MultiChoice went against High Court order to adhere to MACRA on initial tariff increase

The Board of the Malawi Communication & Regulatory Authority (MACRA) made the decision to fine MultiChoice Malawi for effecting DStv tariff increase without its approval after the High Court ordered the service provider to adhere to MACRA’s request for engagement on matter.

MultiChoice Malawi was fined K10 million and also ordered to refund customers of the difference of the increased DStv tariff it effected in July without prior approval from the regulator.

But MultiChoice Malawi has rejected the orders from the regulator, arguing that it is being penalized for a DStv service which is owned and managed by MultiChoice Africa Holdings, which sets the prices of DStv.

MACRA Director General Daud Suleman

The response from Corporate Affairs Manager, Zena Makunje says: “MultiChoice Malawi does not set the price of this service nor decide on any price adjustments. MultiChoice Malawi merely collects the subscription for DStv on behalf of MultiChoice Africa Holdings.

“MACRA is, therefore, penalizing MultiChoice Malawi for a service that is not ours, for prices we do not set and attempting to impose conditions which the law does not prescribe.”

In the public notice released by MACRA Director General, Daud Suleman on January 6, says MultiChoice Malawi breached section 74(1) of the Communications Act (Cap. 68:01 of the Laws of Malawi) and clause 11 of MultiChoice’s Subscription Management Service Licence for adjusting tariffs for DStv without approval from the Authority.

The regulator engaged MultiChoice Malawi on November 28, 2022 and allowed the service provider to make written representations “pursuant to regulation 32(3)(e) of the Commissions Regulations”.

Thus ordered sanctions that “MultiChoice Malawi should credit its customers per bouquet the difference between the pre-adjustment price for its bouquet and the actual implemented price for the whole period the unapproved tariffs have been in force”.

This is in pursuant to section 195(2)(a) of the Communications Act and that “the refunds shall cover the period from the date of effecting the purported tariff adjustment (15 July, 2022) to the date of the refund”.

MultiChoice Malawi has also been ordered to “submit its subscriber database to the Authority and publish a notice in the press stating that customers have been credited with the difference between the unapproved tariff and the ore-adjustment tariff pursuant to section 195(2)(g) of the Communications Act”.

The fine of K10 million is to be paid within 30 days of the notice (January 6, 2023) pursuant to section 80 as read with section 195(2)(d) of the Communications Act and that “MultiChoice Malawi should cease and desist from implementing the unapproved tariffs pursuant to section 195(2)(a) and (g) as read with section 173(2)(b) of the Communications Act”.

In the same vein, MACRA advises all operators in the ICT sector “to desist from effecting new tariffs without prior approval from the Authority to avoid breaching provisions of the Communications Act and respective licence terms and conditions”.

In challenging MACRA, MultiChoice emphasizes that it is required to seek approval from the regulator “for price increase for its services”, which it indicates as being GOtv, saying this is a service it provides and thus it is what they are required to seek approval for.

“MultiChoice has always operated lawfully within the laws, regulations and licence as administered by MACRA and will continue to do so,” said the letter, which adds that MultiChoice “is currently taking legal advice”.

But on June 3, 2022, the High Court heard that MultiChoice did consult MACRA of its intention to increase the DStv service with effect from July 15.

This was after MACRA had written MultiChoice on January 28, 2022 that it has instituted an inquiry against MultiChoice and also issued the service provider with a notice of preliminary findings of breach of section 74(2) of the Communications Act and Clause 11.2 of the Individual Content Services Licence for the provision of subscription management services in Malawi (DHT).

In her judgement made in chambers on July 25, 2022, Justice Violet Palikena-Chipao observed that the notice from MACRA also contained a direction that MultiChoice should not implement the new tariffs as they had not been approved until the final determination of the matter.

MultiChoice thus went to court challenging MACRA’s decision of instituting an inquiry that would direct MultiChoice from implementing the revised tariffs — arguing that MACRA was “acting beyond its authority by subjecting MultiChoice to a preliminary finding concerning revision of a tariff beyond the scope of its licence”.

