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Conrad Mwanawashe Harare Bureau
Innscor Africa Limited has been absolved from paying $2,5 million in penalties imposed by the Competition and Tariff Commission over the food group’s merger with the agro-processor, National Foods Limited.

The legal fight came about after the CTC imposed a penalty on Innscor after it noted that the group had acquired shares in Natfoods which made it a 49,9 percent shareholder in that company. That shareholding was later reduced to 37,82 percent.

The CTC’s investigations in the operations of Innscor culminated in it issuing an order that the group was in breach of the merger notification provisions of the Competition Act, Chapter 14:28, by not notifying the CTC within 30 days of its acquisition of controlling interesting in Natfoods. It argued that the notification was made seven years later.

Innscor was penalised for not obtaining the CTC’s approval of its acquisition of controlling interest in the agro-processor within the time frame stipulated in terms of section 34A(1) of the Act.

The penalty in terms of section 34A (4) of the Act is 0,5 percent of Innscor’s annual turnover in Zimbabwe as reflected in its audited accounts for the preceding financial year.

Innscor appealed to the Administrative Court against the CTC order arguing also that the commission is not empowered to issue a penalty in terms of section 31(1) of the Act. The group further argued that the commission does is not empowered to penalise and also accept a belated application for merger and approve the merger.

The commission argued in court that the appeal was way out of time and not properly before the court.

However the court ruled in favour of Innscor after finding in its favour on three of the four contested areas.

The court said that after the CTC approved Innscor’s application for the merger that literally closed the door for further sanction.

“That literally closed the door for the Respondent (CTC). Respondent had chosen one course of action open to it. It could not turn back and also seek to take the other course of action which it earlier on had an option to take. It couldn’t blow hot and cold,” the court said.

The court also said the CTC is not empowered to issue a penalty in terms of section 31(1) of the Act as it purported to do.