Econet accused of unfair business practices


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ZIMBABWE – The Competitions and Tariffs and Commission has started gathering information, which may result in a fully fledged investigation on alleged uncompetitive behaviour by Econet Wireless.

CTC has arranged a meeting with Econet officials to ascertain the facts around the allegations for them to develop a background position of the challenges they are being accused of by various business entities.

The commission will engage the Reserve Bank of Zimbabwe and the Postal and Telecommunications Regulatory Authority of Zimbabwe as regulators of banks and mobile network operators to better understand the regulatory issues around mobile money business. “We are making preliminary investigations on allegations levelled against Econet Wireless of its uncompetitive behaviour on the telecommunications side.

“The commission is still establishing facts and doing interviews with complainants who have levelled allegations against Econet,” a source who could not be named for professional reasons said. Various entities have raised complaints against Econet, alleging that the mobile network is involved in uncompetitive behaviour and monopolistic practices.

In the forefront has been the banking sector, which has raised issues with Econet with regards to the opening up of mobile banking streams and a directive that all suppliers to Econet have to have an account with Steward Bank.

Econet clashed with banks after it agreed in February 2014 to connect banks onto the USSD platform for other value added services but ended up creating a separate USSD to EcoCash for banks in particular for mobile money transfer services.

The implications for setting up a separate USSD for banks were that Econet would be able to charge banks a separate tariff which is much higher than the prevailing SMS charges and also much higher than what Econet is charging those who are hooked onto EcoCash.

This is viewed as an unfair trade practice as it is designed to make banks’ mobile money transfer services uncompetitive in comparison to Econet’s own product. The tariff is also significantly higher than what other mobile network providers are charging for a similar service.

Banks feel strongly that being put on a separate USSD platform to EcoCash would enable Econet to disconnect banks without inconveniencing its clients on the EcoCash platform. “Econet can throttle or stifle that service in violation of any service level agreements that may be in place because of its immense power,” the source said.

Banks are of the opinion that the proposed charge of $0,30 was too high given that an SMS was currently costing less than $0,05.
Banks felt the charge was too high and was meant to be expensive for any product that the banks would want to provide. Meanwhile, the High Court will soon make a determination on allegations levelled against Innscor Africa Limited by the CTC.

The allegations stem from Innscor’s acquisition of a controlling stake in the country’s largest miller, National Foods Limited.
Innscor increased its shareholding in Natfoods to 49,9 percent from 36 percent between 2003 and 2011.

The company subsequently reduced its shareholding to 37 percent after disposing off 11 percent for $11,7 million — to Tiger Brands of South Africa in 2011.

CTC assistant director (Competition) Mr Benjamin Chinhengo confirmed the development. “The case is now under the jurisdiction of the High Court and a ruling is expected anytime soon then we can furnish you with more details,” said Mr Chinhengo.

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