The Competition and Fair Trading Commission (CFTC) has ordered Goodwill Funeral Services to pay a K68 million fine for engaging in anti-competitive conduct.
The commission has also ordered NICO Life to pay K500,000 fine for a similar offence.
CFTC held a special meeting on 20th January, 2022 in Lilongwe where it made a decision on alleged anti-competitive business practices by NICO Life Insurance Limited and Goodwill Funeral Services.
According to a statement released today and signed by CFTC acting executive director Apoche Itimu, on 22nd September, 2020, the Commission received a complaint from funeral service providers that Medical Aid Society of Malawi (MASM), Goodwill Funeral Services and NICO Life Insurance Company were engaging in anti-competitive conduct.
The complainants alleged that after an agreement between MASM and Nico Life for group insurance cover, funeral services were provided for mainly by Goodwill to their detriment, whereas the complainants had been able to provide those services prior to that agreement.
They also claimed that prior to that agreement, they had dealt directly with MASM whereas they were now required to deal with NICO Life only through Goodwill who would delay with their payments and would deduct commission from their payments.
The Commission after deliberations established that the agreement between NICO Life and MASM did not contain anti-competitive clauses.
The Commission, however, found that although the written agreement between NICO Life and Goodwill did not contain anti-competitive agreements, they had an oral agreement that was anti-competitive and further that they made decisions and engaged in practices that were anti-competitive in violation of Section 32(1) of the CFTA.
The finding was based on the facts that following the agreement between Nico Life and MASM, NICO Life and Goodwill decided that Goodwill would be the only approved funeral service provider for MASM Members despite that prior to the agreement MASM dealt with several funeral service providers and despite that MASM has Members across the country.
“NICO Life and Goodwill reached this agreement without affording other providers the opportunity to also be registered by Nico Life through a competitive process.
“Where Members obtained funeral services from other funeral service providers other than Goodwill, Nico Life would only process their payments if the claims were made through Goodwill (their competitor) despite that they had no subcontract with Goodwill,” reads part of the statement.
According to CFTC, NICO Life had no valid justification for only dealing with Goodwill’s competitors through Goodwill and not directly with them.
“The Commission found that the conduct and decisions by Goodwill and Nico Life resulted in the prevention and distortion of the funeral services market across Malawi,” Itimu Said in the statement.
CFTC has since ordered NICO Life to open up to other funeral service providers by entering into agreements with them through competitive bidding processes.
NICO Life has been fined MK500,000 while Goodwill has been ordered to pay MK68,736,941.00. The fine for the funeral service is hugger because financial gain from the offence could only be established on the part of Goodwill.
