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Open Season On MTN: Now It’s Being Fined By A Ugandan Court

Open Season On MTN: Now It’s Being Fined By A Ugandan Court

South Africa-based MTN, Africa’s largest mobile phone company, is appealing a $660,000 fine by a Ugandan court imposed for sabotaging a Ugandan mobile money business, ENCA reported.

MTN Uganda acted in an “unlawful and anti-competitive manner” and damaged the mobile money business EzeeMoney, the court said.

The Ugandan commercial court is the latest entity to impose a fine against MTN, SABC reported.

In October the Nigerian government imposed a record $5.2 billion fine against MTN for failing to disconnect 5.1 million unregistered SIM cards from its networks.

MTN and EzeeMoney were initially partners, but MTN withdrew from its technical role, saying EzeeMoney was competing with its own mobile money business, according to ENCA.

On Nov. 6, Justice Henry Peter Adonyo ordered MTN to stop acting in a manner which denies other businesses an opportunity to prosper, LeadershipNG reports.

EzeeMoney initially contracted with MTN for digital transmission and 30 fixed phone lines to conduct its mobile money business.

In 2013, MTN canceled the contract, saying EzeeMoney was a direct competitor to its mobile money business. EzeeMoney filed a lawsuit saying MTN’s action “restricted and distorted competition.”

EzeeMoney said MTN deprived it of the 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, limiting competition.

In a Jan. 28, 2013 letter to EzeeMoney, MTN said, “EzeeMoney is in direct competition with MTN in the provision of mobile money.”

Justice Adonyo said the letter confirmed that MTN stopped services of the company because it considered it a competitor.

The judge said MTN coerced its agents to stop doing business with EzeeMoney. An MTN money agent told the court he was restricted from dealing with other firms in the same business by signing exclusivity agreement.

Adonyo said MTN’s tactics were malicious.

“I find that by virtue of the defendant (MTN) being in a dominant position in the business (mobile money), which the plaintiff (EzeeMoney) was involved, (MTN) decided to act maliciously, highhandedly, egregiously, vindictively and oppressively towards the plaintiff for no valid legal reasons.”

EzeeMoney went out of business while MTN continued to prosper, grossing over $400 million in revenue according to its 2014 investor report, the judge said.

This showed MTN benefited unfairly in the mobile money market after stifling competition from EzeeMoney.

“It (MTN) must rethink how it behaves towards other business entities,” the judge said, according to LeadershipNG.

MTN Uganda is appealing the judgment, said Chris Maroleng, group executive for corporate affairs, ENCA reported.