Ginners, these companies
collude over the terms and prices they offer to farmers ».



                                                               17
      Anticompetitive practices which
    exclude or hurt other businesses (V)
Freight transportation and Shipping: Malawi, Tanzania,
West Africa

Air freight : (Sth Africa, Zambia)

Services for industry ( oil, health, computer software): (Nigeria,
Sth Africa)


Industrial products ( chemicals, cardboard, gas, jet fuel, coal,
metal packing, metal crown) : (Kenya, Uganda, Zimbabwe, Zambia
 Sth Africa)                                                   18
Anticompetitive practices which exclude or
hurt other businesses : an example, the ugar
cartel in South Africa 27 March 2000Business Day (South Africa)
INDUSTRIAL sugar users have accused SAs sugar industry of
operating as a cartel that abuses an antiquated piece of legislation to
fix local sugar prices. SA Federation of Soft Drink Manufacturers
spokesman Liz Farquharson said yesterday that the outdated Sugar
Act allows the Sugar Association of SA to act as a cartel by setting a
maximum price for sugar. This means SAs mills all sell sugar for the
same price. The association represents producers and SAs three sugar
mills, Illovo, Tongaat-Hulett and Transvaal Suiker. (…) The
confectionery and soft drink manufacturers buy about 80% of the
domestically produced sugar. Sugar users are considering
alternatives to remain competitive in the global market and soft-drink
manufacturers are investigating a switch from cane to maize-based
sweeteners. Confectioners may have to import sweets as it is cheaper
                                                                 19
than producing them locally.
  Anticompetitive practices which exclude or
  hurt other businesses: an example: margin
    fixing in the banking sector in Uganda
 New Vision December 11 2000 Kampala


« For our markets to become sophisticated, the sector has to develop
new products. An efficient and developed market is key to market
competition, which would lead to lowering margins in the sector.
Bank of Uganda is of a view that the sector should not have cartels
where margins remain fixed for long time otherwise the public will
agitate for intervention from the central bank », the Deputy
Governor Bank of Uganda, Dr louis Kasekende said »


                                                              20
Anticompetitive practices which exclude or
hurt other businesses, an example:
exclusionary practices in the cable Tv in
Nigeria               Dec 25, 2002 (Vanguard/

Boss of Communication Trends Ltd [CTL], Engr Uzo Udemba has
vowed to stay in the cable TV business and continue to provide
cheaper and more convenient alternative package for entertainment
and information despite anti-competitive elements from certain
quarters. At a press meet in Lagos last week (he) reflected on
continental happenings where one company in an unbridled
monopoly, is harassing every other operator out of business by
tying programmes down through satellite and terrestrial exclusive
deals. With this practice, most local Cable TV operators in some
parts of Africa have had to leave the business or be bought out and
eventually be given employment.                                21
  Anticompetitive practices which exclude or hurt
 other businesses, an example: Abuse of dominance
             in Telecom (South Africa)
Johannesburg, Jan 27, 2004 (ITWeb/All Africa Global Media)



Telkom has been accused of bullying tactics and anti-competitive
behaviour.Two of Orion's major clients, Standard Bank and Edgars,
chose not to renew their contracts, after Telkom "made them an
offer which they could not refuse". According to Orion's Don
Tredoux, part of the deal appears to have included lucrative
discounts for the clients, but only if they took their cellular traffic
from Orion's network in order to take them past the threshold
required for the new deal. "This isn't just about Orion Cellular and
its clients. It's about the way Telkom continues to treat the
telecommunications industry as its own personal fiefdom,".
                                                                22
Anticompetitive practices which exclude or
 hurt other businesses, an example:Price
 fixing and trade associations: the case of
        freight transport in Malawi
 From « Spine chilling experiences of anti-competitive practices
 in Malawi », CUTS and Consumer Association of Malawi (CAMA), 2003

