Introduction
Abuse of Dominant Position in Tanzania is an important competition-law issue for businesses that hold significant market power in Mainland Tanzania. The Fair Competition (Abuse of Dominant Position) Regulations, 2026, introduced through Government Notice No. 244 of 2026, provide a more detailed framework for assessing market dominance and identifying commercial conduct that may constitute an abuse of such a position.
The Regulations should be read together with the Fair Competition Act, Cap. 285, Revised Edition 2023.
The framework is particularly relevant to businesses that control important products, distribution networks, infrastructure, technology, intellectual property, essential inputs or other resources that competitors may need to access.
Importantly, holding a dominant position is not, by itself, prohibited. The legal concern arises when a business abuses that position in a manner that exploits customers or appreciably prevents, restricts or distorts competition.
For investors and established businesses, the practical message is clear: commercial success and market leadership must be supported by pricing, contractual and distribution practices that can withstand competition-law scrutiny.
- The legal framework governing abuse of dominance
The principal legislation is the Fair Competition Act, Cap. 285, Revised Edition 2023.
Section 10(1) prohibits a person with a dominant position in a market from using that position where the object, effect or likely effect of the conduct is to appreciably prevent, restrict or distort competition.
The 2026 Regulations provide further detail on how the Fair Competition Commission (FCC) assesses dominance and particular forms of abusive conduct.
The FCC is the principal competition regulator responsible for administering the relevant competition-law framework. Its assessment may involve examining market structure, commercial conduct, pricing practices, customer and supplier relationships, and the competitive effects of the conduct under investigation.
Territorial scope: The Fair Competition Act expressly applies to Mainland Tanzania. Businesses operating in Zanzibar should not automatically assume that the Mainland framework applies in precisely the same way. The applicable Zanzibar laws and regulatory arrangements must be considered separately.
- How does the FCC determine whether a business is dominant?
Market dominance is assessed by reference to the relevant market and the undertaking’s ability to exercise market power.
The assessment is not simply a matter of identifying the largest company in an industry. The relevant question is whether the undertaking can act to a significant extent independently of competitive pressure.
The 2026 Regulations identify factors relevant to the assessment, including:
- Market share: The undertaking’s share of the relevant product and geographical market over a significant period.
- Customer and supplier dependence: The extent to which customers or suppliers depend on the undertaking.
- Pricing power: Whether the undertaking can determine prices or commercial terms independently of competitors.
- Countervailing buyer power: Whether customers, particularly large customers, can negotiate effectively or switch to credible alternatives.
- Import competition: The extent to which imported goods or services constrain the undertaking’s market power.
- Essential facilities and inputs: Whether the undertaking controls important infrastructure, resources or inputs.
- Barriers to entry or expansion: Whether competitors can realistically enter the market or increase their market presence.
Important issue: the 35% and 40% market-share figures
Businesses should be careful when interpreting the market-share provisions.
Section 5(6) of the Fair Competition Act states that a person has a dominant position where the person can profitably and materially restrain or reduce competition for a significant period and its share of the relevant market exceeds 35%.
Regulation 3 of the 2026 Regulations is reported as using a market-share figure exceeding 40% as part of the dominance assessment, alongside other factors.
These provisions should not be presented as though the Regulations simply replaced the Act’s 35% test with a new 40% threshold. The relationship between the statutory provision and the regulatory assessment requires careful legal interpretation, including consideration of the applicable hierarchy of legislation.
Practical advice: Businesses should not assume that a market share below 40% automatically removes competition-law risk. Nor should a market share above 40% be treated, without further analysis, as conclusive proof of abuse. Market definition, market power and the conduct in question remain important.
- What conduct may amount to abuse of a dominant position?
The Regulations address several categories of conduct that may constitute abuse where the applicable legal conditions are satisfied.
The following are the principal areas businesses should review.
3.1 Unfair trading conditions
A dominant undertaking may attract scrutiny where it imposes unfair prices, contractual terms or commercial conditions on customers or suppliers.
Examples may include disproportionate obligations, exploitative contractual restrictions or terms that unfairly disadvantage trading partners.
