Tanzania's New Regulations on Abuse of Dominance: Guide for Businesses & Investors

Key Highlights: Elevated dominance threshold from 35% to 40% market share and holistic assessment Concrete codification of eleven (11) specific abuses established Severe crackdown on Intellectual Property (IP) abuse Institutionalization of the “Rule of Reason” defense https://victoryattorneys.co.tz/contact/ INTRODUCTION On 14 August 2026, the Government of Tanzania issued the Fair Competition (Abuse of Dominant Position) Regulations, 2026 (“the Regulations”) through Government Notice No. 244 of 2026. The Regulations are made under the Fair Competition Act, Cap. 285 (“the Act”) and provide a more detailed framework for determining whether an undertaking holds a dominant position and where dominance exists, whether such undertaking has abused that position.  Even though the Regulations do not introduce the concept of abuse of dominance for the first time, they present crucial developments in Tanzania’s competition law framework. The Act has, for many years, prohibited the abuse of dominance, alongside other forms of conduct capable of harming consumers and distorting competition, including anti-competitive agreements, certain mergers and acquisitions, and misleading or deceptive conducts. The new Regulations therefore provide considerably more detailed circumstances in which an undertaking may be regarded as dominant and the types of commercial conduct that may be construed as abuse of dominance. Before the Regulations came into force, businesses were required to comply with the narrowed statutory prohibitions against abuse of dominance under the Act. However, the assessment of commercial practices depended much on uncomprehensive statutory provisions and economic principles discretionally applied by the Fair Competition Commission (FCC) on a case-by-case basis. The Regulations now provide businesses and stakeholders with greater visibility of the factors that the Commission shall consider when assessing market power and the circumstances in which otherwise ordinary commercial practices may become problematic from a competition-law perspective. For businesses, the significance of these Regulations is not that being successful, having a large market share, or being a mega undertaking in a particular sector is now prohibited. The central issue that these Regulations address is the use of substantial market power in a manner that exploits customers or prevents, restricts or distorts competition. The Regulations are consequently relevant not only to the FCC as a market regulator but also to businesses as a practical guide for assessing and managing competition risk. This article considers the principal provisions of the Regulations, explains how they interact with the Fair Competition Act, and highlights the practical steps that businesses and investors should consider in light of this new framework. UNDERSTANDING DOMINANT POSITION The starting point in any abuse-of-dominance analysis is to establish whether the undertaking is, in fact, dominant. Regulation 3 is therefore fundamental because an undertaking cannot ordinarily be found to have abused a dominant position unless dominance in the relevant market is first established. Dominance is not simply a question of size. A company may be large in terms of revenue, assets or number of employees and customers and yet face effective competition from several competitors. An undertaking may also have a smaller market share but still possess substantial market power, where customers are highly dependent on it, competitors face significant barriers to entry or expansion or alternative sources of supply are not readily available. Regulation 3, therefore, requires the Commission to consider a few factors in determining whether an undertaking holds a dominant position. These include  undertaking’s market share, degree of dependence of customers or suppliers, ability to determine prices independently, the extent of countervailing buyer power, imported competition, control over essential inputs or facilities and barriers to entry or expansion.  Consequently, it is clear that market share is an indicator of market power, but it is not the entire test for determining the dominance in a specific market. This is because you may have a company that accounts for 45% of share in a particular market. That figure may indicate that the said company has substantial market power. However, the Commission would need to consider other competitive conditions surrounding that market. If the remaining 55% is divided among several strong competitors with significant spare capacity, customers can easily switch suppliers, new businesses can readily enter the market, and the company with 45% market share cannot materially influence prices without losing customers. The significance of its market share may be viewed differently if the remaining market is fragmented among small businesses that cannot realistically constrain the company with 45% market dominance. THE RELEVANT MARKET Another issue that the new Regulations seek to address is the relevant market. Here, the Regulations are very categorical in the sense that the assessment of dominance cannot be separated from the question of which market is being assessed. Regulation 4 considers two crucial factors when assessing the relevant market in any undertaking. These include the relevant product market and the relevant geographic market.  