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MultiChoice, consumer protection and free enterprise 17 Sep 2018

The fracas between the Consumer Protection Council (CPC) and MultiChoice Nigeria Limited, the country’s biggest provider of pay-television service, led to the grant of an interim order by the Federal High Court, Abuja on the 20th of August, 2018. The injunction, which restrained MultiChoice from increasing its subscription rates, has evoked strong debates on free enterprise and consumer protection.

Indeed, this is not the first row between CPC and the satellite TV giant. During the course of an investigation the CPC had begun following complaints that had been levelled against MultiChoice in 2015, the regulator had stormed the Lagos offices of the company and disrupted its operations. This action by CPC was attributed to an apparent failure by MultiChoice to fully cooperate and participate in the investigations.

The investigations ended with the issuance of some orders to the company by CPC on 16th of February, 2016. The orders included the suspension of services when consumers are away; the release of free-to-air channels when a subscription has expired; compensation of consumers for lost viewing times; introduction of local toll-free lines for complaints by consumers; and the reasonable and equitable spread of popular sports channels.

According to a press release signed by the Director General of the CPC, Babatunde Irukera, on the 21st of August, 2018, another investigation into MultiChoice had commenced on the 7th of November, 2017 after receipt of numerous complaints such as failure to receive signal after payment of subscription fee, service disconnection prior to the end of billing cycle, non-activation of free-to-air channels, arbitrary charges, and confusing billing. Other complaints included restrictions imposed on some channels subscribed to, poor picture and signal quality with excessive and uncompensated downtime, failure to adopt Pay-as-You-Go billing and disparate charges and treatment of consumers in Nigeria compared to other countries where MultiChoice operates.

Furthermore, the House of Representatives, due to complaints received by constituents, also resolved that the CPC needed to intervene to address the complaints. An investigation was to be carried out to evaluate the company’s compliance with the previous orders in 2016 and address the new complaints.

According to Irukera, during the course of the investigations, the CPC and MultiChoice agreed to and adopted a proposed Mutual Joint Consent (MJC) order. Part of the terms of this order is that MultiChoice will not change, revise or modify any material term or condition of service for a period of 24 months during which the company would be under the Council’s supervision. While awaiting the execution of this proposed MJC order, the pay-TV provider announced an increase in prices.

Perceiving this move as an act of bad faith, particularly in view of the subsisting MJC Order and as an act calculated to undermine the Council, its investigation and general regulatory process, the CPC approached the court and applied for the interim order, which was granted.

The bone of contention is whether the CPC, in the protection of consumer rights, can regulate pricing of goods and services or impose a particular pricing methodology on providers of goods and services. The CPC has denied doing so in its press release where it states: “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 recognises and respects the fidelity in the operation of 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, the regulator’s conclusion in the press release implies otherwise, particularly where it states that “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.”

The CPC’s functions and powers are stated clearly in its enabling law – the Consumer Protection Council Act (Sections 2 and 3). It was essentially created to promote and protect the interest of consumers over all products and services. Its mandate is basically four-fold: to provide speedy redress to consumer complaints through negotiations, mediations and conciliations; to eliminate hazardous and substandard goods from the market; to educate consumers and champion consumer interests at appropriate forums and to provide redress to obnoxious practices or unscrupulous exploitation of consumers.

The CPC has done pretty well in its advocacy for consumer rights, especially in light of the non-existence of a law that encapsulates all consumer rights in Nigeria. In carrying out its objectives, it has had to engage sector-specific regulators such as the Nigerian Communications Commission (NCC) for the telecommunica-tions sector; the Nigerian Electricity Regulatory Commission (NERC) for the power sector; Nigerian Civil Aviation Authority (NCAA) for the aviation sector; Central Bank of Nigeria (CBN) and Securities and Exchange Commission (SEC) for the financial and investment services sector; and the National Agency for Food and Drug Administration (NAFDAC) for food and drinks, drugs and cosmetics. The regulator’s efforts are to ensure that guidelines designed to protect consumer interests are developed and complied with.

