Mul­ti­Choice, con­sumer pro­tec­tion and free en­ter­prise

The Con­sumer Pro­tec­tion Coun­cil is over­reach­ing in its at­tempt to reg­u­late the pric­ing model or tem­plate of Mul­ti­Choice ser­vices.

Financial Nigeria Magazine - - Contents -

The fra­cas be­tween the Con­sumer Pro­tec­tion Coun­cil (CPC) and Mul­ti­Choice Nige­ria Limited, the coun­try’s big­gest provider of pay-tele­vi­sion ser­vice, led to the grant of an in­terim or­der by the Fed­eral High Court, Abuja on the 20th of Au­gust, 2018. The in­junc­tion, which re­strained Mul­ti­Choice from in­creas­ing its sub­scrip­tion rates, has evoked strong de­bates on free en­ter­prise and con­sumer pro­tec­tion.

In­deed, this is not the first row be­tween CPC and the satel­lite TV gi­ant. Dur­ing the course of an in­ves­ti­ga­tion the CPC had be­gun following com­plaints that had been lev­elled against Mul­ti­Choice in 2015, the reg­u­la­tor had stormed the La­gos of­fices of the com­pany and dis­rupted its op­er­a­tions. This ac­tion by CPC was at­trib­uted to an ap­par­ent fail­ure by Mul­ti­Choice to fully co­op­er­ate and par­tic­i­pate in the in­ves­ti­ga­tions.

The in­ves­ti­ga­tions ended with the is­suance of some or­ders to the com­pany by CPC on 16th of Fe­bru­ary, 2016. The or­ders in­cluded the sus­pen­sion of ser­vices when con­sumers are away; the re­lease of free-toair chan­nels when a sub­scrip­tion has ex­pired; com­pen­sa­tion of con­sumers for lost view­ing times; in­tro­duc­tion of lo­cal toll-free lines for com­plaints by con­sumers; and the rea­son­able and eq­ui­table spread of pop­u­lar sports chan­nels.

Ac­cord­ing to a press re­lease signed by the Di­rec­tor Gen­eral of the CPC, Ba­batunde Iruk­era, on the 21st of Au­gust, 2018, an­other in­ves­ti­ga­tion into Mul­ti­Choice had com­menced on the 7th of Novem­ber, 2017 af­ter re­ceipt of nu­mer­ous com­plaints such as fail­ure to re­ceive sig­nal af­ter pay­ment of sub­scrip­tion fee, ser­vice dis­con­nec­tion prior to the end of billing cy­cle, non-ac­ti­va­tion of free-to-air chan­nels, ar­bi­trary charges, and con­fus­ing billing. Other com­plaints in­cluded re­stric­tions im­posed on some chan­nels sub­scribed to, poor pic­ture and sig­nal qual­ity with ex­ces­sive and un­com­pen­sated down­time, fail­ure to adopt Pay-as-You-Go billing and dis­parate charges and treat­ment of con­sumers in Nige­ria com­pared to other coun­tries where Mul­ti­Choice op­er­ates.

Fur­ther­more, the House of Rep­re­sen­ta­tives, due to com­plaints re­ceived by con­stituents, also re­solved that the CPC needed to in­ter­vene to ad­dress the com­plaints. An in­ves­ti­ga­tion was to be car­ried out to eval­u­ate the com­pany’s com­pli­ance with the pre­vi­ous or­ders in 2016 and ad­dress the new com­plaints.

Ac­cord­ing to Iruk­era, dur­ing the course of the in­ves­ti­ga­tions, the CPC and Mul­ti­Choice agreed to and adopted a pro­posed Mu­tual Joint Con­sent (MJC) or­der. Part of the terms of this or­der is that Mul­ti­Choice will not change, re­vise or mod­ify any ma­te­rial term or con­di­tion of ser­vice for a pe­riod of 24 months dur­ing which the com­pany would be un­der the Coun­cil’s su­per­vi­sion. While await­ing the ex­e­cu­tion of this pro­posed MJC or­der, the pay-TV provider an­nounced an in­crease in prices.

