CFTC fines 3 companies on unfair trading practices; one asked to refund K1.975m to a consumer

The Competition and Fair Trading Commission (CFTC) has fined a total of K1.5 million on three companies for committing different offences unfair trading practices — that included one company being ordered to refund K1.975 million to a consumer.

A press statement from acting Executive Director, Apoche Itimu says CFTC held a meeting in Lilongwe on December 12, 2022, where considered and adjudicated a total of 57 cases — which included 51 being unfair trading practices and 6 of anti-competitive business practices.

It was reported to the Commission by a complainant that Joko Electric Company Limited excluded liability for defective goods and unconscionable conduct in a supply of transformers.

The incident was reported on May 28 last year in which alleged that a consumer purchased a distribution electric transformer from Joko Electric Company at K3 million with a one year guarantee but was advised that the transformer was faulty.

The Commission heard that Joko’s technicians worked on the transformer to rectify the problem for which the complainant was charged K400,000 and was paid but when the transformer was tested by Electricity Supply Corporation of Malawi (ESCOM) technicians, it did not function properly.

Joko then proceeded to advise the customer to take the transformer to another technician and “that they would share the costs which amounted to K3,075,040.80”.

Joko Electric Company supplied faulty transformer to a consumer

Joko is reported to have paid a total of K1.5 million towards the full costs of repair and following deliberations, the Commission found that the company was liable for excluding liability for defective goods, which is in contravention of section 43(1)(b) of the Competition and Fair Trading Act (CFTA) and for engaging in an unconscionable conduct towards the complainant in contravention of section 43(1)(g) of the CFTA.

Thus Joko ordered to pay K1,975,040.80 being the balance for repairing the faulty transformer; and a further fine of K500,000 for engaging in excluding liability for defective goods.

Another case that was reviewed and a fine of K500,000 was meted was on Malawi Dairy Industries (MDI) on allegations of supplying products which do not comply with prescribed consumer safety standards, insufficient labelling of products and non-disclosure of material information.

During inspections, the Commission said it found that MDI homogenized and pasteurized liquid milk (250ml) packaging material and labelling of the product did not display any information that would provide information on the shelf life of the products.

It was found that the products had no date of manufacture; products valid shelf life and/or expiry dates and it was conclusively determined that MDI supplied a product which did not display sufficient information in contravention Section 43(1)(e) of the CFTA.

Rana Superette in Ntcheu was also fined K500,000 for being found guilty of “misleading conduct and supply of products which did not comply with the prescribed consumer standards”.

Market inspection findings that was conducted at the shop by CFTC were that Rana Superette was stocking packets of MDI homogenized and pasteurized liquid milk (250ml) — a product manufactured by MDI — whose packaging material and labelling did not display manufacture dates and/or expiry dates, which was in contravention of Section 43(1)(e) of the CFTA.

A case against United General Insurance (UGI) was closed after the Commission established that there was no evidence that suggested that the insurance company engaged in anti-competitive business conduct.

Information which the Commission came across on the market suggested that UGI, “through its broker, engages in anticompetitive business practice by restricting competition in the provision of Toyota Plus Insurance Policy to purchased Toyota Malawi motor vehicles”.

“This appeared to be in contravention of Section 32(1) of the CFTA.

Investigations established that UGI are in an agreement with Toyota Malawi and CFAO to provide an all-inclusive comprehensive Toyota Plus Insurance Policy to customers who have not yet identified a motor vehicle insurance policy upon purchasing a vehicle from Toyota Malawi.

“The arrangement is for purposes of complying with the law and does not force customers to subscribe to it nor restrict any other players from offering the service.

Another case against TNM Mpamba Limited favoured the mobile money service provider after a complaint alleged that it was involved in ‘exclusive dealing arrangement’ that “prohibited agents from selling competitors’ products within the applicant’s branded shops and kiosks without the Commission’s authorization”.

Upon request, TNM Mpamba Limited submitted its application for assessment in accordance with Section 44 of the CFTA, which indicated that the company’s exclusive dealing arrangement only relates to TNM Kiosks and TNM branches — “not small traders who do business under umbrellas”.

“These small traders would not be affected by the arrangement and are allowed to sell anything including products from competitors but the Commission, among others, noted the following:

* That the proposed agreement would not substantially affect competition in the relevant market;

* That the agreement would not affect the distribution and availability of rival products since there are several distribution channels including own agent networks that service providers use to reach out to their respective customers;

* That there are some agents that are non-exclusive, and would be offering services of competitors. These will provide access to customers including in rural and semi-urban areas.

* That the transaction would not adversely affect the small-scale agent’s business operations in rural areas.

“Therefore, the Commission resolved that the proposed exclusive dealing arrangement between TNM Mpamba Ltd and its agents should be approved on condition that the TNM Mpamba would review incentives, including the commission it offers to its agents.”

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