The Competition and Consumer Protection Tribunal has fined prominent Pay-TV operator Multichoice Nigeria N150 million for disobeying its order on a case involving subscription price increases for DStv and GOtv packages.
The tribunal, led by Justice Thomas Okosu, also ordered Multichoice to offer Nigerian customers a one-month free subscription.
This ruling follows an interim order issued by the tribunal that restrained Multichoice from implementing a planned price increase pending the resolution of a motion filed by Barrister Festus Onifade. Onifade’s suit, which included the Federal Competition and Consumer Protection Commission (FCCPC) as a party, argued that Multichoice unjustly increased subscription fees without providing the legally required one-month notice to customers.
Tekedia Mini-MBA edition 15 (Sept 9 – Dec 7, 2024) has started registrations; register today for early bird discounts.
Tekedia AI in Business Masterclass opens registrations here.
Join Tekedia Capital Syndicate and invest in Africa’s finest startups here.
According to the suit, Onifade argued that Multichoice Nigeria Ltd violated consumer rights by not giving adequate notice before the May 1, 2024, price hike.
“It is our submission that the 8-day notice issued by Multichoice Nigeria is insufficient in law. A monthly subscriber should be given at least a month.
“Dismiss this application (by Multichoice) for being a waste of time of the court,” Onifade prayed.
Earlier ruling by a tribunal chaired by Saratu Shafii was in Onifade’s favor, issuing an interim injunction to prevent the price increase. However, Multichoice’s lawyer, Moyosore .J. Onibanjo (SAN), subsequently filed a preliminary objection, arguing that the tribunal lacked jurisdiction and cited a previous ruling (CCPT/OP/1/2022) in favor of Multichoice.
Onibanjo contended that the power to regulate prices lies with the President of Nigeria and not the tribunal. However, Onifade maintained that his case was focused on the adequacy of the notice given to consumers, not the price increase itself.
He also asked the Tribunal to direct Multi-choice Nigeria Limited to pay the sum of N1,000,000,000.00 (One Billion Naira only) or any amount the Tribunal deems may fit appropriate in this circumstance for “deliberately disobeying, contravening, and failure to comply with the Interim Order of this Honourable Tribunal granted on the 29th April 2024.”
Therefore, Justice Okosu referred to Section 39(2) of the FCCPC Act, asserting that the tribunal has jurisdiction over all business activities in Nigeria. He dismissed Multichoice’s preliminary objection, affirming that consumers do not need to appeal to the President or the Price Control Board to enforce their rights.
The judge noted that Onifade had appropriately contacted the FCCPC before filing the case.
The tribunal condemned Multichoice for disobeying its interim orders and proceeding with the price increase. As a result, Multichoice was fined N150 million and ordered to provide a one-month free subscription to its customers.
Backstory: Multichoice and Price Adjustments
Multichoice announced new price adjustments for its DStv and GOtv packages on April 24, 2024. The price changes, effective May 1, 2024, resulted in a 25% to 26% increase across its packages.
This development sparked widespread outrage among subscribers, prompting Onifade to file a suit. Onifade argued that the eight-day notice Multichoice provided was insufficient and did not meet the legal requirement of a one-month notice.
Despite the tribunal’s interim order, Multichoice, which has complained about the rising cost of operation – buoyed foreign exchange volatility and fuel subsidies removal, proceeded with the price hike, leading to the recent ruling that found the company in contempt and imposed significant penalties.
Implications of the ruling on Foreign Direct Investment (FDI)
However, this judgment against Multichoice, a major foreign investor in Nigeria’s entertainment industry, has sparked concerns about the country’s investment climate from many quarters. As the Nigerian government actively seeks to attract foreign direct investment (FDI) to spur economic growth, many argue that the ruling sends a troubling signal to potential investors.
The courts had previously intervened in similar cases, ordering Multichoice to halt plans to increase tariffs, or asking the company to reverse a hike. In 2020 the Nigerian House or Representatives asked Multichoice to develop a Pay As You Go or Pay-Per-View subscription plan for consumers, as the South African company sought to increase subscription fees. The move later died naturally after the House, and Nigerian consumers learned that PAYG or PPV comes with a higher cost.
These moves, among others, have alluded to the belief that Multichoice is being targeted because it is a foreign company. Business leaders believe the latest judgment highlights potential unpredictability in Nigeria’s regulatory environment.
According to financial analysts, unexpected penalties and stringent conditions can significantly deter new investments. The perceived regulatory uncertainty may lead investors to reconsider entering the Nigerian market, fearing similar unexpected challenges. They also noted that harsh penalties and ongoing regulatory disputes faced by the company could create a perception of hostility towards foreign businesses.
Economists have earlier warned that the government needs to demonstrate its commitment to fair and predictable regulatory practices. They said reassuring potential investors that their investments will be protected and fairly treated is vital for fostering a conducive investment climate.
Our problems are many, maybe we are problematic people. From Executive to Legislature, from Judiciary to ordinary Nigerians, we all feel entitled. We don’t have many big businesses in a country of this size, yet we haven’t reflected hard on why that is the case. You can fine a company when it breaks a law, but to order a business to service its customers for one month free? We joke a lot here.
We are still not ready to make Nigeria a haven for investors, both local and foreign, but we can keep making excuses and attacking businesses. Until we learn that money goes only where there are less troubles but with greatest rewards. The jokes write themselves, always.