Goodwill Funeral Services secures temporary relief against CFTC order to pay K68m for violating fair trading laws
The High Court in Blantyre on Tuesday granted a stay order to Goodwill Funeral Services against the Competition and Fair Trading Commission (CFTC) on its recent fine of K68 million for violating the fair-trading laws.
The order gives the company temporary relief from paying the fine. Lawyer for Goodwill Funeral Services, Benard Ndau, said this means his client will not pay the fine until the outcome of the appeal.
The State-funded regulator of trade slapped Goodwill Funeral Services with a whooping K68 million fine for engaging in anti-competitive business practices.
The Commission also imposed a K500, 000 fine on Nico Life for generating profits through anti-competitive conduct.
The two companies were given a two-week ultimatum to pay the fines or risk being dragged to court.
CFTC Acting Executive Director Apoche Itimu said the Commission received a complaint from funeral service providers on September 22, 2020, alleging that Medical Aid Society of Malawi (MASM), Goodwill Funeral Services and NICO Life Insurance Company were engaging in anticompetitive conduct.
Itimu said the complainants alleged that MASM, Nico Life and Goodwill were engaging in anti-competitive conduct as a result of an agreement for group insurance cover that MASM had entered into with Nico Life.
They alleged that following that agreement funeral services were provided for mainly by Goodwill to their detriment, whereas they had been able to provide those services prior to that agreement.
They also claimed that prior to that agreement, they had dealt directly with MASM whereas they were now required to deal with Nico Life only through Goodwill who would delay with their payments and would deduct commission from their payments.
It was further alleged that Goodwill was taking advantage of customers by overpricing their products without disclosure to customers about their insurance cover with MASM.
Itimu said following the allegations, the Commission held a special meeting on 20th January, 2022, in Lilongwe where, among others, it made a decision on alleged anti-competitive business practices by NICO Life Insurance Limited and Goodwill Funeral Services.
“On 20th January, 2022, the Commission deliberated over the evidence gathered in the case as well as submissions made by the Parties during and after the public hearing that was held by the Commission in the matter. In summary, the Commission did not find any evidence to substantiate the allegation that Goodwill was overpricing its products and was not informing Members of the limits of their cover under MASM so as to take advantage of them. The Commission thus dismissed those allegations.
“The Commission also established that the agreement between Nico Life and MASM did not contain anti-competitive clauses and further that following the entry into force of the agreement, MASM ceased to deal directly with funeral service providers who were to deal directly with NICO Life.
“The Commission, however, found that although the written agreement between Nico Life and Goodwill did not contain anti-competitive agreements, they had an oral agreement that was anti-competitive and further that they made decisions and engaged in concerted practices that were anti-competitive in violation of Section 32 (1) of the CFTA,” read the statement in part.
It added that the finding was based on the agreement between Nico Life and MASM, Nico Life and Goodwill decided that Goodwill would be the only approved funeral service provider for MASM Members despite that prior to the agreement MASM dealt with several funeral service providers and despite that MASM has Members across the country; Nico Life and Goodwill reached this agreement without affording other providers the opportunity to also be registered by Nico Life through a competitive process; and where Members obtained funeral services from other funeral service providers other than Goodwill, Nico Life would only process their payments if the claims were made through Goodwill (their competitor) despite that they had no subcontract with Goodwill; Nico Life had no valid justification for only dealing with Goodwill’s competitors through Goodwill and not directly with them.
Itimu said the Commission found that the conduct and decisions by Goodwill and Nico Life resulted in the prevention and distortion of the funeral services market across Malawi.
“In light of the findings, the Commission issued, among others, the following orders: that NICO Life should open up to other funeral service providers by entering into agreements with them through competitive bidding processes, that NICO Life should pay a fine of Five Hundred Thousand Kwacha (MK500,000) for engaging in anticompetitive conduct; that Goodwill should pay a fine amounting to Sixty-Eight Million Seven Hundred and Thirty-Six Thousand Nine Hundred and Forty-One Kwacha (MK68,736,941.00) being financial gain generated from engaging in the anticompetitive conduct,” she ordered.
“The Commission also noted with concern that the offence was equally committed by Nico Life and Goodwill, however, the financial gain from the offence could only be established on the part of Goodwill,” concluded the press release.
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