Per­ceiv­ing this move as an act of bad faith, par­tic­u­larly in view of the sub­sist­ing MJC Or­der and as an act cal­cu­lated to un­der­mine the Coun­cil, its in­ves­ti­ga­tion and gen­eral reg­u­la­tory process, the CPC ap­proached the court and ap­plied for the in­terim or­der, which was granted.

The bone of con­tention is whether the CPC, in the pro­tec­tion of con­sumer rights, can reg­u­late pric­ing of goods and ser­vices or im­pose a par­tic­u­lar pric­ing method­ol­ogy on providers of goods and ser­vices. The CPC has de­nied do­ing so in its press re­lease where it states: “The in­ves­ti­ga­tion, or in­deed the Coun­cil, did not in­tend to reg­u­late price, or in any way in­ter­fere with the commercial in­ter­face be­tween Mul­ti­Choice and its cus­tomers in fix­ing price. Es­sen­tially, the Coun­cil recog­nises and re­spects the fidelity in the op­er­a­tion of mar­ket forces in ar­riv­ing at prices for goods or ser­vices. The Coun­cil un­der­stands and ap­pre­ci­ates that price is an ac­cept­able de­ter­mi­na­tion of trans­par­ent and undis­torted mar­ket op­er­a­tions.”

How­ever, the reg­u­la­tor’s con­clu­sion in the press re­lease im­plies oth­er­wise, par­tic­u­larly where it states that “with the in­terim in­junc­tive or­der of Jus­tice Nnamdi Dimgba, it is a vi­o­la­tion of the or­der of a court for Mul­ti­choice to re­quire con­sumers to pay, or to re­ceive any new rate for their ser­vices from con­sumers. For clar­ity, the cur­rent, valid and pre­vail­ing rate for DStv and GOtv ser­vices are the rates that were ef­fec­tive as at July 31st, 2018.”

The CPC’s func­tions and pow­ers are stated clearly in its en­abling law – the Con­sumer Pro­tec­tion Coun­cil Act (Sec­tions 2 and 3). It was es­sen­tially cre­ated to pro­mote and pro­tect the in­ter­est of con­sumers over all prod­ucts and ser­vices. Its man­date is ba­si­cally four-fold: to pro­vide speedy re­dress to con­sumer com­plaints through ne­go­ti­a­tions, me­di­a­tions and con­cil­i­a­tions; to elim­i­nate haz­ardous and sub­stan­dard goods from the mar­ket; to educate con­sumers and cham­pion con­sumer in­ter­ests at ap­pro­pri­ate fo­rums and to pro­vide re­dress to ob­nox­ious prac­tices or un­scrupu­lous ex­ploita­tion of con­sumers.

The CPC has done pretty well in its ad­vo­cacy for con­sumer rights, espe­cially in light of the non-ex­is­tence of a law that en­cap­su­lates all con­sumer rights in Nige­ria. In car­ry­ing out its ob­jec­tives, it has had to en­gage sec­tor-spe­cific reg­u­la­tors such as the Nige­rian Com­mu­ni­ca­tions Com­mis­sion (NCC) for the telecom­mu­nica- tions sec­tor; the Nige­rian Elec­tric­ity Reg­u­la­tory Com­mis­sion (NERC) for the power sec­tor; Nige­rian Civil Avi­a­tion Au­thor­ity (NCAA) for the avi­a­tion sec­tor; Cen­tral Bank of Nige­ria (CBN) and Se­cu­ri­ties and Ex­change Com­mis­sion (SEC) for the fi­nan­cial and in­vest­ment ser­vices sec­tor; and the Na­tional Agency for Food and Drug Ad­min­is­tra­tion (NAFDAC) for food and drinks, drugs and cos­met­ics. The reg­u­la­tor’s ef­forts are to en­sure that guide­lines de­signed to pro­tect con­sumer in­ter­ests are de­vel­oped and com­plied with.