The CPC has recorded some measure of success in these sectors, including the NCAA’s Bill of Rights, which covers basic consumer rights in aviation such as entitlements after delayed or cancelled flights. It recently launched the Patients Bill of Rights in conjunction with the Federal Ministry of Health. In the telecommunica-tions sector, the Council got the NCC to introduce and enforce number portability that allows consumers exercise their choice of service providers without losing their telephone numbers.

Telecom service providers are also compelled to disclose the cost of each call or text immediately after. Through CPC’s advocacy, NERC removed the fixed charge known as meter maintenance fee in power bills and banks are now mandated to set up consumer complaints desks for the speedy resolution of complaints.

However, in order to fully actualize its mandate, particularly as it relates to goods or services that are not essential in nature or could be described as utilities and thereby regulated like the industries mentioned above, there has to be legislative action, and this is the push the CPC must make. The current CPC Act was promulgated in 1992 as a Decree under General Ibrahim Babangida’s administration. An attempt to amend the Act by the 7th National Assembly failed as the bill was introduced but never passed. The 8th National Assembly has had better success with the passage of the Federal Competition and Consumer Protection Bill in December 2017. The bill is currently awaiting presidential assent. The bill establishes the Federal Competition and Consumer Protection Commission (which will replace the CPC) as well as the Competition and Consumer Protection Tribunal.

The bill, which if passed, will replace the current CPC Act, provides a comprehensive legal regime for the regulation of competition and consumer rights in Nigeria. Part XV of the bill lists an array of consumer rights while Part XVI provides for the duties of manufacturers, importers, distributors and suppliers of goods and services. The Federal Competition and Consumer Protection Commission created under the bill has been proposed to have greater powers and is given broad discretion in carrying out its duties. It would also be empowered to make regulations prohibiting a wide range of activities, including anti-competitive agreements; as well as misleading, unfair, deceptive or unconscionable marketing, trading and business activities. It is also proposed to be empowered to authorize (with or without conditions), prohibit or approve mergers and to make regulations relating to the charging and collection of fees, levies, fines and the imposition of administrative penalties.

Without the passage of this bill into law, the CPC is overreaching in its attempt to regulate the pricing model or template of MultiChoice services. Even with the law in place, there are bound to be arguments as to the applicability of the regulation in respect of pricing the type of commodity or service MultiChoice renders.

There is currently no general consumer protection legislation that allows for the fixing of prices for goods and services. Pricing regulations that exist are strictly sector-specific. For example, NERC regulates the price of electricity and Petroleum Product Pricing Regulatory Agency (PPPRA) regulates the price of petrol. The best way to protect consumers of non-essential products or services in respect of pricing and prevent inequality in their bargaining power is to ensure adequate competition in the market and prevent restrictive agreements (where industry operators agree to fix prices).

Though it smacks of bad corporate governance for MultiChoice to increase prices in the midst of ongoing investigations by the consumer protection agency, it has not broken any existing law or any agreement for that matter. By the very admission of CPC, the Mutual Joint Consent Order had not been executed.

I agree that it is quite easy for an organisation like MultiChoice to create unequal bargaining power, which would require consumer protection. But one must first prove that the failure of another registered Nigerian company to operate profitably at MultiChoice’s level is as a result of the company’s conduct in attempting to distort the market.

It must be borne in mind that with the technological advancement that has reduced the world to a global village, MultiChoice does have some competition in Nigeria, which are out of the control or jurisdiction of CPC or indeed any other Nigerian regulatory agency. The pay-TV giant is facing increasing competition from video-on-demand (VOD) services such as Netflix, Amazon Prime, etc. With the entire world as their market and no operating costs in majority of the countries where their services are used, it would not be easy for a registered Nigerian entity to compete favourably with global VOD services. The situation would be even more difficult for the Nigerian entity under stringent regulatory control of its pricing methodology.

CPC should focus on the very germane complaints about the quality of services rendered, which have been paid for. The regulator ought not to enmesh itself in pricing methodology of non-essential services. It should also prevail on President Muhammadu Buhari to sign the Federal Competition and Consumer Protection Bill into law before the end of his administration.