Anti-competitive business practices by Illovo Sugar Company and Simama General Dealers

The Commission received a complaint from Karonga Business Association alleging that Illovo Sugar Company Ltd and Simama General Dealers were engaging in anti-competitive business practices. In particular, the Association alleged as follows:

  1. That Illovo had granted Simama monopoly powers or control of the sugar distribution chain in Karonga and the surrounding districts i.e  Simama was involved in sugar transportation, warehousing, wholesaling and retailing.
  2. That, by selling sugar at wholesale and retail prices, Simama was undercutting competitors;
  3. That Simama was refusing to sell sugar to competitors in areas where the company had sugar outlets.
  4. That customers who bought sugar from the warehouse were compelled to use Simama’s transport.

After thorough investigations, the Commission established violations of the Act committed individually or jointly by Simama General Dealers and Illovo Sugar Ltd. Specifically, Illovo was implementing an agreement (i.e. Warehouse Management and Stock Handling Agreement) with Warehouse Administrators, which contained anti-competitive clauses such as “prohibiting Warehouse Administrators from selling sugar from any other source other than Illovo”. Further, Illovo also implemented an arrangement which created monopoly powers and led to unnecessary price build up for consumers. This allowed

Simama to abuse their market power in violation of the Act by blocking other wholesalers from accessing sugar directly from Illovo.

Consequently, the Commission ordered Illovo to suspend the warehouse management agreement due to its anti-competitive nature and come up with an Agreement which was consistent with the provisions of Act and to take corrective actions to ensure sufficient physical presence of the company in Distribution Centres.  In the same regard, the Commission ordered Simama to cease and desist from predatory conduct and other unfair trade practices such as charging wholesalers a loading fee from warehouse, yet this was already covered by Illovo.