The relevant product market This concerns the goods or services that customers may reasonably regard as alternatives or substitutes. For instance, a company may appear to have an extremely high share if the market is narrowly defined as a particular type of product. If other products that customers regard as reasonable substitutes are included, the same company’s market share may be significantly lower. Consider company A that supplies a particular type of construction material. If the relevant market consists of only that specific material, the undertaking may have a very high market share. However, if other materials are readily available for use by customers for the same purpose and compete effectively with the products sold by company A, the relevant market may be broader. Relevant geographical market This concerns the physical or otherwise referred to as economic area to which the undertaking is taking place. It is a specific locality, such as a district, regional, or national area, depending on the sectors of the undertaking and other factors of competition economics. To identify abuse of dominance in the identified specific market, the Commission will consider factors such as demand and supply chain substitutability. This is by assessing whether consumers can realistically switch to alternative products or whether competitors can quickly supply to consumers without incurring financial constraints if the dominant supplier implements unfair practices, such as price increases. Additionally, the Commission will for example investigate as to whether a price increment (ordinarily small but non-transitory) by a dominant party will be sufficient enough to force consumers to alternatives and thereby widening the market definition. A good example of geographical market is when assessing dominance in tourism market which tend to be easier to narrow down to say Arusha, Manyara or Serengeti as opposed to manufacturing sector, telecoms or banking which tend to have a national coverage. Even in these national coverage sector, the Commission will still look at the specific product sub-segments and consumer behavior to determine if a market is truly national or regional. Two crucial legal inferences are drawn from the critical assessment of the relevant market established under the new Regulations. First, the new Regulations shift the legal standard away from rigid corporate footprints toward dynamic consumer behavior. As demonstrated by comparing national networks (telecom and banking sectors) to localized assets (Arusha tourism), the geographic market is no longer dictated by where a company can sell, but by where consumers can practically turn to for alternatives. Second, the legal definition of the relevant market is a sophisticated but flexible mechanism that successfully prevents large corporations from hiding behind broad "national presence" arguments when they are executing localized anti-competitive strategies, ensuring that market power is policed precisely where it is felt by the consumer. WHEN DOES DOMINANCE BECOME ABUSE The Regulations also expound the circumstances under which the dominance position is considered to have been abused. That is to say, once dominance is established, the analysis moves to Regulation 5, which can be argued as the most important provision in the Regulations. This is because it explains the transition from lawful market power to potentially unlawful conduct. As above clarified, the Regulations do not treat dominance itself as an offence. Instead, there must be conduct by the dominant undertaking that has the purpose, effect or likely effect of exploiting customers or preventing, restricting or distorting competition.  This distinction is fundamental to the appropriate application of competition law. A company may have a 60% market share and still comply with the law. It may have become dominant because it offers better products, has invested in superior technology, has developed an efficient distribution system, has achieved economies of scale or has earned customer loyalty through legitimate competition. Cognizance, what this specific regulation requires is that a dominant undertaking does not use its position in a way that harms the competitive process or unfairly exploits those who depend upon it. The reference to the purpose, effect or likely effect of conduct is particularly significant. Competition-law assessment is therefore not necessarily limited to what has already happened. Conduct may attract scrutiny where its likely effect is sufficiently apparent, even where the full anti-competitive consequences have not yet materialized. For businesses, this means that a competition-law review should be undertaken before implementing a potentially risky commercial strategy, rather than only after competitors or customers have suffered demonstrable harm. UNFAIR TRADING CONDITIONS Regulation 6 deserves particular attention because it deals with the circumstances in which a dominant undertaking may use its bargaining power to impose unfair trading conditions on customers or suppliers.  