« Transport costs are high in Malawi despite the fact that
Government has abandoned traffic control. Though the industry
consists of a few large firms e. g. Trans African Transport (TAT),
Central African Road Services (CARS), Zagaf, Welsons, Fersons,
etc and many small ones, rates are not set competitively. The Road
Transport Operators Association sets them for the industry at
large. It was also established that foreign trucking firms operating
into Malawi (mainly South African and Zimbabwean) are also     23
members of this cartel ».
    Anticompetitive practices which exclude
    or hurt other businesses; an example :the
         soft drink industry in Zambia
Times of Zambia, September 23, 1999
Franchise arrangements by Coca-Cola and Cadbury Schweppes (Z)
are among the major points of negotiation between the Zambia
Competition Commission (ZCC) and the two companies over their
intended merger in Zambia. Zambia Competition Commission
executive director George Lipimile has said that the franchise
arrangements made by the two firms in Zambia had some anti-
competitive arrangements which the commission was trying to
resolve. Among the provisions in the franchise arrangements by
Coca-Cola and Schweppes is the barring of distributors from dealing
in similar products as those put out by Coca-Cola and Schweppes,
price fixing, and territorial restrictions.                    24
Anticompetitive practices which exclude or hurt
other businesses, an example:Price fixing and trade
associations: the case Jet fuel cartel in South
Africa:cost to SAA
« An airline executive comments: "When you sign up with one( oil
company) it's like signing your marriage vows. You're expected to
remain true and faithful. The others won't talk prices to you, so you
can't shop around to see if you can do a better deal."
On average, the contract price for jet fuel at Jan Smuts is 14c a litre
more than at Cape Town and nearly 30% more than at Heathrow in
London. "It costs us R25,000 more to fill a Boeing 747 400 at Jan
Smuts than it does at Heathrow" says Mike Myburgh, CE of SA
Airways (SAA) which spends R228m a
year on fuel at Jan Smuts ».

                                                                          25
                              21 April 1995, Southern Africa Business Intelligence
                 A Case study:
          The Egyptian Cement Market




                                       26
F.Jenny
                The Demand for Cement in Egypt

          The demand for cement in Egypt increased considerably during
          the 90’s. The major reasons for the rise in consumption are the
          rapid expansion of tourist projects along the Red Sea and the
          North Coast and the boom in residential construction around
          Greater Cairo. Thus, the availability of cement at a competitive
          price is crucial both for the welfare of consumers and for the
          development of the tourist industry, an important source of
          foreign exchange
      Over the past twenty years cement consumption increased by 10%
      annually rising from a per capita cement consumption level of
      95 kg in 1979 to an estimated 396 kg in 1998. This consumption
      level is still relatively low compared to the consumption level in
      developed countries ( more than 600 kg).                     27
F.Jenny
          Privatization and Deregulation of the
               Egyptian Cement Industry
    Until 1999, the Egyptian cement sector was publicly owned
    and faced problems of low utilisation of production facilities, low
    productivity and dependence on imports. The distribution of
    cement was in the hands of a small number of powerful licensed
    distributors. Until 1998, public and private construction companies
    could not order cement directly from the manufacturers but had
    to order through the licensed distributors. The distributors were
    known to withold supply in critical periods in order to boost prices.

    Starting in 1999, the picture changed completely. Customers were
    given the right to order directly from producers. The government
    sold majority stakes in cement companies to four foreign and two
    local strategic investors.
                                                                 28
F.Jenny
          Privatization and Consolidation in the
                Cement Industry in Egypt
               65%
                        Tourah Cement
          Suez Cement Co
                                                     Blue Circle
          Alexandria Cement                          (British)

          Beni Sueif Cement                           Lafarge
                                                      (French)
          Egyptian Cement                Titan
                                        ( Greek)
          National Cement
                                                    Cemex
           Assuit Cement                            (Mexican)

          El Amreya Cement                         Simbura
                                                   (Portuguese)
                    Helwan Cement                                  29
F.Jenny        5%                                  Arab Swiss Eng Co
Other Structural Changes:Decrease in Import
Competition and Entry in the Industry
      1) Import competition decrease

      Because of the acquisition of local cement companies by large
      international firms, competition from imports has declined in
      Egypt since these international firms were the main importers
      of cement in Egypt.