MultiChoice — through its lawyer Wapona Kita — also argued that they had “no right or powers to adjust DStv tariffs and it does not own or operate the DStv service” and that the service provider in Malawi was “not the entity that has revised the tariff in issue but only communicated as advised by MultiChoice Africa, the owners and operators of DStv services”.

MultiChoice Malawi also argued that MACRA is cognizance of the fact that DStv service is not licensed in Malawi through various engagements it has had with the service provider.

MultiChoice went to court to seek for judicial review against MACRA’s decision and for an injunction pending hearing of the application for the judicial review.

In its defence, lawyer Edward Zimphonje emphasized that MACRA “is a creature of a Statute as such there is no question that it is a public body” and that the notice of inquiry on MultiChoice’s upward revision of tariffs was promptly made “three months from the date the alleged infringing decision was made as required under Civil Procedure Rules (CPR) and also within 30 days as required under section 196 of the Communications Act.

The Judge observed that the issues, however, are whether MultiChoice has alternative remedies and whether matters raised by the service provider show a prima facie case [accepted as correct until proved otherwise] fit for further investigations during the judicial review proceedings which had been applied for.

She also observed that from Clause 32(1) of MultiChoice Malawi licence is clear that disputes should first go through arbitration if not amicably settled before seeking court relief.

In the letter in which MultiChoice based its application for judicial review that was tendered as evidence, MACRA invited the service provider to an engagement “to show cause why a final finding of breach should not be made against you and appropriate sanctions imposed on you” and asked MultiChoice to “revert to the Authority within 14 days of the letter [dated June 28, 2022] on your representations in writing on the preliminary finding”.

The letter also ordered MultiChoice “to cease implementation of the tariffs for DStv services, as these have not been approved, until further determination of this matter by the Authority”.

But the service provider still went ahead to implement the tariff hike having justified that “as a gesture of goodwill, and in order to cushion the effect of the tariff increase on our customers, we shall stagger the implementation of the proposed tariff increase of 18% over 2 phases commencing with 10% increment”.

“We have notified our customers of this 10% increment to come with effect on 15th July, 2022 as per attached extracts of the customer notification. The remaining 8% will be levied before our financial years ends by 31 March, 2023.

“We wish to assure the Authority that together the increase percentage of the two phases will not exceed 18%, calculated at the date of the deemed approval.”

Justice Palikena-Chipao observed that the wording of the letter suggests to the court that MultiChoice “is aware that tariffs adjustments have to be approved before they are implemented”, adding that the service provider “specifically refers to DStv service subscription fee”.

“It further suggests that there are two modes of approval — express approval by the Authority and approval by operation of the law”, which — as MultiChoice indicates in its letter — “happens when the Authority, upon receiving notification of proposed adjustments of tariff, neither approves nor rejects the proposal within a oeriod of 14 days

“It is in respect of the second mode of approval that the MACRA considered its proposed tariff adjustment for DStv and GOtv services approved,” the judge said.

MACRA also presented to the court that it was not the first time that MultiChoice had sought approval on tariff adjustment on DStv, indicating that on June 29, 2021, it advised the Authority seeking approval to adjust the same DStv tariffs citing section 74 of the Communications Act to which MACRA refused and MultiChoice responded by challenging the refusal with justifications.

The judge took note that according to the correspondents between the two parties, it is the norm that approval is first sought based on the law and in her conclusions, she observed that there was nothing wrong for MACRA to commence inquiry on MultiChoice’s proposal on “possible breach of the law and to make preliminary finding” — emphasizing that “it is further clear the decision was based on the documentation and previous dealings between the parties since MultiChoice obtained the licence whose provision were not challenged at any time”.

She also observed that the issues raised in court by MultiChoice should have been made to MACRA as an engagement when as response “to the call to show cause” adding that “to come to court at this stage seems, in my view, to be premature”.

“The claimant having come to court prematurely, and other available remedies not having been exhausted, the application for leave for judicial review is found wanting and it is dismissed with costs.

“The application for injunction was consequential upon granting of leave to commence judicial review [and] in the absence of judicial review, the application for injunction cannot stand. It is dismissed.”

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