The Attorney General (AG) Thabo Chakaka-Nyirenda has advised the Directorate of Road Traffic and Safety Services (DRTSS) to terminate a contract with Motor Vehicle Spares and Accessories (Movesa) for the importation and supply of retro-reflective blank number plates into Malawi.
The AG’s advice follows findings by the Competition and Fair Trade Commission (CFTC) this month, which established that DRTSS and Malawi Bureau of Standards (MBS) engaged in anti-competitive practices in the award of the contract to Movesa.
CFTC has since fined DRTSS and MBS K500 000 each and also reported them to the Anti-Corruption Bureau (ACB) to investigate the two State entities to establish if there were any elements of corruption in the award of the contract to Movesa.
The findings emanated from a complaint lodged to CFTC by another supplier, Bulldog Spares and Suppliers Limited.
The AG, in a letter dated May 15 2022 which we have seen, addressed to DRTSS and Ministry of Transport and Public Works, advised DRTSS to immediately comply with the determination by the CFTC.
The AG, in an interview on Friday, confirmed to have engaged DRTSS on the matter.
“I am deeply saddened by the cartel that the Competition and Fair Trading Commission has exposed in the present case. There was clearly lack of open and fair competition in the manner the blank number plate contracts were awarded to Movesa,” Chakaka-Nyirenda said.
In its determination, CFTC also ordered MBS and DRTSS to cease and desist from engaging in anti-competitive conducts in the enforcement of standards in the importation of blank number plates in Malawi.
According to findings of CFTC, Bulldog Spares and Suppliers lodged a complaint to CFTC on alleged anti-competitive conduct regarding the importation of blank retro-reflective plates for motor vehicles.
The complaint alleged that DRTSS and MBS favour one importer, a conduct which was construed as restrictive business practice by the complainant.
Bulldog, during the public hearing conducted by CFTC, submitted that they started their business in 2003. They expressed interest to DRTSS to supply blank number plates in 2010 and DRTSS advised them to consult MBS for conformity standards.
They completed the required forms and later got licenced to be an embosser, it was learnt.
The public hearing learnt that Bulldog went ahead to learn import processes from Movesa, including subjecting pre-shipment and consignment samples to MBS for testing to check if they conformed to relevant standards.
The findings reads: “On 21st November 2021, Bulldog was issued with a pre-shipment import quality monitoring report by MBS which approved the importation of blank number plates for motor vehicles. On 21st December 2011, MBS withdrew the approval on the ground that it was issued by error. Further, on 26th March 2012 MBS advised Bulldog that the DRTSS had suspended the importation of number plate blanks.
“In spite of the suspension, DRTSS continued to allow Movesa only to import the said number plates. The complainant deemed this conduct to be anti-competitive and done in order to ensure that Movesa monopolised the market.”
The public hearing further learnt that Bulldog took the matter to court and won the case in the High Court in 2014, but MBS appealed and won the case in the Malawi Supreme Court of Appeal in 2018.
The commission found that it was not correct to state that Bulldog slept on their rights, as earlier argued by MSB and DRTSS, by not applying for a waiver when their samples did not meet standards, arguing nowhere in the MBS Act or the Regulations is it stipulated that one can apply for a waiver to allow importation of number plate blanks following a pre-shipment sample that does not conform to mandatory standards or even the procedures to follow when one is doing so or factors that are taken into consideration.
The AG in his letter said there were indications from the determination by the CFTC that Movesa was complicit to the unfair trading practices and that, in fact, it benefitted from such illegality.