Friday, December 13, 2019
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Press Releases

APPROVAL OF THE MERGER BETWEEN FDH FINANCIAL HOLDINGS AND MALAWI SAVINGS BANK (MSB)

At the 44th meeting of the Board of Commissioners held on 12th February 2016, the Competition and Fair Trading Commission considered an investigation report on the likely effect of the acquisition of MSB Limited by FDH Financial Holdings Limited.

After thoroughly considering the report and the submissions by the parties, the Commission found that the transaction may not likely result in substantial lessening of competition in the banking and foreign exchange trading markets. This finding was based on the following factors:

  1. The increase in market concentration resulting from the transaction is within the safe harbour set in the Commission's Guidelines for Merger Assessment;
  2. The banking industry is dominated by two big banks which have a market share of about 25% each. The rest of the banks have individual market shares of less than 10%. The merged entity between FDH Bank and MSB would have a market share of about 15%, making it the third largest bank in Malawi. This will likely ease the dominance by the two big banks which would be a positive competitive attribute.
  3. MSB was facing statutory closure for failure to meet Basel II requirements.  The Malawi Government, as a sole shareholder in MSB was not prepared to recapitalize the Bank.  Therefore, the transaction has saved MSB from statutory closure which would have negatively affected the stability of the banking industry and resulted in a massive loss of jobs.

The Commission's investigations also showed that the transaction may result in some job losses. Further, there were concerns that the transaction may result in the closure of some MSB branches particularly those in rural areas which are key to fostering financial inclusion in Malawi.

In light of these findings, the Competition and Fair Trading Commission resolved to approve the transaction subject to the parties complying with the following undertakings:

  1. The parties will not abuse the increase in market power that the merged bank will acquire as a result of the merger;
  2. In line with the sales purchase agreement, the parties maintain the existing MSB staff at the same or improved terms and condition of service and should there be need for retrenchment, all redundancy and termination costs shall be paid accordingly; and
  3. Maintain all existing branches of MSB and FDH Bank.

Upon the parties agreeing to these undertakings, the Commission will sign a Memorandum of Undertaking with the parties to ensure that they are complied with.  

CHARLOTTE WEZI MALONDA

EXECUTIVE DIRECTOR

Market Inspection on the supply of Maize

In pursuit of its mandate of protecting consumers from unfair trading practices, the Competition and Fair Trading Commission has been undertaking inspections to maize selling points in some districts.

During the inspections, the Commission visited privately owned and ADMARC warehouses as part of a monitoring exercise for the availability and accessibility of maize to consumers. Over the past two days, our inspectors have visited maize selling points and warehouses in Lilongwe, Mchinji and Dowa districts.

Through the inspections, we have noted with concern that some traders are engaged in conducts that clearly violate the Competition and Fair Trading Act and the Consumer Protection Act.

Some of the unfair trading practices that have been reported to us are as follows:

  • Withholding maize supplies or hoarding with the intention of triggering a price increase.  
  • Use of incorrect measures or weights with a view to deceive or mislead consumers.
  • False representation regarding the weight of maize sold to consumers.
  • Unconscionable conduct through charging excessive prices which are exploitative to consumers

In view of these findings, the CFTC would like to warn all maize traders in the country that withholding of goods for speculative purposes is prohibited and constitute a criminal offence under Section 43(1)(g) the Competition and Fair Trading Act (CFTA) and Section 6 of the Consumer Protection Act (CPA).

It is also an offence for traders to use incorrect measures or weights or any other forms of misrepresentations. Likewise, Section 43 of the CFTA prohibits traders from charging excessive prices which are exploitative to consumers.

The CFTC would, therefore, like to warn all maize traders in the country to cease and desist from engaging in the above conducts. Any trader found engaging in these practices commits an offence which attracts a fine of MK500,000.00 or an amount equivalent to the financial gains of the offence, whichever is higher, and five year imprisonment upon conviction.

CHARLOTTE WEZI MALONDA

EXECUTIVE DIRECTOR

APPOINTMENT OF COMMISSIONERS FOR THE COMPETITION AND FAIR TRADING COMMISSION

Pursuant to Section 5 of the Competition and Fair Trading Act, it has pleased the President of the Republic of Malawi, His Excellency Professor Arthur Peter Mutharika, to appoint the following eminent Malawians as Commissioners for the Competition and Fair Trading Commission:-

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H.E. PRESIDENT PROF. ARTHUR PETER MUTHARIKA APPROVES REFORMS OF THE COMPETITION AND CONSUMER PROTECTION REGIME IN MALAWI

As part of the ongoing public service reforms, the Competition and Fair Trading Commission (CFTC) wishes to inform the general public that the State President of the Republic of Malawi, His Excellency Prof. Arthur Peter Mutharika has approved reforms for the competition and consumer protection regime in Malawi.

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Fair Competition Commission(FCC) of Tanzania to visit Malawi on a Study Tour

The Competition and Fair Trading Commission (CFTC), a government agency with a mandate of regulating, monitoring, controlling and preventing acts or behaviour which are likely to adversely affect competition and consumer welfare in Malawi, will from 12th to 18th April host a delegation from the Fair Competition Commission (FCC) of Tanzania which will be on a study tour in Malawi.

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Public Notice of Investigation against Aqua Pure Bottled Water

Following increased consumer complaints, the Competition and Fair Trading Commission and the Ministry of Industry and Trade requested the Malawi Bureau of Standards (MBS) to conduct laboratory tests for Aqua Pure bottled water to determine its conformity with prescribed consumer safety standards, in particular MS 699- Mandatory Malawi Standard on Bottled Water other than Mineral Water Specification.

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Invitation to Business Clinics on Competition and Fair Trading Law

One of the functions of the Competition and Fair Trading Commission (CFTC) is to provide persons engaged in business with information regarding their rights and obligations under the Competition and Fair Trading Act and Consumer Protection Act.

In line with this, the CFTC has organised a series of Business Clinics in all the major trading districts in Malawi targeting private sector enterprises, trade associations, statutory regulatory agencies and civil society. During the Business Clinics, officials from the CFTC will sensitise stakeholders in specific sectors of the economy on their rights and obligations.

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Invitation to Public Hearing

Pursuant to Section 10(2) and Section 11 of the Competition and Fair Trading Act, the Competition and Fair Trading Commission will hold a Public Hearing on Friday 30th January, 2015 at Game Haven Lodge in Bvumbwe from 0930 hrs.

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