The Regulation provides several circumstances that the Commission will consider before ruling out abuse of dominance on account of unfair trading conditions. These include conducts that demonstrate contractual imbalance, imposition of excessive or unreasonable contractual obligations to the counterparty, exclusivity arrangements, burdensome financial commitments, unjustified differences in contractual treatment, unilateral changes to important contractual terms to the detriment of the other party and other forms of unfair contractual treatment. The importance of Regulation 6 lies in the fact that many of these practices are not unusual in commercial contracts. Businesses routinely negotiate exclusivity, minimum purchase requirements, security arrangements, long-term contracts, credit terms and rights to unilaterally alter certain contractual provisions. The existence of such a clause does not automatically mean that there has been an abuse of dominance. The relevant question is whether the dominant undertaking is using its market power to impose conditions that are unfair under the circumstances and cannot reasonably be justified by legitimate commercial considerations. For example, a dominant supplier may include a contractual provision allowing it to change important commercial terms unilaterally at any time, while the customer has no realistic alternative supplier. The mere existence of a variation clause would not, by itself, rule that the dominant party is abusing its dominance position. The Commission would need to consider the nature of the clause, the bargaining relationship between the parties, the customer’s ability to switch suppliers, the importance of the term and whether there is a legitimate commercial or economic justification for the arrangement and whether such justification does not intent to exploit the customer or restrict or prevent competition in the market space. Thus, Regulation 6 should be approached carefully, acknowledging that contractual freedom can operate differently where one party possesses substantial market power and the other party has little practical ability to resist the terms imposed upon it. For businesses that may be dominant, this is an area where contract and other commercial arrangement reviews should go beyond the ordinary question of whether a provision is legally enforceable to whether the provision could be regarded as an unfair exercise of market power. PREDATORY PRICING Regulation 7 addresses predatory pricing, which concerns situations in which a dominant undertaking prices its products or services at levels that may be intended or likely to eliminate competitors or prevent effective competition or drive out an equally efficient competitor. Predatory pricing differs from ordinary competitive pricing. Competition law does not require businesses to maintain high prices simply because their competitors cannot match them. A business may legitimately offer lower prices because it has lower costs, better technology, greater efficiency or a temporary promotional strategy. Abusive conduct arises where a dominant undertaking can sustain losses or unusually low margins in circumstances suggesting that the pricing strategy is directed towards excluding competitors, after which the undertaking may be able to recover those losses through future price increments or other restrictive conduct. This distinction is particularly important in markets where a dominant business has substantially greater financial resources than its competitors. A smaller competitor may be unable to sustain prolonged losses, even though it would otherwise be capable of competing effectively. Therefore, businesses should maintain proper records supporting significant pricing decisions, particularly when prices fall below normal levels or when aggressive pricing is introduced in a market in which the undertaking has substantial market power. MARGIN SQUEEZE AND CROSS-SUBSIDISATION Regulations 8 and 9 address two forms of conduct that are particularly relevant to businesses operating across different levels or segments of a market. These are margin squeeze and cross-subsidization. A margin squeeze arises when a dominant undertaking controls an important upstream input and competes with businesses that depend on that input downstream. This refers to a pricing practice in which the margin between the price at which the vertically integrated firm, which is dominant in an input market, sells a downstream product and the price for which it sells the key input to competitors does not allow the downstream competitor to compete effectively. For example, the dominant party may set the upstream price sufficiently high, while simultaneously maintaining a downstream price sufficiently low, which consequentially triggers loss (unprofitability) even to an efficient competitor in the market space. Thus, Regulation 8 direct specific attention to matters such as the importance of the essential input or facility, the availability of alternatives and whether the downstream margin is sufficient for an efficient competitor to compete.  