It seems when it rains for MTN Group, it pours. This is as a commercial court in Uganda has ordered the telecoms giant’s subsidiaries – MTN Uganda to pay the sum of Shs 2.3 billion (about $662,000) in damages to EzeeMoney Limited for sabotaging its business.
Justice Henry Peter Adonyo also ordered the company on the 6th of this month to stop acting in an unlawful and anti-competitive manner, which denies other businesses the opportunity to prosper.
Justice Adonyo who ordered MTN to pay Shs 800 million to EzeeMoney as general damages for loss of business, also slammed a penalty of Shs 1.5 billion in punitive damages to deter not only MTN but also warn other companies against uncompetitive business tactics.
NAN/Reuters jointly reported on Wednesday that it all started when EzeeMoney, which runs an e-money business, obtained a contract from MTN for the provision of digital transmission [E1] and 30 fixed telephone lines to carry out its mobile money business.
EzeeMoney then contracted Yo! Uganda Limited, YUL, to implement the service after Uganda Communications Commission, the regulator, approved it on December 2012, to use the 7711 short code to enable its customers to subscribe for e-money services.
But in 2013, MTN cancelled the contract, saying EzeeMoney was a direct competitor to its mobile money business. Through AF Mpanga and company advocates, EzeeMoney went to court, saying MTN’s action “restricted and distorted competition.”
EzeeMoney said MTN also damaged its ties with YUL and deprived it of services of other telecommunications operators. It argued that MTN used its exclusivity agreements to stop its agents from working for any other firm with similar business, further limiting competition
In a January 28, 2013 letter to EzeeMoney, MTN appeared to say its business would be disrupted if the former was given access to its platform.
“EzeeMoney is in direct competition with MTN in the provision of mobile money,” read the letter in part.
Justice Adonyo said the letter confirmed that MTN was stopping services of the company because it considered it a competitor.
“It is testified that when YUL required the defendant (MTN) to activate the plaintiff’s (EzeeMoney) short code on its platform, the defendant declined to do so on the basis that the plaintiff was in direct competition with it,” the judge observed.
“YUL then seeing that the plaintiff couldn’t carry out the business they had agreed together, by a letter dated 7/2/2013, did terminate all services with the plaintiff as YUL did not want to jeopardize its relationship with the defendant.”
The judge also found that MTN coerced its agents to reject EzeeMoney. The court was told by a witness, Sammy Mwathi, that he was an MTN money agent and he was restricted from dealing with other firms in the same business by signing exclusivity agreement.