Mtn Uganda Lands N190 Million Fine

Telecoms giant, MTN has been found wanting in another African country and has landed a fine in Uganda according to a report by Uganda’s New Vision newspaper.

A commercial court in Uganda on November 6th, presided over by Henry Peter Adonyo, slammed a fine of sh2.3bn ( $662,000,N190 Million) on the multinational telecommunications company- payable to EzeeMoney as damages for sabotaging EzeeMoney mobile money business.

EzeeMoney had initially filed the suit in 2013 claiming that MTN breached the contract they had with them for fear of competition thereby sabotaging their mobile money business and flouting sections 53 (1) and 56 of Uganda’s Communications Act.

The section deters service providers from involving in endeavors that limit or restrict competition in the communications business.

The company wanted a local telephone service aggregator to ease its interface with all licensed telecom service providers.

According to EzeeMoney, they had signed a contract with MTN Uganda to provide for them the telephone and data services it needed to perform its businesses.

An excerpt from the judgement reads: “However, MTN for fear of competition to its mobile money product made a U-turn and started sabotaging EzeeMoney business. It started by denying EzeeMoney the ability to connect an aggregator called YO! Uganda Limited (YUL) to its network.

“It (MTN) denied the use of EzeeMoney short code on its network, cut off all of EzeeMoney’s call centre lines, withdrew over 300 pre-paid data simcards that were being used in EzeeMoney’s GSM enabled POS machines.”

According to the reports, MTN also bullied all of EzeeMoney mobile money agents into appending signatures to exclusive agreements that stops them from offering any service to its competitors and handling or selling products related to other services.

MTN in an attempt to defend their stand told the court during the hearing that EzeeMoney being a non-licensed communications service provider could not have suffered the breaches they are accusing MTN of within the meanings of sections 53 (1) and 56 of the communications Act. MTN asked court to dismiss the suit with costs in its favour.

The judge, Adonyo declared that the exclusivity agreement between MTN and its agents infringe section 53 (1) (b) of the Communications Act and therefore null and void.

He said that the Act prohibits parties from entering into agreements which unfairly prevent, restrict or distort competition, adding that the communications regulation of 2005 also prohibits anti-competitive agreements and exclusive dealings.

“The agreement itself confirms that the defendant (MTN) acted outside the law, for it appears it used such coercive methods to deny fair competition to other parties involved in the business,” he said.

The judge waived off MTN’s defense stating that anybody can be affected by the prohibited behavior of anti-competition under the law hence the defendant’s argument is invalid.

He said: “Its (MTN’s) refusal to allow EzeeMoney use its platform is an act which is prohibited within the meaning of section 53 of the communications Act.”

Owing to this, he ordered MTN to pay sh800 million and sh1.5 billion with a six per cent interest at court rate as general and punitive damages for loss of business arising from its anti-competition actions to EzeeMoney.

He also said his judgement against MTN should serve as a warning to other companies that might tow the sabotage line.

“This is to act as a deterrent to the defendant and other entities with similar anti-competition conducts to stand warned that the court will not tolerate illegal conduct and high handedness in the conduct of business,” he said.

Adonyo gave a permanent injunction against MTN prohibiting it from acting unlawfully against EzeeMoney.