This is particularly relevant in infrastructure-based sectors, where competitors may depend on access to facilities, networks or other essential inputs controlled by a vertically integrated or dominant undertaking. In this case, the Commission will not need to prove dominance in the downstream because dominance in the upstream is sufficient to leverage the squeeze of competitors downstream. The Commission will strictly look into the spreads between wholesale prices charged to rivals or affiliates (transfer pricing arrangements) and retail prices charged to end users.If the spread is so narrow that its equal or reasonably efficient competitors cannot sustain downstream costs and still make profits, the pricing will be treated as abusive and against competition because such conduct not only geared to exploit customers but also appreciably prevent, restrict or distort competition by forcing the downstream competitor out of the market. Regulation 9 addresses cross-subsidization, which, according to Section 3(b) of the Fair Competition (Amendment) Act of 2024, occurs where profits or resources generated in one market are used to support activities in another market in a manner that harms competition.  Cross-subsidization is not inherently illegal. Businesses operating in several markets naturally allocate resources between different divisions and product lines. This competition concern arises where a dominant undertaking uses its strength in one market to support below-cost or exclusionary conduct in another market, making it unnecessarily difficult for competitors to enter or remain in that second market. Thus, the Competition will investigate and first establish dominance in at least one market, evidence of cost shifting, predatory pricing in the subsidized market and harm or likely harm to competitors and consumers in that subsidized market to rule that cross subsidization is actually abusive.  Thus, it is crucial for businesses and investments operating through multiple divisions, subsidiaries or vertically integrated structures to accurately account and allocate costs not only for financial reporting purposes but also for competition-law compliance. REFUSAL TO DEAL AND ACCESS TO ESSENTIAL FACILITIES Regulations 10 and 11 deal with two related areas: refusal to deal and denial of access to essential facilities or inputs. On refusal to deal, the regulations are categorical in the sense that the Commission shall declare the existence of an illegal refusal to deal if a dominant enterprise denies business to a customer or supplier without a reasonable economic justification. Under ordinary circumstances, businesses do not ordinarily have legal obligations to transact with every customer or competitor. A refusal to supply can be justified by legitimate economic reasons, such as credit risk, lack of capacity, regulatory restrictions, technical limitations or other genuine commercial considerations. The position may be however be different and trigger scrutiny where a dominant undertaking refuses to deal without reasonable economic justification and the refusal with intention, effect or likely effect of exploiting customers or restricting, preventing or distorting competition. Thus, the Commission during investigation or assessment of a claim of refusal to deal will ensure to establish three crucial factors, such as (i) the existence of a dominant position in the sense that the undertaking holds a dominant position in the relevant market, (ii) existence of actual or constructive refusal to deal, specifically when the dominant party actively refuses to supply goods or services, blocks market access for other competitors, or imposes such unviable, unequal, or cost-prohibitive terms that force other competitors out and lastly (iii) existence of anti-competitive intent or effect, such that the denial must have the explicit object, actual effect, or likely effect of appreciably preventing, restricting, or distorting competition, or directly exploiting customers. In the absence of these factors or in a situation where the refusal is economically justified, the Commission will dismiss the claim. With regard to access to essential inputs or facilities, Regulation 11 is categorical in the sense that the fact that a facility is useful to a competitor does not automatically make it an essential facility. A facility is essential if it is an infrastructure or resource that cannot reasonably be duplicated and without access to which competitors cannot reasonably provide goods or services to their customers. For example, an electricity transmission grid controlled by a utility monopoly (such as TANESCO) that blocks third-party power producers from delivering electricity to consumers will be construed as an abuse of dominance under the access to essential facilities doctrine. Accordingly, the Commission is expected to consider whether the facility is genuinely indispensable, whether it can reasonably be duplicated, whether there are viable alternatives and whether access has been denied without proper justification. This distinction is important because competition law should not be understood as requiring a business to hand over its commercial assets to competitors simply because those assets are useful to them. The essential-facilities concept is concerned with situations in which control over an indispensable facility can effectively determine whether competition is possible in a downstream market. TYING AND BUNDLING Regulation 12 deals with tying and bundling, both of which are common commercial practices but can present competition concerns if undertaken by a dominant business. Tying occurs when a customer purchasing one product or service is required to purchase another product or service. Bundling generally involves offering two or more products or services together, often on terms that make the combined purchase more