SA experts roped into Econet inquiry

via SA experts roped into Econet inquiry | The Herald 16 July  2014 by Happiness Zengeni and Tinashe Makichi

The competitions authority has sought the expertise of South African-based competition analysts to help them build a case against Econet, in a case that is likely to re-shape the future of the financial services sector, The Herald Business can reveal.

Recently it emerged that Econet’s long running dispute with the local banking industry attracted the ire of the Competitions and Tariffs Commission who began an information gathering exercise meant to establish if Econet had a case to answer with regards to flouting competition rules in its interactions with banks and suppliers.

Econet has refused to give access to banks on the USSD platform used to channel mobile banking services preferring them to use its EcoCash platform. Only recently has Econet agreed to grant access to banks, but restricted banks to a separate USSD platform to the one the mobile operator uses, more-so at a significantly higher cost.

Documents in our possession reveal that Econet wants to charge as much as 30c per SMS for a USSD session if it relates to mobile money transfer, a charge which banks feel is not only too high, considering that most mobile money transfers are low value payments of only a few dollars but also discriminatory against non-EcoCash users. It emerged that Econet charges between zero and five cents for all its other USSD services so the banks have been querying the 30c base line charge being demanded by Econet.

Bankers maintain that such discriminatory pricing is tantamount to an unfair trade practice and is meant to make any bank mobile money transfer products uncompetitive relative to Econet’s own offering

In an interview with The Herald Business yesterday, CTC assistant director (Competition) Mr Benjamin Chinhengo confirmed the development.
“We have a formal and informal corporation agreement with Zambia and South Africa in relation to competition investigations. We get assistance on certain areas of expertise whenever we may require one.

“A team of experts from South Africa were in the country last week assisting CTC officials on analysing and assessing methods to be used during the preliminary investigations,” said Mr Chinhengo.

“We are still establishing and verifying facts at the same time doing interviews with complainants who levelled allegations against Econet.”
He said the telecoms industry is a highly technical area hence the need to consult experts on the investigations.

Mr Chinhengo said a fully fledged investigation will commence once preliminary investigations are complete.
“The experts have already met Econet officials to ascertain the facts around the allegations for them to develop a background position of the challenges they are being accused of by various business entities. In addition our officials are in South Africa for a technical course as we speak,” said Mr Chinhengo.

In a related matter, the CTC has roped in the experts to analyse whether the relationship between Steward Bank and Econet has resulted in anti-competitive practices. Recently some suppliers of Econet were “encouraged” to open accounts with Steward Bank in exchange for more favourable terms of trade, a move which banks say violates competition ethics.

The commission, as part of the investigations, engaged the Reserve Bank of Zimbabwe and the Postal and Telecommunications Regulatory Authority of Zimbabwe as regulators of banks and mobile network operators to better understand the regulatory issues around mobile money business.