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Competition Commission probes Econet Wireless
15/07/2014 00:00:00
by Business Reporter
Econet H1 profits down 30pc to US$50m
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THE Competitions and Tariffs Commission (CTC) has roped in South Africa-based competition experts to investigate whether Econet has flouted competition laws in its money transfer scheme as well as the firms banking subsidiary.

The investigation could reconfigure the country’s financial services sector.

Econet is locked in a long-running dispute with the local banking industry over its mobile money transfer scheme, Ecocash.

The Commission says it wants to establish whether Econet has any case to answer and whether it has flouted competition rules in its interactions with banks and suppliers.

The telecoms firm has refused to give banks access to its USSD platform used to channel mobile banking services preferring them to use its Ecocash platform.

Only recently Econet agreed to grant access to banks, but restricted them to a separate USSD platform to the one the mobile operator uses, more-so at a significantly higher cost.

In an interview Tuesday, CTC assistant director (Competition) Benjamin Chinhengo confirmed the development.

"We have a formal and informal co-operation agreement with Zambia and South Africa in relation to competition investigations. We get assistance on certain areas of expertise whenever we may require one,” said Chinhego.

"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.

"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 was a highly technical area hence the need to consult experts on the investigations.

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.

Banks feel the charge 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 has also 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 was tantamount to an unfair trade practice and meant to make any bank mobile money transfer products uncompetitive relative to Econet's own offering.


In a related case, 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.

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