attractive than purchasing the products separately. There is nothing inherently unlawful about selling products together. Businesses may tie or bundle products because doing so reduces distribution costs, simplifies administration, improves customer convenience or creates genuine efficiencies. However, where a dominant undertaking uses its position in one market to leverage customers into another market and thereby leaves no choice to the customer or makes it difficult for competitors in the second market to compete, that would be considered an abuse of dominance. Therefore, the assessment focuses on the structure and commercial effect of the arrangement and must establish that (a) there are separate relevant markets for each product, (b)a party is dominant at least in one market, (c) there is sufficient evidence supporting the claim for tying and bundling (d) such acts leave the customers with no option except for purchasing products as tied or bundled and € suchtying and bundling practices restrict competition on the market where the product has been tied or bundled without sufficient efficiencies to compensate for competitive infringement. Therefore, businesses considering a tying or bundling strategy must ensure that they can identify the legitimate commercial rationale for the arrangement and assess whether the strategy could foreclose competitors who otherwise would have a reasonable opportunity to compete before implementing such a strategy. PRICE DISCRIMINATION Regulation 13 addresses price discrimination, which broadly concerns situations in which a dominant undertaking charges different prices to different customers or customer groups for the same or equivalent products or services without adequate justification. Again, the Regulations do not mean that businesses must charge every customer exactly the same price. Differences in price for the same product or service can have legitimate explanations. For example, a customer purchasing a substantially larger quantity may receive a volume discount. A customer located further away from the production facility may pay a higher price because of transportation costs. Different credit risks may justify different payment terms. Differences in service levels may also justify different prices. However, where price differences fall short of commercial justification under the competition laws, that situation will be considered as customer exploitation conduct and harmful to competition warranting the Commission’s legal ban. The Regulations guide businesses that, to apply differentiated pricing, they should ensure that the basis for those differences is identifiable and commercially defensible. LOYALTY DISCOUNTS AND REBATES Discounts and rebates signify a discount offered on the condition that the customer engages in loyal purchasing behaviour by repeatedly purchasing goods or services from the same supplier and refraining from purchasing from other suppliers. These practices are an essential part of ordinary commercial activity as part of the marketing strategy that encourages customers to purchase larger quantities while attracting prompt payment, reducing distribution costs, or providing other legitimate commercial benefits to suppliers. The position becomes more sensitive when a dominant undertaking structures a discount and rebate in a way that effectively locks customers or distributors into dealing with it, thereby making it commercially difficult for competitors to obtain access to those customers. Considering that these practices are common commercial arrangements, the Regulations take a further step to ensure that the dominant party does not abuse their position using discount and rebate arrangements. To ensure that not all discount and rebate arrangements are considered abusive, Regulations 14 set minimum requirements that must be established before ruling against a dominant part exercising this practice. These include (a) a person exercising discount and rebate must hold a dominant position in the market, (b) discount and rebate must be implemented in a way that has an exclusionary effect and (c) the objective of that act, its effect or likely effect must be to systematically exploit customers and prevent, restrict and or distort competition.   INTELLECTUAL PROPERTY RIGHTS AND COMPETITION LAW Regulation 15 is particularly relevant to businesses whose competitive strength depends on patents, copyright, trademarks, technology or other intellectual property rights.  Intellectual property law provides rights holders with important legal protections. Those rights are intended to encourage innovation, investment and creativity. However, the existence of an intellectual property right does not necessarily place its exercise outside the scope of competition law. The Regulations identify circumstances such as unjustified refusal to license, excessive licensing fees, discriminatory licensing conditions, unnecessary additional licensing requirements and strategic use of intellectual property rights to prevent competitors from entering or competing in a market. The objective of this specific restriction is not to undermine legitimate intellectual property protection. Rather, it is to ensure that a dominant undertaking does not use its intellectual property to unlawfully suppress competition. Businesses with substantial intellectual property portfolios should therefore