On 14th July, 2020, CFTC received a complaint, through the Ministry of Trade, from Limbe Fabrics Group alleging that D&T Fabrics and Accessories, a fabrics wholesaler of Old Limbe Bus Depot, Limbe, Blantyre, was engaging in predatory conduct by trading as an unlicensed retailer in Limbe and commissioning small scale traders to sell their fabrics to end consumers at wholesale prices in rural areas of Blantyre, Chiradzulu and Zomba.
The alleged conduct appeared to contravene Section 32(1) and 32(2)(a) of the CFTA.
The investigations established that the Respondent is a licensed wholesaler, and has no licence to trade as a retailer.
It was also reported that information sourced from a Zomba-based customer, who was found in the Respondent’s shop in Limbe on the day of the visit, informed the investigators that she was a regular customer for the Respondent, and confirmed that she purchased fabrics from the Respondent at wholesale (50m or more), and not retail.
The Committee noted that supplying fabrics to end consumers at wholesale prices, and without a retailer’s licence, implies that the Respondent is unfairly competing with other fabric retailers at the trading centers. This conduct has potential to prevent, restrict or distort competition since final consumers will prefer to buy at the wholesale price from the Respondent and not the competitors. Eventually, the competitors will exit the market. If indeed the trend continues in other rural areas of Blantyre, Chiradzulu, Mwanza and Zomba as alleged, the alleged conduct will have substantial negative impact on supply of fabrics in the southern region of Malawi in the long run.
The Commission deliberated over the case and resolved as follows:
- The Respondent should pay a fine of Five Hundred Thousand Malawi Kwacha (MK500,000.00) for engaging in predatory conduct;
- The Respondent should apply for exclusive dealing arrangement with the Commission if they wish to have distributors in the rural trading centers.