The CPC has recorded some mea­sure of suc­cess in these sec­tors, in­clud­ing the NCAA’s Bill of Rights, which cov­ers ba­sic con­sumer rights in avi­a­tion such as en­ti­tle­ments af­ter de­layed or can­celled flights. It re­cently launched the Pa­tients Bill of Rights in con­junc­tion with the Fed­eral Min­istry of Health. In the telecom­mu­ni­ca­tions sec­tor, the Coun­cil got the NCC to in­tro­duce and en­force num­ber porta­bil­ity that al­lows con­sumers ex­er­cise their choice of ser­vice providers with­out los­ing their tele­phone num­bers.

Tele­com ser­vice providers are also com­pelled to dis­close the cost of each call or text im­me­di­ately af­ter. Through CPC’s ad­vo­cacy, NERC re­moved the fixed charge known as meter main­te­nance fee in power bills and banks are now man­dated to set up con­sumer com­plaints desks for the speedy res­o­lu­tion of com­plaints.

How­ever, in or­der to fully ac­tu­al­ize its man­date, par­tic­u­larly as it re­lates to goods or ser­vices that are not es­sen­tial in na­ture or could be de­scribed as util­i­ties and thereby reg­u­lated like the in­dus­tries men­tioned above, there has to be leg­isla­tive ac­tion, and this is the push the CPC must make. The cur­rent CPC Act was pro­mul­gated in 1992 as a De­cree un­der Gen­eral Ibrahim Ba­bangida’s ad­min­is­tra­tion. An at­tempt to amend the Act by the 7th Na­tional Assem­bly failed as the bill was in­tro­duced but never passed. The 8th Na­tional Assem­bly has had bet­ter suc­cess with the pas­sage of the Fed­eral Com­pe­ti­tion and Con­sumer Pro­tec­tion Bill in De­cem­ber 2017. The bill is cur­rently await­ing pres­i­den­tial as­sent. The bill es­tab­lishes the Fed­eral Com­pe­ti­tion and Con­sumer Pro­tec­tion Com­mis­sion (which will re­place the CPC) as well as the Com­pe­ti­tion and Con­sumer Pro­tec­tion Tri­bunal.

The bill, which if passed, will re­place the cur­rent CPC Act, pro­vides a com­pre­hen­sive le­gal regime for the reg­u­la­tion of com­pe­ti­tion and con­sumer rights in

CPC should fo­cus on the very ger­mane com­plaints about the qual­ity of ser­vices ren­dered, which have been paid for. The reg­u­la­tor ought not to en­mesh it­self in pric­ing method­ol­ogy of nonessen­tial ser­vices.

Nige­ria. Part XV of the bill lists an ar­ray of con­sumer rights while Part XVI pro­vides for the du­ties of man­u­fac­tur­ers, im­porters, dis­trib­u­tors and sup­pli­ers of goods and ser­vices. The Fed­eral Com­pe­ti­tion and Con­sumer Pro­tec­tion Com­mis­sion cre­ated un­der the bill has been pro­posed to have greater pow­ers and is given broad dis­cre­tion in car­ry­ing out its du­ties. It would also be em­pow­ered to make reg­u­la­tions pro­hibit­ing a wide range of ac­tiv­i­ties, in­clud­ing an­ti­com­pet­i­tive agree­ments; as well as mis­lead­ing, un­fair, de­cep­tive or un­con­scionable mar­ket­ing, trad­ing and busi­ness ac­tiv­i­ties. It is also pro­posed to be em­pow­ered to au­tho­rize (with or with­out con­di­tions), pro­hibit or ap­prove merg­ers and to make reg­u­la­tions re­lat­ing to the charg­ing and col­lec­tion of fees, levies, fines and the im­po­si­tion of ad­min­is­tra­tive penal­ties.

