Airtel risks prosecution, granted K2bn refund

The High Court of Malawi Civil Division has granted Airtel Malawi plc a K2 billion fine refund that the Competition and Fair Trading Commission (CFTC) slapped on the mobile phone operator.

But the court has ordered the Director of Public Prosecutions (DPP) to review evidence for possible criminal charges against the telecommunications company.

In his ruling delivered in Blantyre yesterday, High Court of Malawi Judge Allan Muhome  only agreed with Airtel lawyers Ralph Mhone and Madalitso Mmeta on one of the eight  objections, which was that it was outside the mandate of the CFTC to impose a fine on Airtel.

Airtel challenged in court the CFTC determination that found the company guilty of unconscionable conduct for changing terms of a bonus scheme styled Khete-Khete loyalty programme.

The commission ordered the company to pay a K2 billion fine, saying it gained advantage over its customers when it changed the scheme from automatic crediting of the bonuses to one where customers were required to redeem the bonuses on a set date.

Muhome ordered CFTC to refund the K2 113 099 660 fine, but dismissed the rest of the grounds of appeal and ordered the DPP to review evidence before the court and consider placing criminal charges on Airtel within 90 days.

The judge held that there was a valid contract between Airtel and its qualifying clients who subscribed to the network’s services, including entitlement to the bonus scheme.

Muhome said: “CFTC recorded an admission by Airtel that the bonus was not a gift, but was earned. This shows that Airtel was aware of the contract and cannot legitimately deny the same on appeal.

“The court finds that Airtel, having lured its customers’ base into the bonus scheme, had deliberately caused its customers to suffer an inconvenience by unilaterally changing its terms.

“The financial loss arises where a subscriber for one reason or another was unable to redeem the bonus within the prescribed time, coming from a position where the bonus was being automatically credited to the user account.

“All in all, by changing the terms of the scheme, Airtel gained advantage over its customers… Our firm view is that the bonus is a liability on the part of Airtel and by forfeiting the same, Airtel gained unfair advantage over its customers, which is unconscionable.”

During hearing, the court learnt that on August 27 2021, CFTC issued the determination against Airtel ordering it to pay the fine and to cease and desist from engaging in unconscionable conduct, which is proscribed under section 43(1)(g) of the CFTC.

Around September 2020, the court further learnt, the CFTC launched an investigation following a number of consumer complaints against Airtel under the bonus scheme.

Under the scheme, customers who used a minimum of K1 000 in the previous month, were given 10 percent bonus of voice minutes on the 14th of the following month.

Previously, Airtel would automatically credit subscriber accounts with monthly bonuses earned in a particular month. This was easily accessible and beneficial to all Airtel qualifying subscribers regardless of network availability on any day.

However, sometime in 2018, Airtel stopped the automatic crediting of subscriber accounts.

Instead, Airtel required customers to apply for the redemption of their bonuses on the 14th of every month.

Consumers who did not redeem their monthly bonuses forfeited.

But during hearing, Airtel denied that the change constituted an unfair and unreasonable conduct contrary to the CFTC. They submitted that the bonus was just a mere gift as it was a token of appreciation given to customers and that it was not based on any contractual arrangement or an application of law.

But CFTC, through its lawyers Apoche Itimu and Patrick Mpaka, felt Airtel, by changing terms, violated section 43(1)(g) of the CFTC.

The commission assessedthat Airtel made a financial gain of K2 113 099 660.

The court ordered each party to pay their own costs for the case.