The assessment depends on the circumstances, the nature of the market and the relevant competitive effects.
3.2 Predatory pricing
Predatory pricing generally involves a dominant undertaking deliberately setting prices below relevant cost levels to weaken or eliminate competitors.
The concern is not ordinary price competition or a legitimate promotional discount. The issue is whether the pricing strategy is capable of excluding competitors and whether the undertaking can sustain the losses with a realistic prospect of recovering them later.
Businesses should retain proper cost records and written commercial justifications for significant pricing decisions.
3.3 Margin squeeze
A margin squeeze may arise where a business controls an important upstream product or service and also competes in a downstream market.
The concern arises where the relationship between the upstream price charged to competitors and the downstream price offered by the dominant undertaking leaves competitors unable to operate profitably, even if they are reasonably efficient.
This issue may be particularly relevant to telecommunications, utilities, infrastructure, distribution and other vertically integrated industries.
3.4 Cross-subsidisation
Cross-subsidisation involves shifting costs between products, services or markets.
It may attract competition scrutiny where a dominant undertaking uses resources from one market to support below-cost pricing or exclusionary conduct in another market, with resulting harm to competition or consumers.
Businesses operating across several product lines should maintain reliable accounting records that identify costs, revenue and financial allocations between their different activities.
3.5 Refusal to deal
Businesses generally retain commercial freedom to choose their customers and suppliers. However, a dominant undertaking’s refusal to supply or purchase may become problematic where it lacks reasonable economic justification and has the purpose or effect of exploiting customers or restricting competition.
A legitimate refusal based on genuine commercial considerations should be distinguished from a strategy intended to exclude competitors or deny them access to an important market.
3.6 Denial of access to essential facilities or inputs
An undertaking controlling an essential facility or input may face scrutiny if it denies competitors access in circumstances that restrict competition.
A facility is not automatically essential merely because it would be useful to a competitor. Its importance, practical substitutability, ability to be duplicated and relevance to effective competition must be assessed.
This issue can be significant in infrastructure-dependent industries, logistics, telecommunications, energy and other markets where access to particular resources is commercially critical.
3.7 Tying and bundling
Tying occurs where the purchase of one product or service is made conditional on purchasing another product or service.
Bundling involves offering two or more products or services together, sometimes at a combined price.
These arrangements are not automatically unlawful. However, where a dominant undertaking uses them to restrict customer choice or exclude competitors in related markets, the arrangements may attract regulatory scrutiny.
Businesses should ensure that bundling and cross-selling arrangements have legitimate commercial justifications and do not unnecessarily restrict competition.
3.8 Price discrimination
Price discrimination involves charging different customers or market segments different prices for the same or comparable products or services.
Different prices are not necessarily unlawful. Differences may reflect legitimate variations in costs, volumes, delivery arrangements, risk or other commercial factors.
The concern arises where a dominant undertaking applies unjustified differences in pricing and the conduct has the relevant exploitative or anti-competitive purpose or effect.
3.9 Loyalty discounts and rebates
Loyalty programmes, volume discounts and rebates are common commercial practices.
However, arrangements that make customers dependent on a dominant supplier or discourage them from purchasing from competitors may attract scrutiny.
Sales and procurement teams should review exclusivity requirements, conditional rebates, loyalty incentives and other discount arrangements to establish whether they are commercially justified and competitively defensible.
3.10 Abuse of intellectual property rights
One particularly important area for businesses operating in technology, manufacturing, pharmaceuticals, distribution and innovation-driven industries is the treatment of intellectual property rights.
Regulation 15 addresses abuse involving intellectual property rights.
Potentially problematic conduct may include:
- Refusing to license intellectual property without reasonable justification in circumstances that foreclose competition.
- Charging disproportionately high licensing fees or royalties.
- Applying discriminatory licensing conditions without legitimate justification.
- Requiring licensees to accept unnecessary additional licences or conditions.
- Using patent strategies, including patent thickets, to obstruct competitors.
