DECISIONS BY THE BOARD OF COMMISSIONERS OF THE COMPETITION AND FAIR TRADING COMMISSION AT THE 47TH MEETING

The Board of Commissioners (hereinafter referred to as ''The Commission") of the Competition and Fair Trading Commission held its 47^th Meeting in Lilongwe on 3^rd February 2017 to consider and adjudicate over cases relating to unfair trading practices, anti-competitive business conducts and mergers. These cases were brought before the Commission in accordance with Section 8 of the Competition and Fair Trading Act.

In total, the Commission considered and adjudicated over a total of twenty-seven (27) cases. This statement provides a summary of the Commission's determinations of the cases.

For more information, contact Mr Lewis Kulisewa on 0999960235 or email lewis.kulisewa@cftc.mw

CHARLOTTE WEZI MALONDA

EXECUTIVE DIRECTOR

SUMMARY OF THE COMMISSION’S DETERMINATIONS OF THE CASES

ALLEGED SUPPLY OF PRODUCT WHICH IS LIKELY TO CAUSE PHYSICAL HARM TO CONSUMERS BY SPICE EMPORIUM SHOP

The Commission ordered Spice Emporium Shop in Limbe to pay  a fine of five hundred thousand Kwacha (MK500,000-00) for deliberately supplying products likely to cause injury to health and failing to comply with consumer protection statutes.

Investigations carried out by the Commission established that Spice Emporium Shop were deliberately supplying expired products which were likely to cause injury to health or physical harm to consumers. The expired products included non-carbonated soft drinks and spices such as Everest Bar Bhaji Masala, Everest Royal Garam Masala and Everest Pani Puri Masala. This was contrary to Section 43(1)(e) of the Competition and Fair Trading Act which states that:

"Á person shall, not in relation to a consumer, supply products which are likely to cause injury to health or physical harm to consumers, when properly used, or which do not comply with a consumer safety standards which has been prescribed under any written law”

Further, Spice Emporium refused to comply with instructions from the Commission's inspectors to remove the expired products from the shelf, thereby subjecting unsuspecting consumers to increased harm.

By refusing to comply with consumer protection authorities set by Government, Spice Emporium violated Section 6(1)(d) of the Consumer Protection Act which obliges business enterprises to cooperate with Government authorities in the execution of policies relating to consumer protection.

ALLEGED EXCLUDING LIABILITY BY BEFOWARD COMPANY LIMITED

The Commission ordered Be Forward Company Ltd to exchange the non-runner motor vehicle it supplied to Mr Daniel Likugwe with a motor vehicle in good running condition.

Investigations conducted by the Commission showed that, in 2013, Be Forward Company Ltd supplied a non-runner second hand motor vehicle to Mr Daniel Likugwe, contrary to indications at the time of purchase, that it was in perfect running condition. The vehicle, which was purchased at US$3,200 was delivered without an Engine Control Unit (ECU). This was clear-cut misrepresentation which resulted in the consumer suffering substantial consumer harm and a blatant violation of Section 43(1)(b) of the Competition and Fair Trading Act which provides that:

"Á person shall, not in relation to a consumer, engage in conduct that is likely to mislead the public as to the nature, price, availability, characteristics, suitability for a given purpose, quantity or quality of any products or service".

Further, by excluding liability on a defective motor vehicle, the company breached Section 43(1)(b) of the Competition and Fair Trading Act which states that:

"Á person shall, not in relation to a consumer, exclude liability for defective products".

The Commission further ordered Be Forward Company Ltd to refund all the related expenses incurred by the Complainant in trying to fix the problem.

ASSESSMENT OF THE IMPACT OF THE TAKEOVER OF METROPOLITAN HEALTH LIMITED BY MEDHEALTH LIMITED

The Commission has authorized the proposed takeover of Metropolitan Health Ltd by MedHealth Ltd.

This follows an application for the authorization of the proposed takeover of 100% shareholding in Metropolitan Health Limited by a local company MedHealth Ltd.

Analysis of the information gathered by the Commission shows that the proposed takeover will simply result in change of ownership of the company without changing the market structure or any other competition factors. Further, the proposed transaction will ensure that the business of Metropolitan Health continues to exist in Malawi, hence sustaining and maintaining same levels of competition on the market.

Accordingly, it was unlikely that the transaction will result in substantial lessening of competition in Malawi.

ALLEGED RESTRICTIVE BUSINESS PRACTICE BY TELEKOM NETWORKS MALAWI LIMITED IN THE SPONSORSHIP OF FOOTBALL

The Commission has ordered Telekom Networks Malawi Ltd (TNM) and Super League of Malawi (SULOM)to follow international best practices in its sponsorship arrangement for the Super League football tournament.

Investigations conducted by the Commission showed that the sponsorship agreement between the Super League of Malawi (SULOM) and Telekom Networks Malawi (TNM) contained clauses which had the effect of restricting competition in as far as advertising and football sponsorship was concerned.

After a thorough analysis of the information gathered during investigations, the Commission concluded that, while the Sponsorship Agreement foreclosed football sponsorship as an advertisement platform for TNM competitors, its effect would not likely result in substantial lessening of competition in the telecommunication market. However, the sponsorship agreement was found likely to have negative effect on the development of football in Malawi.

Accordingly, in the event that the two parties agree to renew the sponsorship at the end of the current contract, the Commission ordered that the proposed agreement should be submitted to the Competition and Fair Trading Commission for assessment of compliance with the Competition and Fair Trading Act.

Further, the Commission ordered the Sports Council of Malawi to consider developing guidelines for sports sponsorship, particularly, football taking into consideration best practices from other jurisdictions to prevent sponsors from taking advantage of the weak bargaining power of sponsorship recipient.

Charlotte Wezi Malonda

EXECUTIVE DIRECTOR