Assent to Federal Competition and Consumer Protection bill sacrosanct on the back of CPC’s legal tussle with MultiChoice Africa

Not too long ago, the news hit the air wave that the Consumer Protection Council (CPC) had sought and was granted an injunction by Justice Nnamdi Dimgba of the Federal High Court, Abuja in suit number FHC/ABJ/CS/894/2018 to restrain the South African pay television company, MultiChoice, its agents, representatives or howsoever described from increasing its DStv and GOtv subscription rate pending the determination of an application before the court.  

MultiChoice is a South African video and internet company founded in 1986. The MultiChoice Group operates under various brands, including DStv, M-Net, SuperSport, GOtv, DStv Digital Media and DStv Media Sales. It is a wholly-owned subsidiary of the Naspers Group.

Prior to the legal tussle between MultiChoice and CPC, Nigeria’s consumer watchdog, the former has developed the habit of tinkering with its subscription rates incessantly and arbitrarily.

In July 2018, MultiChoice raised its rate for its five DStv bouquets: DStv Premium, Compact Plus, Compact, Access and Plus. In specific terms, the subscription rate for DStv Premium was increased from N14,700 to N15,800; Compact Plus package was raised by 7.6 per cent from N9,900 to N10,650 while DStv Compact bouquet rose by 7.9 per cent to N6,800 from its previous value of N6,300.

The situation was not different for DStv’s package of Access and Plus. DStv Access and Plus packages was increased to N2,000 and N1,600, up from N1,900 and N1,500 respectively.

The pay television sub-sector of Nigeria behaves more or less like a monopoly market despite presence of brands like Startimes, Trend TV, MyTV and more recently, TSTV. The market has been dominated by MultiChoice since it made inroad into the country in 1994 and operated as a joint venture between MultiChoice Africa and Adewunmi Ogunsanya, a Nigerian lawyer and businessman.

The exclusivity of pay TV for the rich was broken following the establishment of Startimes in 2010 by the Chinese firm, Startimes Group. At its inception, with just N1,000 charge for monthly subscription, Startimes was able to tap into the huge potential of the lower segment of the market. This singular act did not only revolutionize the Nigerian pay TV ecosystem by breaking the jinx among majority of Nigerians who held the view that pay TV was a luxury, but it also gave rival firms a run for their money.

To remain relevant, MultiChoice which controlled market share sought ways to rise up to the competition Startimes was fuelling.   

In 2011, exactly a year after the emergence of Startimes, MultiChoice launched GOtv, a Digital Terrestrial Television (DTT) service provider. The birth of GOtv was basically MultiChoice’s “tactical response to the cut-throat price strategy of Startimes” at that time. GOtv was to provide a low cost-digital television service, offering the greatest selection of local channels, made in Africa for Africans as well as the best international channel.

With intense marketing and advertising campaigns coupled with the urgency at which many Nigerians were ready to break free from DStv’s high subscription charge, GOtv quickly gained wide acceptance. GOtv had impressive local and world class channels offered in two bouquets, GOtv and GOtv Plus at affordable prices.  

MultiChoice’s donkey years of operation in Nigeria coupled with its diverse content portfolio which range from exclusive rights to popular sports leagues (such as the English Premier League) and its long-running investment in entertainment and movie content, has helped in no small measure to cement its status as the undisputed leader in the pay television space in Nigeria. Importantly, such feat has considerably strengthened its monopolistic power to tamper with subscription prices at will. 

MultiChoice market leadership is predicated on its core conventional marketing strategy: enter the market at rock bottom price, draw enough customers (either as an entrant into a new market or from rivals) to solidify control and when you are sure that you have got them hooked, turn on the heat by raising prices.

TStv came into the space with the ideology of being a wholly Nigerian brand but no sooner had the company commence business when it was tainted with intellectual property theft scandal, dashing hopes of Nigerians to rescue them from the god-like approach of MultiChoice. Unfortunately, TStv, like others that have come before it, couldn’t contest market share with MultiChoice.