- Initiating legal proceedings solely to harass competitors or delay their entry into a market.
This does not mean that owning or enforcing a trademark, patent, copyright or other intellectual property right is unlawful. Intellectual property rights remain important commercial assets.
The competition-law issue concerns the manner in which those rights are exercised by an undertaking that holds market power.
Businesses should therefore ensure that licensing arrangements, royalty structures, technology transfer agreements and enforcement strategies have a legitimate commercial and legal basis.
3.11 Unrelated supplementary conditions
The Regulations also address supplementary conditions imposed in connection with commercial agreements.
This concerns situations where a dominant undertaking makes acceptance of obligations unrelated to the main subject matter of a transaction a condition of entering into that transaction.
For example, a business may require a customer purchasing one product to accept an unrelated commercial obligation that is not reasonably connected to the transaction.
Whether such a condition amounts to abuse depends on the relevant legal test and the circumstances of the arrangement.
- The importance of intellectual property compliance
The inclusion of intellectual property-related conduct is particularly significant for businesses whose competitive position depends on trademarks, patents, technology, copyrighted materials, industrial designs, software or proprietary commercial systems.
Intellectual property protection gives businesses important rights to protect and commercially exploit their creations and brands. However, those rights should be exercised consistently with applicable competition law.
Companies should consider reviewing:
- Intellectual property licensing agreements.
- Royalty and technology transfer arrangements.
- Exclusive distribution and licensing arrangements.
- Restrictions imposed on licensees and commercial partners.
- Patent portfolios and filing strategies.
- Trademark and technology enforcement practices.
- Contractual conditions attached to access to protected products or technology.
A company should not assume that every restriction contained in an intellectual property agreement is automatically justified simply because it concerns a registered intellectual property right.
Equally, the Regulations should not be interpreted as removing the legitimate rights of intellectual property owners. The relevant assessment concerns the conduct, the undertaking’s market position and the effect on competition.
- What should businesses do to reduce competition-law risk?
Businesses with significant market positions should consider a structured competition-compliance review.
The following measures provide a practical starting point.
- Assess market position
Identify the relevant products or services, geographical market, competitors, market shares, customer dependence and barriers to entry.
- Review pricing practices
Examine below-cost pricing, price differences between customers, rebates, loyalty discounts and pricing arrangements between different levels of the supply chain.
- Review commercial agreements
Examine exclusivity clauses, tying arrangements, bundled sales, distribution restrictions, refusal-to-deal provisions and supplementary contractual conditions.
- Examine intellectual property arrangements
Review licensing terms, royalty rates, exclusivity provisions, technology transfer agreements and restrictions imposed on licensees.
- Maintain proper records
Keep reliable cost information, pricing models, market studies, contract records and internal approvals explaining important commercial decisions.
- Train management and commercial teams
Directors, senior management, procurement teams, sales personnel and business development teams should understand the competition risks associated with pricing, discounts, distribution and customer relationships.
- Obtain an appropriate compliance assessment
Where a business has substantial market power or controls important infrastructure, technology or distribution channels, it should consider obtaining a competition-law assessment before implementing potentially restrictive commercial arrangements.
- What are the implications for investors?
The Regulations are relevant not only to established businesses but also to investors considering acquisitions, joint ventures, market entry or expansion in Mainland Tanzania.
An investor assessing a target company should consider whether the target:
- Holds a significant position in a relevant market.
- Controls essential facilities, inputs or distribution channels.
- Uses exclusivity or loyalty arrangements.
- Has potentially problematic pricing practices.
- Owns intellectual property that is commercially important to competitors.
- Has faced competition complaints, investigations or regulatory scrutiny.
These issues can affect the commercial value of a business, the structure of a transaction and the allocation of regulatory risk between parties.
Competition compliance should therefore form part of appropriate commercial and regulatory due diligence, particularly in sectors with high barriers to entry or concentrated market structures.
- The role of the Fair Competition Commission
The Fair Competition Commission administers the relevant competition framework under the Fair Competition Act.
The Act prohibits misuse of a dominant position where the conduct has the object, effect or likely effect of appreciably preventing, restricting or distorting competition.
