Press Statement from the Consumer Protection Council
PURSUANT TO SECTIONS 2(i), 10 and 16, CONSUMER PROTECTION COUNCIL ACT
Federal Republic of Nigeria v Multichoice Nigeria Limited; FHC/ABJ/CS/894
Court grants Interim Order Prohibiting Increase in Dstv or GOtv Subscription Rates Pending Further Hearing and Order of Court.
August 21st, 2018: On November 7, 2017, the Consumer Protection Council (Council) commenced a broad investigation with respect to Multichoice Nigeria Limited (operators of DStv & GOtv). This investigation was not the first regulatory intervention in Multichoice operations. Specifically, on February 16, 2016, the Council concluded a previous investigation and issued certain orders.
However, despite the previous investigation and orders, consumer complaints did not abate. As a matter of fact, complaints increased in number and scope. Specifically, many customer care issues that were subject of the previous investigation and orders, appeared to become more incessant. Some are: failure to receive signal after subscription paid; subscription disconnection prior to end of billing cycle with no credit applied for paid time lost; lack of clarity in terms and conditions; non-activation of free to air channel except when a consumer complains; confusing toll-free customer care telephone channels; arbitrary charges; confusing billing; block on some channels subscribed; poor picture or signal quality with excessive and un-compensated downtime; during both inclement and clear weather conditions; failure to adopt “Pay-As-You-Go” billing model; lack of responsiveness; and others. A significant number of complaints characterized Multichoice’s cost, billing and attitude as exploitative and obnoxious, including alleging disparities and disparate treatment in cost and treatment of consumers in other countries where Multichoice operates.
In addition, the House of Representatives of the National Assembly, on account of incessant complaints from constituents, conducted a hearing, and resolved that the Council intervene to address the myriad and persistent complaints, including, and identifying with specificity the question of arbitrary charges and disparate treatment of consumers in Nigeria compared with other locations, as well as the question of whether Multichoice was complicit in suppressing competition in Nigeria.
Section 2(i) of the Consumer Protection Council Act (CPCA) mandates the Council to “provide redress to obnoxious practices or unscrupulous exploitation of consumers”. The Council, pursuant to its mandate, and statutorily available regulatory tools therefore opened its renewed investigation. The purpose of the renewed investigation was to evaluate compliance with the Council’s previous orders, and to address new complaints based on a combination of persistent complaints to the Council, and the resolution of the House of Representatives.
The investigation, or indeed the Council, did not intend to regulate price, or in any way interfere with the commercial interface between Multichoice and its customers in fixing price. Essentially, the Council recognizes and respects the fidelity in the operation of free market forces in arriving at prices for goods or services. The Council understands and appreciates that price is an acceptable determination of transparent and undistorted market operations. However, it is the law, that operators can by conduct, distort the market and, or otherwise compromise the integrity or transparency of the market, thereby questioning the reliability of the pricing methodology or mechanism. Although these principles are better articulated in the context of a Competition or Antitrust legislation and regime, which Nigeria does not have, they are consumer protection principles that are generally express or sometimes derived from existing consumer protection legislation. In Nigeria, Section 2(i) CPCA expressly captures this.
In any inquiry under the CPCA, the question must be whether any entity or individual has engaged in conduct that constitutes an “obnoxious practice”, or “unscrupulous exploitation”. If any conduct is declared to be these, and such conduct has sufficiently distorted the market and redounded to the benefit of an entity or person at the expense of consumers, the objective, and or outcome of such conduct, is necessarily suspect and implicated under law whether it is price, market share, appearance, name or other features of a commodity or service. An Inquiry in this respect does not question whether a price is acceptable or excessive. It simply really examines conduct.
The Council in addressing the entire scope of complaints and House of Representatives resolution, proceeded in the investigation. Multichoice initially adopted a sensible industry approach to regulatory oversight, which was to preserve regulatory and company resources by making admissions of its own in certain areas and welcoming additional regulatory initiatives to improve services and customer experience over a period of time, and supervision.
Over a period of time, during which mutual concerns and reservations were addressed, the Council and MultiChoice agreed and adopted a Proposed Mutual Joint Consent Order. The terms and obligations included an unopposed and undisputed requirement and understanding that Multichoice will not change, revise or modify any material term or conditions of service(s) for a period of 24 months. Multichoice never expressed any concerns or dissatisfaction with this clause of the Consent Order that required Multichoice to maintain status quo on its Terms and Conditions (which naturally includes pricing) for the 24-month period during which the company would have been under the Council’s supervision, to ensure that all necessary corrective measures were adequately implemented, and that consumers eventually get expected value for their money.
Having agreed to the negotiated consent order, parties were planning on a date for the execution of same. There were repeated postponements of the execution date in part at the instance, and for the convenience of Multichoice executives. However, while waiting for, and when execution was imminent, Multichoice surreptitiously, without consultation, notice, courtesy information or deference to the Council, and in violation of the spirit of collaboration and the finalized draft Proposed Mutual Joint Consent Order, by text messages to consumers, announced an increase in prices which materially changed a term of its service.
The Council conveyed its strong disapproval to Multichoice’s conduct as it amounted to bad faith, undermined both the Council and its regulatory process. Multichoice’s failure to reconsider its decision, or honor its expressed and negotiated commitment made it impracticable in the absence of the judicial process to sufficiently protect consumers and accomplish the vital provisions of the Proposed Mutual Joint Consent Order.
As such, it became imperative for the Council to seek judicial intervention. The Federal Republic of Nigeria filed an action under prevailing law to restrain Multichoice from perverting the regulatory process and the course of the law. The nature of the action, and order granted on August 20, 2018 by Justice Dimgba in Case No. FHC/ABJ/CS/894 is to prevent Multichoice from executing and perpetrating a modification of a material term of its contract with its customers, while preserving the status quo so that the Council is allowed to complete its investigations into possible unscrupulous, obnoxious and exploitative conduct by the company.
Nothing in the entire case is about setting or controlling the price or bargain that Multichoice and its customers find reasonable and optimal in their commercial and social contract.
With the Interim Injunctive Order of Justice Nnamdi Dimgba, it is a violation of the order of a court for Multichoice to require consumers to pay, or to receive any new rate for their services from consumers. For clarity, the current, valid and prevailing rate for DStv and GOtv services are the rates that were effective as at July 31st, 2018.