With­out the pas­sage of this bill into law, the CPC is over­reach­ing in its at­tempt to reg­u­late the pric­ing model or tem­plate of Mul­ti­Choice ser­vices. Even with the law in place, there are bound to be ar­gu­ments as to the ap­pli­ca­bil­ity of the reg­u­la­tion in re­spect of pric­ing the type of com­mod­ity or ser­vice Mul­ti­Choice ren­ders.

There is cur­rently no gen­eral con­sumer pro­tec­tion leg­is­la­tion that al­lows for the fix­ing of prices for goods and ser­vices. Pric­ing reg­u­la­tions that ex­ist are strictly sec­tor-spe­cific. For ex­am­ple, NERC reg­u­lates the price of elec­tric­ity and Petroleum Prod­uct Pric­ing Reg­u­la­tory Agency (PPPRA) reg­u­lates the price of petrol. The best way to pro­tect con­sumers of non-es­sen­tial prod­ucts or ser­vices in re­spect of pric­ing and pre­vent in­equal­ity in their bar­gain­ing power is to en­sure ad­e­quate com­pe­ti­tion in the mar­ket and pre­vent re­stric­tive agree­ments (where in­dus­try op­er­a­tors agree to fix prices).

Though it smacks of bad cor­po­rate gov­er­nance for Mul­ti­Choice to in­crease prices in the midst of on­go­ing in­ves­ti­ga­tions by the con­sumer pro­tec­tion agency, it has not bro­ken any ex­ist­ing law or any agree­ment for that mat­ter. By the very ad­mis­sion of CPC, the Mu­tual Joint Con­sent Or­der had not been ex­e­cuted.

I agree that it is quite easy for an or­gan­i­sa­tion like Mul­ti­Choice to cre­ate un­equal bar­gain­ing power, which would re­quire con­sumer pro­tec­tion. But one must first prove that the fail­ure of an­other reg­is­tered Nige­rian com­pany to op­er­ate prof­itably at Mul­ti­Choice’s level is as a re­sult of the com­pany’s con­duct in at­tempt­ing to dis­tort the mar­ket.

It must be borne in mind that with the tech­no­log­i­cal ad­vance­ment that has re­duced the world to a global vil­lage, Mul­ti­Choice does have some com­pe­ti­tion in Nige­ria, which are out of the con­trol or ju­ris­dic­tion of CPC or in­deed any other Nige­rian reg­u­la­tory agency. The pay-TV gi­ant is fac­ing in­creas­ing com­pe­ti­tion from video-on-de­mand (VOD) ser­vices such as Net­flix, Ama­zon Prime, etc. With the en­tire world as their mar­ket and no op­er­at­ing costs in ma­jor­ity of the coun­tries where their ser­vices are used, it would not be easy for a reg­is­tered Nige­rian en­tity to com­pete favourably with global VOD ser­vices. The sit­u­a­tion would be even more dif­fi­cult for the Nige­rian en­tity un­der strin­gent reg­u­la­tory con­trol of its pric­ing method­ol­ogy.

CPC should fo­cus on the very ger­mane com­plaints about the qual­ity of ser­vices ren­dered, which have been paid for. The reg­u­la­tor ought not to en­mesh it­self in pric­ing method­ol­ogy of non-es­sen­tial ser­vices. It should also pre­vail on Pres­i­dent Muham­madu Buhari to sign the Fed­eral Com­pe­ti­tion and Con­sumer Pro­tec­tion Bill into law be­fore the end of his ad­min­is­tra­tion.

A Fi­nan­cial Nige­ria colum­nist, Fun­mi­layo Odude is a La­gos-based le­gal prac­ti­tioner, and a pub­lic af­fairs an­a­lyst.

Dur­ban of­fice of South Africa’s Mul­ti­Choice

Mul­ti­Choice, Con­sumer Pro­tec­tion and Free En­ter­prise

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