The Act also provides for compliance orders, compensatory orders and offences. Section 58(6), in particular, provides for the Commission to require publication of information relating to an offence in the circumstances specified by that provision.
The precise consequences of a competition-law contravention depend on the applicable statutory provisions, the nature of the conduct and the outcome of the regulatory process.
Businesses should not assume that the absence of a complaint means that their commercial arrangements are necessarily compliant.
- Why the Regulations matter for business governance
The Regulations reinforce the importance of treating competition compliance as part of ordinary corporate governance rather than an issue to be considered only after a complaint or investigation.
For directors and senior management, this means that important commercial decisions should be supported by proper records and a clear business rationale.
Pricing decisions, exclusive arrangements, distribution agreements, licensing terms and access policies should be reviewed with the undertaking’s market position in mind.
A company that can demonstrate a genuine commercial justification, maintain reliable records and identify potential competition risks is better positioned to respond to regulatory scrutiny.
Conclusion
The Fair Competition (Abuse of Dominant Position) Regulations, 2026 provide a more detailed framework for examining how businesses with significant market power operate in Mainland Tanzania.
The Regulations are relevant to pricing, supply arrangements, distribution, access to essential facilities, intellectual property licensing and other commercial practices.
Businesses should understand that market leadership is not prohibited in itself. The central issue is whether a dominant undertaking uses its position in a manner that unlawfully exploits customers or harms competition.
For investors and established companies, reviewing commercial agreements, pricing structures, intellectual property arrangements and internal compliance procedures is a practical step towards reducing regulatory risk and supporting sustainable business operations.
Frequently Asked Questions
- Is holding a dominant position illegal in Tanzania?
No. Holding a dominant position is not, by itself, prohibited. The Fair Competition Act prohibits misuse of a dominant position where the relevant conduct has the object, effect or likely effect of appreciably preventing, restricting or distorting competition.
- Does a market share above 40% automatically mean a business is abusing its dominant position?
No. Market share is relevant to the assessment of dominance, but it does not by itself establish abuse. The relevant market, market power and the undertaking’s conduct must also be examined. The relationship between the 35% figure in section 5(6) of the Act and the 40% figure reported in Regulation 3 should be considered carefully.
- Are price discounts and rebates prohibited?
No. Discounts and rebates are ordinary commercial practices. They may attract scrutiny where they are used by a dominant undertaking in a manner that unlawfully excludes competitors or harms competition.
- Can intellectual property rights create competition-law risks?
Yes. The Regulations address certain forms of abusive conduct involving intellectual property rights, including unjustified licensing refusals, disproportionate royalties and discriminatory licensing conditions. Legitimate ownership and enforcement of intellectual property rights remain protected, subject to applicable law.
- Do the Regulations apply to Zanzibar?
The Fair Competition Act expressly applies to Mainland Tanzania. Businesses operating in Zanzibar should assess the applicable Zanzibar legal and regulatory framework separately rather than assuming that the Mainland provisions apply identically.
- Which businesses should review their competition compliance?
Businesses with significant market shares, control over essential inputs or infrastructure, substantial intellectual property portfolios, exclusive distribution arrangements or significant pricing power should consider a competition-compliance review.
About GERPAT Solutions
GERPAT Solutions is a Tanzania and Zanzibar business advisory and regulatory compliance firm specializing in intellectual property, business formation, licensing and corporate compliance.
We support local and international businesses with regulatory compliance coordination, intellectual property matters, business establishment and commercial compliance considerations in Tanzania and Zanzibar.
GERPAT Solutions – Intellectual Property, Business Formation, Licensing & Corporate Compliance in Tanzania & Zanzibar
Reach to out Team at www.gerpatsolutions.co.tz , info@gerpatsolutions.co.tz, +255 742 816 955
Disclaimer: This article is provided for general business and regulatory information. It is not a substitute for advice on a specific transaction, investigation or competition-law matter. The application of the Act and Regulations depends on the facts, the relevant market and the applicable legal provisions.