While it may be said that the subscription rate for MultiChoice varied packages is one of the lowest in the Africa continent, and that government should not dabble unnecessarily into the operations of the private sector by tinkering with prices, it will equally be important to stress that the onus rest on the government to create a unified and robust regulatory framework for competition to thrive. On this latter case, the government has scored low.  

Analysts have averred that the monopoly power DStv currently enjoys in the country today came about as a result of unfair competitive practices that have prevented new entrants from gaining grounds in the country.

It was on this note the Federal Competition and Consumer Protection Bill, 2016 was proposed: to bridge the regulatory gap and check against any industry or economic sector gravitating towards monopoly in Nigeria.

The bill seeks to enact an act to repeal the Consumer Protection Act, Cap. C25, laws of the Federation of Nigeria, 2004, establish the Federal Competition and Consumer Protection Commission and the Competition and Consumer Protection Tribunal for the development and promotion of fair, efficient and competitive markets in the Nigerian economy, facilitate access by all citizens to safe products, secure the protection of rights for all consumers in Nigeria; and for related matters.

Section 3(1) seeks to substitute the Consumer Protection Council with the Federal Competition and Consumer Protection Commission. Section 17 of the Bill explicitly spelt out the functions and powers of the commission. The Commission will be saddled with executing the traditional role of consumer protection that is being carried out by CPC and also assume an additional role of regulating competition.

Part IX of the bill assessed the abuse of dominant position. According to section 70 (1) (2) of the bill, “an undertaking is considered to be in a dominant position if it is able to act without taking account of the reaction of its customers, consumers or competitors.”

“A dominant position in a relevant market exists where an undertaking enjoys a position of economic strength enabling it to prevent effective competition being maintained on the relevant market and having the power to behave to an appreciable extent independently of its competitors, customers and ultimately consumers.”

Other provisions of the bill include: the control of monopoly where the Commission believe it might exist in relation to production and distribution; regulations of mergers; prohibition of acts of fixing the selling and purchase price of goods and services, collusive tendering, dividing the markets among others.

Prior to the time the bill was initiated, the laws regulating competition in Nigeria have been embedded in various pieces of legislation relating to the regulation of different sectors of the economy. Examples are the Nigeria Communications Act 2003, Investments and Securities Act 2007 amongst others. The competition bill aims to unify and codify Nigerian laws governing competition in the economy.

The Federal Competition and Consumer Protection Bill was passed by the National Assembly in December 2017 and has since being sent to President Muhammadu Buhari for assent in line with the constitutional provisions. Eight months down the line, the president is yet to append his signature to the bill.

The delay in assenting to the bill could not be unconnected to concerns raised by organised private sector of the surreptitious insertion of 0.5 per cent tax on companies to fund the establishment of a planned commission/agency that will undertake responsibilities under the law.

“We urge Mr President, in the interest of this economy and sustainable development of Nigeria, to withhold assent to the Federal Competition and Consumer Protection Bill 2016. The bill should be sent back to the National Assembly for proper procedural compliance,” Larry Ettah, President of Nigeria Employers Consultative Association (NECA) said in a press conference earlier in March.   

Nevertheless, the relevance of a strong, viable competition law becomes necessary given that anti-competition regulations otherwise known as anti-trust laws are weak in the country especially when viewed against the size and complexity of the national economy. This has created the groundwork for monopolies in different sectors of the economy to thrive and the resultant flagrant abuse of consumers’ rights by products’ manufacturers and service providers.

Placing the burden of overseeing the regulatory procedures of competitive behaviours in the market place on a competent, strategic body like the proposed Federal Competition and Consumer Protection Commission will go a long way in checking against the excesses of both indigenous and multinational companies who are playing gods in the marketplace. 

It’s high time the Presidency considers its stance on the matter and assent to the bill for the overall good of the consumers.