From National Law to Regional Oversight: Addressing Buyer Power in Tanzania

The regulation of buyer power is a growing concern in Tanzania’s competition law framework. Under the Fair Competition Act, 2003, recently strengthened by the Fair Competition (Amendment) Act, 2024, the law recognises that while firms may negotiate strongly with suppliers, the misuse of such bargaining power, commonly referred to as “abuse of buyer power”, can distort markets and harm competition. Increasingly, oversight extends beyond domestic markets. The Common Market for Eastern and Southern Africa (COMESA) now provides a regional lens for evaluating anti-competitive practices by powerful buyers, particularly when cross-border trade is affected.  

Buyer power refers to the ability of a firm or group of firms to influence the terms on which suppliers operate. In Tanzania, such power is not inherently illegal. The concern arises when it is exercised in ways that unfairly disadvantage suppliers, restrict competition, or distort the market. The 2024 Amendment explicitly empowers the Fair Competition Commission (FCC) to assess scenarios in which large buyers impose conditions that may be exploitative or exclusionary, thereby enhancing regulatory oversight of supply-side dynamics in concentrated markets.  

Abuse of buyer power can take several forms. Exploitative practices involve imposing unfair or onerous trading conditions on suppliers, including unreasonably low prices, delayed payments, or other contractual terms that transfer disproportionate risk to suppliers. These practices often harm smaller suppliers, limit their ability to invest or innovate, and reduce the overall efficiency of supply chains. The 2024 Amendment strengthens the FCC’s ability to evaluate whether these practices are systemic, enabling it to address conduct that disadvantages suppliers over time rather than isolated transactions.  

Exclusionary abuses occur when powerful buyers structure procurement or distribution arrangements to foreclose competitors from the market. Examples include exclusive supply contracts, tying arrangements, or requirements that suppliers allocate disproportionate resources to a particular buyer, effectively limiting their capacity to sell to others. Such practices can suppress market entry, reduce choice, and harm long-term competition. Under the amended law, the FCC is empowered to examine both the intent and the likely effect of such practices, ensuring that the competitive process itself is protected.  

The regional perspective adds another layer of complexity. COMESA has increasingly recognised the significance of buyer power, particularly in markets involving cross-border trade. The COMESA Competition Commission assesses whether powerful buyers distort competition not only domestically but also regionally. Its framework considers economic dependence, meaning a supplier that relies heavily on a particular buyer may be vulnerable even if the buyer does not hold traditional market dominance. This broadens the potential scope of enforcement beyond what might be addressed under national law alone.  

A citation or investigation under COMESA carries significant implications for firms operating in Tanzania. Dual enforcement by the FCC and COMESA introduces potential regulatory overlap and increases compliance risk. Moreover, COMESA’s lower liability threshold means that even conduct that is legally permissible domestically may be challenged if it affects regional suppliers or trade flows. Firms must therefore be vigilant in assessing the impact of procurement policies, pricing strategies, and contractual arrangements on both local and cross-border markets.  

Enforcement under COMESA is robust, with powers to conduct inspections, issue binding directives, and impose financial penalties. When combined with the strengthened provisions in the 2024 Amendment, firms face a more assertive regulatory environment. Sectors with highly concentrated buyers—such as retail, telecommunications, and large-scale procurement operations—are particularly exposed. Firms operating across multiple jurisdictions must therefore carefully evaluate the potential competitive effects of their practices to avoid accusations of abusing buyer power.  

In practical terms, the evolving legal landscape necessitates proactive compliance strategies. Companies should review procurement policies, supplier contracts, and distribution arrangements to ensure they do not exploit supplier dependence or foreclose competition. Documentation of negotiations and economic justifications is increasingly important, as regulators assess the impact on market competition rather than merely the intent behind actions. Monitoring cross-border trade is also crucial, as practices that appear acceptable domestically may affect suppliers or markets in neighbouring COMESA states.  

Looking ahead, the combination of the Fair Competition Act (Amendment 2024) and COMESA regulations reflects a more mature approach to competition law in East and Southern Africa. The law recognises that powerful buyers bear an elevated responsibility and that their conduct can have far-reaching effects on market health and supplier welfare. For businesses, this underscores the need for transparency, fairness, and sustainability in procurement and supply chain practices. Firms must navigate both domestic and regional requirements to ensure compliance, maintain competitive markets, and protect suppliers from exploitative or exclusionary conduct.  

The Tanzanian and COMESA experience illustrates a broader regulatory trend: oversight is evolving from a narrow focus on sellers to encompass the responsibilities of buyers with substantial economic power. By addressing abuse of buyer power, regulators aim to promote balanced market relationships, prevent the marginalisation of smaller suppliers, and safeguard the competitive process. For firms, this means that influence over supply markets is subject to heightened scrutiny, requiring careful strategy, documentation, and adherence to both national and regional competition standards.