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Malawi: Parliamentary Legal Affairs Committee Supports Review of Competition and Fair Trading Act and Its Regulations

Parliamentary Legal Affairs Committee adds credence that it is important that Malawian laws need to be reviewed as frequently as practical and thus supports the review of Competition and Fair Trading Act (CFTA) and its Regulations, which Competition & Fair Trading Commission (CFTC) is undertaking.

Speaking at a sensitization meeting in Salima on Saturday, the Parliamentary Committee chairperson, Albert Mbawala emphasized that the CFTA – a piece of legislation that aims at protecting consumers and foster competition – is wanting.

He added that the CFTA is important in regulating monopolies and ensuring an efficient economy and that is why it must be up to date arguing that the current law is archaic.

“It is important to review laws that are up to date and let us not use archaic laws” Mbawala said. “It is important that these laws are reviewed as frequently as practical.”

The current CFTA was enacted over two decades ago in 1998, and has since been out of sync with trends in the economy. Under the CFTA, the CFTC was established in the same year with a mandate to regulate, monitor, control and prevent acts or behaviours which would adversely affect competition and fair trading in Malawi.

The Commission is currently in the process of reviewing the CFTA and its Regulations and proposed areas of reform by the Commission include

· Mandatory merger application;

· Revision of fines and penalties – percentage of turnover;

· Introduction of on-spot fines;

· CFTC to replace Consumer Council under CPA; and

· Commitment and Settlement Procedures.

Gracing the sensitization meeting was Minister of Trade & Industry, Simplex Chithyola Banda, who said since 1998, “there have been significant changes in the economy as well as the business environment, not just in Malawi, but regionally and globally as well”.

“The legal framework that regulates competition and consumer welfare in Malawi is therefore outdated and not in tandem with trends that have taken place in the area of competition and consumer welfare.

“In order to foster economic development in Malawi, it is important that we have an enabling business environment that allows all businesses to compete fairly and one that also ensures that the rights of consumers are respected.”

The Minister appraised the legislators that the Bill, will among other things, “provide for a more effective enforcement regime through fines and penalties as well as various legal remedies that will ensure that anti-competitive and consumer rights violations are not tolerated in our economy”.

“Furthermore, the new law will clear the inconsistencies and ambiguities in the current Act that have posed various challenges for the Commission in enforcing the law.

“It is also pleasing that, not only has the Bill incorporated some international competition and consumer protection best practices, principles and standards, but it has also included provisions on collaboration with other multilateral bodies in enforcing competition and consumer protection law.”

The fresh calls for the speedy amendment of the CFTA fined Airtel Malawi Plc K2.1 billion for alleged unfair trading practices but the telco sought court intervention, which ruled that the Commission should refund the funds.

The CFTC took the ruling made on July 12 back to the High Court, which upheld the order that the Civil Division made for the Commission to refund the total of K2,113,099,006.

The determination made to refund the funds was based on the Court’s earlier determination by Justice Alan Muhome, who contended that Section 51 of CFTA “presupposes the existence of criminal proceedings and the consequences thereof include a fine, disgorgement of financial gains and imprisonment”.

He observed that the CFTA “does not mandate CFTC to expressly convict offenders, impose fines, disgorgement of financial gains and imprisonment and also that it does not have the power to issue administrative fines since CFTA does not provide for the same.

“Under Malawi law, criminal prosecutorial powers are primarily vested in the DPP (Section 99(2) of the Constitution as well as section 76 of the Criminal Procedure and Evidence Code,” said the judgment.

But in upholding that CFTC should still make a refund, Justice Muhome, granted a stay against the judgment on July 12, “in relation to the finding that CFTC lacks jurisdiction to mete out fines, until the matter is disposed of by the apex court or a further order of the Court.

Justice Muhome also said for the avoidance of doubt, the orders directed to the Director of Public Prosecutions (DPP) are similarly stayed” in which CFTC’s determination that Airtel Malawi’s conduct was unconscionable and unreasonable, thus ordered the DPP to review the evidence in the matter and commence criminal proceedings against Airtel within 90 days.

In September last year, CFTC ordered Airtel to pay the fine for what was described as ‘unreasonable’ behaviour to customers over Khethekhethe loyalty bonus programme — following several complaints from consumers, alleging Airtel stopped automatically crediting into customer accounts with monthly bonuses.

According to the complaints to CFTC, customers were required to apply for the redemption of their bonuses on the 14th of every month but they were being forfeited if they were not redeem.

It was further alleged that the unredeemed bonuses were later appropriated and sold to other customers on the 15th and CFTC claimed that Airtel Malawi made a financial gain of about K2.1 billion, thereby acting “unreasonably and without conscious.”