MTN ordered to pay EzeeMoney sh2.3b over sabotage

By Betty Amamukirori

THE Commercial Court judge, Henry Peter Adonyo, has ordered telecommunications firm MTN Uganda to pay over sh2.3b to EzeeMoney as damages for sabotaging the latter’s mobile money business.

The judge made the order following a suit filed by EzeeMoney accusing MTN of sabotaging its mobile money business and breaching the duties imposed on it by sections 53 (1) and 56 of the Communications Act.

The sections bar communication service providers from engaging in activities which restrict and distort competition in regards to communication services.

According to the suit filed in 2013, while starting operations in Uganda, EzeeMoney signed up MTN Uganda to provide the former (EzeeMoney) with telephone and data services it needed to carry out its businesses.

It contracted the services of a local telephone service aggregator to ease its interface with all licensed telecom service providers. EzeeMoney also recruited mobile money agents across Uganda, giving them its signage and GSM enabled point of sale (POS) machines to serve its customers.

“However, MTN for fear of competition to its mobile money product made a U-turn and started sabotaging EzeeMoney business. It started by denying EzeeMoney the ability to connect an aggregator called YO! Uganda Limited (YUL) to its network,” the judgment reads in part.

“It (MTN) denied the use of EzeeMoney short code on its network, cut off all of EzeeMoney’s call centre lines, withdrew over 300 pre-paid data simcards that were being used in EzeeMoney’s GSM enabled POS machines.”

MTN also intimidated all EzeeMoney mobile money agents into signing exclusivity agreements that bar them from providing any services to its competitors and handling or selling products of other competitors.

In its defense during the hearing, MTN contended that EzeeMoney being a non-licensed communications service provider could not have suffered the breaches alleged in its hands within the meanings of sections 53 (1) and 56 of the communications Act. MTN asked court to dismiss the suit with costs in its favour.

In his ruling on November 6, Adonyo declared that the exclusivity agreement between MTN and its agents infringe section 53 (1) (b) of the Communications Act and therefore null and void.

He said that the Act prohibits parties from entering into agreements which unfairly prevent, restrict or distort competition, adding that the communications regulation of 2005 also prohibits anti-competitive agreements and exclusive dealings.

“The agreement itself confirms that the defendant (MTN) acted outside the law, for it appears it used such coercive methods to deny fair competition to other parties involved in the business,” Adonyo said.

The judge dismissed MTN’s defense saying that law provides that any entity or person can be affected by the prohibited behavior of anti-competition.

He said, “Its (MTN’s) refusal to allow EzeeMoney use its platform is an act which is prohibited within the meaning of section 53 of the communications Act.”

He therefore, ordered MTN to pay sh800m and sh1.5b with a six per cent interest at court rate, being general and punitive damages for loss of business arising from its anti-competition actions, to EzeeMoney.

“This is to act as a deterrent to the defendant and other entities with similar anti-competition conducts to stand warned that the court will not tolerate illegal conduct and high handedness in the conduct of business,” he said.

Adonyo issued a permanent injunction against MTN prohibiting it from acting unlawfully against EzeeMoney.