          2) Production capacity increase

      Attracted by the profit opportunities, four new new private
      companies, the Egyptian Cement Company, Misr Beni Suef,
      Qena Cement and Sinai Cement also entered the market
      supplying nearly 1.4 million tons each. Altogether market
      capacity increased by 7.5 million tons between 1999 ( when the
      Government privatised the local cement industry) and 200230
F.Jenny
   Because of the Newcomers, Competition
Increases in the Domestic and Export Markets 1
      « The fierce race to secure a place in the market was a challenge
      to newcomers particularly because of the economic slowdown.
      The newly established firms began lowering the price of their
      goods, sometimes selling them at the break-even point to ensure
      a market share and meet the financial obligations of the loans
      they took out to establish themselves. The presence of small
      players, helped by a network of wholesalers is the leading factor
      since, unlike in the public sector era, distributors now deal with
      any cement company which gives them a good bargain »
     The Egyptian Cement Company started exporting its
     production to the Spanish Canary Islands at much lower
     prices than that offered by Cemex, the Mexican cement producer
     with a majority stake in Assiut Cement
                                                                 31
F.Jenny    1) Al Ahram, December 19 2002
          Retaliation Against the Newcomers1
     According to Azzam Abdel-Azeem, head of the marketing
     department at the National Cement Company and Maged Nezar,
     head of Suez Cement sales department, « Cemex and other
     foreign companies retaliated by pushing local prices to their
     lowest levels to prevent local companies from exporting by
     burdening them with losses » (Cemex denies the allegation)

      « An anonymous source (…) asserted that Egyptian Cement
      Company has lowered the volume of its shipments to the
      Canary Islands by 75% as a reaction to the local price war. »

      « We cannot control the practices of foreign companies,
      Abdel-Azeem said. « being the affiliates of international cement
      heavyweights, they can afford losses for one or two years till they
      achieve their aim in the market »
                                                                   32
F.Jenny   1) Al Ahram, December 19 2002
      Cement production in Tanzania


Mbeya Cement ( bought by Lafarge in 1998; production
is doubled in 1998-2001. Current production: 220.000 Tons,
Market share 44%)

Tanga Cement Company ( belongs to the Holcim Group Market
share 18%)

Tanzania Portland Cement Company ( belongs to the
Hieldelberger group market share 38%)
                                                         33
    Cement production in Uganda


Hima Cement Company ( owned by Bamburi Cement,
part of the Lafarge group since 1999. Current
production 250.000 Tons annually; market share 55%).

Tororo Cement, independent, market share 45%




                                                       34
        Cement production in Kenya



Bamburi Cement (owned by Lafarge; market share 60%)

East African Portland Cement Ltd ( used to be owned by Blue
Circle and became part of the Lafarge group when Lafarge
merged with Blue Circle; market share 34%)

Athi River Mining ( partly owned by Bamburi Cement; market
Share 6%)

                                                       35
        The East Africa Cement Producers
                   Association
In 2001 « The East Africa Cement Producers Association »
(EACPA) is created. It includes cement producers of Tanzania
(Mbeya Cement and Tanga Cement Company), Uganda ( Hima
Cement and Tororo Cement) and Kenya ( Athi River Mining
Limited, Bamburi Cement Limited and East African Portland
Cement limited). Together these companies have a market share
of 62% in Tanzania, 100% in Uganda and 100% in Kenya.