consider both the intellectual-property and competition-law implications of their licensing policies, enforcement strategies and dealings with potential competitors. OFFENCES AND ENFORCEMENT UNDER THE FAIR COMPETITION ACT While the Regulations provide more detail on what may amount to abuse of a dominant position, the Act provides a wider enforcement framework and sets out the consequences of breaching competition law. Thus, the Fair Competition (Abuse of Dominant Position) Regulations, 2026, should be read together with the Fair Competition Act, Cap. 285. Of particular importance is section 58(6) of the Act, which allows the Fair Competition Commission to order that a person who has committed an offence under the Act to publish information relating to the offence in the manner and within the time determined by the Commission. This implies that the consequences of non-compliance may extend beyond financial penalties. A business may also face reputational consequences if it is required to publicly disclose information relating to an offence of abuse of dominance, which would be at its financial and reputational detriment. It is important to note that section 58(6) does not itself create the offence or prescribe the fine. Rather, it gives the Commission an additional enforcement power where an offence under the Act has been established. The applicable offence and penalty depend on the relevant provisions of the Act. Businesses, particularly those with significant market power, should therefore ensure that their pricing, contractual terms, discounts, exclusivity arrangements and other commercial practices comply with both the Act and the new Regulations. Early compliance review can help businesses avoid enforcement action, financial penalties and unnecessary reputational damage and ultimately drive business growth and sustainability. FORWARD LOOKING VIEW AND CONCLUSION Our forward-looking view in as far as the new Regulations are concerned is that the immediate practical question for businesses is not simply whether they are dominant. It is whether their business model and commercial practices remain defensible if examined through the framework established by the Act and the new Regulations. Businesses operating in concentrated markets should first understand their position in the relevant market. This requires more than simply calculating sales figures or marketing strategies. Management should consider the products and services that form the relevant market, the geographic scope of competition, the position of competitors, customer dependence, barriers to entry and expansion, and the extent to which customers can switch to alternative products. Once a business is found to have, or reasonably believes that it may have, substantial market power, greater care should be exercised in designing commercial strategies. In our view, particular attention should be paid to pricing, discounts and rebates, exclusivity arrangements, distribution agreements, tying and bundling, refusal to supply, access to infrastructure, intellectual property licensing and contractual terms imposed on customers or suppliers. The objective should not be to avoid every practice mentioned in the Regulations. This would be commercially unrealistic and legally unnecessary. Many of these practices are legitimate when properly structured and objectively justified. In general, a business should be able to answer three questions: first, what is the legitimate commercial purpose of the strategy we want to implement? Second, is the practice reasonably necessary or proportionate to achieving that purpose? Finally, could the practice, given our position in the market, exploit customers or prevent, restrict, or distort competition? If the answer to the third question is potentially yes, the arrangement should be reviewed before implementation. DISCLAIMER This article is intended for general information on Tanzanian law and does not constitute legal advice on any specific matter. If your business needs its pricing practices, commercial agreements, exclusivity arrangements, distribution structures or intellectual property licensing reviewed for compliance with Tanzania’s competition laws, that is precisely the kind of proactive legal support our advisory and retainer arrangements are designed to provide. The objective is to identify and address potential competition risks before they develop into regulatory investigations, costly disputes or enforcement proceedings. ABOUT US Victory Attorneys and Consultants is a law firm based in Dar es Salaam, Tanzania, providing practical and commercially informed legal services to businesses, investors and individuals. We support our clients in navigating legal and regulatory requirements, structuring commercial transactions, reviewing contractual arrangements and managing legal risks. Our approach is rooted in understanding our clients’ commercial objectives and providing legal solutions that protect their interests while supporting sustainable business growth. We believe effective legal support should not begin when a dispute arises, but should form part of how businesses make decisions, manage risks and pursue opportunities. Contact Us Victory Attorneys & Consultants, IT Plaza Building, 1st Floor Ohio Street/Garden Avenue, P.O. Box 72015, Dar es Salaam. info@victoryattorneys.co.tz https://victoryattorneys.co.tz/