On 10th June, 2013, The Competition and Fair Trading Commission (CFTC) ordered Airtel Malawi and Telekom Networks Malawi Limited (TNM) to notify the Distribution Arrangement the companies had with their respective distributors
In particular, the Commission through its investigations came across information that Airtel Malawi and TNM had appointed exclusive distributors for airtime and other products and services offered by the companies. The distributors were demarcated into zones in which they had to operate exclusively. The concern of the Commission was that the appointment of distributors for specific geographical zones was restraining competition in the distribution of airtime and other products and services in the designated zones.
The arrangement contravened provisions of the Act, specifically, Section 32(2), which refrains businesses from, among other things, imposing restrictions on arrangements for distribution of goods and services as well as on resale price maintenance. The Commission was mindful that the practice was not an outright violation of the Act, however, the companies were supposed to justify the agreements and seek authorisation of the Commission according to section 44 of the Competition and Fair Trading Act.
Following submission of the notification by both Airtel Malawi and TNM, the Commission examined the Arrangements and established that the dealing arrangements had advantages which outweighed the disadvantages.
The Commission authorised the arrangements that both companies had with their respective appointed distributors subject to amendment of provisions relating to imposition of restrictions on distribution of products for competing networks. Following the authorisation, TNM complied, but Airtel sought to challenge the decision of the Commission in a court of law.