According to an offical publication of the French Ministry of Finance,
the object of EACPA is to promote East African Cement Industry
and to lobby East African governements so that they will take
appropriate measures to fight cement imports from Egypt. 36
            From Price Competition to Price
               Fixing (December 2002) 1
    « Representatives of almost all local cement producers met last
    week and set a price range for cement of between LE167 and
    LE176 a ton. Just hours before the meeting, the price had fallen to
    an exceptionally low LE 125 a ton. The drop had caused serious
    worry among cement producers, pushing traded cement shares
    over the edge and rendering the sector less appealing to
    foreign investors. »
    « Cement company representatives discussed other solutions in the
    meeting. « We could agree on another plan to fix market share for
    different cement companies according to their production
    capacities », Said Maged Nezar, head of Suez Cement sales
    departement. While Nezar agrees that such agreements would
    violate market forces, he believes they would be better than
    the price wars (…) »                                         37
F.Jenny   1) Al Ahram, December 19 2002
                  Cause for Concern
Interview of Mr Collomb CEO Lafarge,Les Echos, June 10 2002
Question: your group has given high priority to emerging markets;
has this policy been successful?
Answer:Absolutely, in 2001 more than 40% of the cement profits
(of Lafarge) were realized in emerging markets and we have
roughly multiplied by 2 the share of Asia in our activities. This
strategy has also given very good results in South Africe, Jordan,
Morocco, Honduras, Venezuela, Brazil, Chile.
Question: Globally, is the evolution of prices favorable for Lafarge?
Answer: In 2001 and 2002, in most countries, maybe except in
Germany, prices have moved favorably for Lafarge; this is true, in
Particular, in certain emerging economies where prices were
abnormally low because of local operators who did not have 38   a
sufficiently realistic appraisal of the necessary profit level.
       Lessons from the Recent History of
          the Egytian Cement Industry
 -1) In spite of trade liberalization, Egyptian cement producers
cannot export freely to the Canary Islands
-2) Consumers of cement are hurt in the Canary Islands. In Egypt,
consumers benefited from the low prices during a short period
of time but they will pay monopolistic prices for a long time. Indeed
the fact that a large operator has shown a willingness to punish its
competitor by using predatory price pratices is likely to discourage
local cement manufacturers from engaging in price competition
on the Egyptian market in the future.
-3)The Egyptian government is powerless to prevent either the
predatory pricing or the price fixing because there is no antitrust
law in Egypt
-4) Without some form of international cooperation, it is unlikely
that the EU Commission will be able to use its power to sanction
                                                               39
the anticompetitive practices on the market of the Canary Islands
         Lessons from the Recent History of
          the Egytian Cement Industry (Ib)
    The Egyptian consumption of cement in 2002 was 26,682,000
    tons. The cement producers agreed to increase
    the price of cement from LE 125 to LE 171 ( on average), an
    increase of about LE 46 per ton. The annual cost to Egyptian
    consumers of this price fixing agreement is LE 1.227 billion or
     US$ 227,291,111 per year
        Note, for comparison purposes, that the annual budget of the
        competition authority of South Africa is US$ 9, 000,000. The
        enforcement activity of this authority has just been peer-reviewed
        in the OECD Competition Committee and considered to be quite
        satisfactory by international standards. Even if the annual cost
        of a competition authority in Egypt were twice the cost incurred
        in South Africa, this cost would be recouped even if the authority
                                                                    40
F.Jenny did nothing more than stop the cement price cartel for one month.
      Setting the stage for competition inthe
       beer market in Tanzania and Kenya
                       1997
                              Kenya
                                                         South Africa
   Tanzania
                        Kenya East African
                        Breweries Ltd (95%
Sth African Breweries Mkt share in 1997)     Sth African Breweries
      Int (SABI)                             (98% Market share)
  (Plants in Mwanza and  Kenya Breweries Ltd
     Dar es Salaam)                                          Tusker
                                                      SAB has already established
  Kibo Breweries                                      itself in sub-Saharan Africa and
  (Plant Moshi)       Kenya Castle                    accounts for more than half of the
                                                      beer produced and sold in the
                      Breweries                       continent through breweries in
                      (Starts construction of plant   Swaziland, Lesotho, Botswana,
                                                                                 41
                                                      Zimbabwe, Mozambique, Zambia,
                      in Thika in 1997)               Tanzania and South Africa
 KBL’s attempt to raise barriers to entry on
          the Kenyan beer market
  01 October 1997, African Business




The most worrying competition ( for Kenya Breweries Limited, the
giant bottlers controlling 95% of the beer business in Kenya, is
from South African Breweries who already have two bottling lines
in Mwanza and Dar es Salaam in Tanzania, and who have decided
to bring the battle to Kenya Breweries on their own turf by putting
up a bottling plant at Thika.




                                                              42
           Competition in the beer market in
                        Kenya
Global Information Network,NAIROBI, Nov. 24 1998

But for consumers, a beer is a beer. The war erupted after SAB
entered the East African market. Within days of SAB unveiling
Castle Milk Stout to compete with the local KBL local Guinness
brand, another new brand by KBL, Pilsner Ice, targeting the urban
youth hit the market. KBL has also started canning its Tusker beer
to match Castle. A 0.5-litre bottle of Tusker costs 54 shillings, while
Castle sells for 52 shillings. These prices are expected to drop as the
competition intensifies. "Prices will no longer be determined by the
company's accountants, but by beer drinkers," said Castle Kenya
(SAB) Ltd Managing Director, Roger Smith. And, as
the corporate war rages on, local beer consumers have become the
major beneficiaries. "There is now a wider choice, beer quality has
shot up and prices come down," said John Mwaura, an engineer.      43
       From price war to market sharing I
 May 14, 2002 ,The East African Standard

The beer market suffered a major jolt yesterday when Castle
Brewing Kenya suddenly closed its operations in Kenya. At the same
time, Castle's main rival, Kenya Breweries Ltd (KBL), announced
that it was holding talks with South African Breweries International
(SABI) with a view to taking over Castle's operations in Kenya. But as
Castle was closing its Thika plant, KBL's parent company East
African Breweries Limited (EABL), too was closing down its
operations at Kibo in Moshi, Tanzania. And in what clearly emerged
as a give-and-take arrangement, SABI will through its Tanzania
Breweries Ltd (TBL) buy the Kibo plant from EABL. EABL
dominates the Kenyan beer market through Kenya Breweries, while
SABI controls the Tanzanian market via Tanzania Breweries (…).
EABL External Affairs Director, Ms Brenda Mbathi, attributed the
market re-alignment to the fact that the beer market in the region has
been declining "Castle were losing money in Kenya and we were  44
losing in Kibo" she said.
         From price war to sharing the East
                  African Market

                                Kenya
                                                          South Africa
    Tanzania
                           Kenya East African
                           Breweries Ltd (95%
                           Mkt share in 1997)          Sth African Breweries
Sth African Breweries
                                                       (98% Market share)
     Int (SABI) Cross
                  licenses
   (Plants in Mwanza and      Kenya Breweries
       Dar es Salaam)
                                     (100%)                   Tusker
             (100%)
                  20%                                  SAB has already established
                                                       itself in sub-Saharan Africa and
                         Kenya Castle Breweries        accounts for more than half of the
                                                       beer produced and sold in the
Tanzanian Breweries (Starts construction of plant in
                   20%                                 continent through breweries in
                         Thika in 1997)                Swaziland, Lesotho, Botswana,
(CSK)                                                                             45
                                                       Zimbabwe, Mozambique, Zambia,
             Each group closes its plant
Plant Moshi  In the other’s territory                  Tanzania and South Africa
Jt venture to prevent competition in the beer
market in Uganda I 30 October 1997,New Vision
South African Breweries, one of the world's largest breweries, bought a 40% stake
in Nile Breweries in a joint venture with the Madhvani Group, sources disclosed.
Although the Group entered the venture' with the South Africans earlier this year,
the level of equity participation had remained a secret between the two parties.
Company sources said yesterday they recently stepped up capacity from the
previous 300,000 HL per annum to 750,000HL. With the merger, Nile Breweries
which is in direct competition with Uganda Breweries, hopes to strengthen its
brand portfolio and expand its export potential in the region. "It is envisaged that
the introduction of the SAB brands, led by Castle Lager, will strengthen the brand
portfolio of Nile Breweries," said the source. Nile Breweries which manufactures
Nile Special, Chairmans Extra Strong Brew brands boasts of a 57% share of the
Uganda Beer market. Under the joint venture agreement, South African Breweries
is to start bottling some of its household brands like Castle and Ohcesses in
Uganda. Likewise, popular Ugandan brands like Nile Special and Chairmans ESB
will be bottled in South Africa. The merger was a strategic one for Nile Breweries
which envisages tough competition from foreign brands when government lifts the
                                                                              46
ban on beer imports next year.
       Merger in the beer market in Uganda II
    29 June 2001 Johannesburg Stock Exchange
 South African Breweries is the world's leading brewer in emerging markets,
with major brewing and distribution operations in Africa, Central and
Eastern Europe and Asia. It is the world's fifth largest brewer overall by
volume with 82 breweries in 22 countries. Today it announced it has acquired,
through its subsidiary company SAB International Africa B.V, a majority
interest in Nile Breweries of Uganda from the Madhvani group of companies.
This acquisition takes SAB's stake in Nile Breweries to 93.1%, with the
Madhvani family still having an interest in the business. "To date we have been
managing Nile Breweries on behalf of the shareholders and this is therefore a
logical move for us in this region", said Graham Mackay, Chief Executive of
SAB plc. "This acquisition represents another important step for SAB in Africa
and illustrates our commitment to the continent." Nile Breweries was founded
in 1951 and presently has a capacity of 700,000. hectolitres and its leading brand
is Nile Special Lager. The Ugandan beer market grew by 52% between 1997 and
2001 and at the same time has seen increased competition and promotional47
activity over the last year.

								
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