THE REPUBLIC OF UGANDAIN THE HIGH COURT OF UGANDA AT KAMPALA
[COMMERCIAL COURT]
CIVIL SUIT NO.330 OF 2013
EZEEMONEY (U) LIMITED :::::::::::::::::::::::::::::::::::::: PLAINTIFF
-VERSUSMTN UGANDA LIMITED :::::::::::::::::::::::::::::::::::::::: DEFENDANT
BEFORE THE HON. MR. JUSTICE HENRY PETER ADONYO:
JUDGMENT:
1. The Background of this Suit:
The Plaintiff an incorporated entity under the laws of Uganda is a private limited company
whose business involves among others the establishment of mobile money platforms which
enables individuals or companies carry out money transfers and other transactions using mobile
telephony networks, the internet and other electronic communication mediums. The Defendant is
similarly an incorporated company under the laws of Uganda and is a large transnational mobile
telephone operator with business interests ranging from mobile telephony, data and landline
telephony services. This is in addition to providing its customers with mechanisms for mobile
money transmission services. It is probably the largest mobile telephone company in Uganda
with presence through self, agents and aggregators all over Uganda.
The Plaintiff suit against the Defendant is that the Defendant being an holder of a dominant
position in the mobile telecommunications market in Uganda and in particular in the provision of
mobile money platforms which enables individuals to transfer money and similar transactions
using mobile telephony networks, internet and other electronic mediums and with an estimated
registered subscribers and active agents as of 18th April, 2013 numbering 3.5 million and over
15,000 respectively, breached the duties imposed on it by Sections 53 (1) and 56 of the
Communications Act which bars it from engaging in activities which restricts and or distorts
competition in regards to communications services did unfairly deny the Plaintiff the ability to
connect an aggregator called Yo! Uganda Limited (YUL) to its network on top of withdrawing
its E1 line and over 300 pre-paid data lines with the result that not only YUL completely severed
its ties with the Plaintiff (an act which deprived the Plaintiff of the services of other
telecommunications operators) but that the Defendant through the use of exclusivity agreements
subjected its agents to such harassment and denial of support and services which not only limited
competition but resulted in the Plaintiff suffering huge loss of business.
The Defendant denies in total the Plaintiff’s allegation the Plaintiff and goes on to alludes that
the Plaintiff being a non licensed communications service provider could not have suffered the
breaches alleged in the its hands within the meaning of Sections 53 (1) and 56 of the
Communications Act 2013 being that the Defendant was a licensed communications services
provider and thus the suit is not competent and should be dismissed with costs.
Of note is, however, from the bar, it was opined by the Defendant as matter of preliminary point
of law that even if the alleged breaches did occur the Plaintiff should have exhausted the
procedural remedies provided under the Uganda Communications Act which require that any
dispute between parties recognised under the said act had to in the first instance exhaust those
remedies provided under the Act before resorting to the High Court in line with the holding in
Abdu Katuntu and Kimberley Kasana v MTN Uganda Limited and 6 Others HCSS No.
248 of 2012 for as was held in the case of Kawuki Mathias v Commissioner General Uganda
Revenue Authority HCMA No. 14 of 2014 where specific procedures were provided for
aggrieved parties such parties should as a matter of course exhaust those procedures before
resorting to court action and since the Plaintiff did not comply with those provisions of the law
then this suit should be considered incompetent and thus should be dismissed with costs to the
Defendant.
The case went through the procedural processes inspite of the alleged preliminary point of law
indicated above and of note is that during the conferencing of this matter while indeed the parties
to this suit seemingly agreed to the issues framed at that point there appears to have arisen a
change of tactic by the parties for the perusal of the final submissions indicate variance of the
issues. Be that as it may, this dispute is resolved on the basis of the issues framed by the court as
below.
2. Issues:
a. Whether the Defendant breached statutory duties owed to the Plaintiff under the Uganda
Communications Act 2013?
b. Whether the exclusivity agreements between the Defendant and the mobile money agents
are lawful.
c. Whether the Defendant committed unlawful torts of causing loss by unlawful means and
unlawful interference with contractual relations?
d. Whether the Plaintiff is entitled to the remedies it seeks.
3. The resolution of this dispute:
a. Whether the Defendant breached statutory duties owed to the Plaintiff under the
Uganda Communications Act 2013:
The Plaintiff’s case is that the Defendant breached its duties imposed by Sections 53 (1) and 56
of the Communications Act it breached its statutory duty.
A breach of statutory duty is a tort and according to the acclaimed discourse by Winfield &
Jolowicz On Tort, (15th ED) pages 260, 261 and 263 for such breach to be proved certain basic
elements of it must be evident and thus proved \and these are;
a.
A duty owed to a Plaintiff by a Defendant,
b. The duty owed was breached resulting into an injury to the Plaintiff,
c. The injury must be the kind which the statute was created to prevent and,
d. The breach of the duty caused the Plaintiff damage:
Relating the above elements of the breach to the instant matter, it is the contention of the Plaintiff
that the Defendant breached the statutory duty imposed on it to unfairly restrict competition
when it denied it an aggregative platform offered by Yo! Uganda Limited and agency services
which was contrary to Section 53 of the Communications Act, 2013 the scope of which is
reproduced below;
Section 53 of the Communications Act, 2013:
(1) An operator shall not engage in any activities, which have, or are intended to or
likely to have, the effect of unfairly preventing, restricting or distorting competition
in relation to any business activity relating to communication services.
(2) For the purposes of subsection (1) the acts or omissions include—
(a) any abuse by an operator, independently or with others, of a dominant
position which unfairly excludes or limits competition between the
operator and any other party;
(b) entering into an agreement or engaging in any concerted practice with
any other party, which unfairly prevents, restricts or distorts
competition; or…
In its defence, the Defendant intimates that the above provision of the law when read in its
entirety would be found to actually not prohibit “competition” as such but an “unfair
competition” with the breach being committed by a licensed entity against a similarly licensed
entity with both entities being engaged in the provision of telecommunications, data, radio and
postal communications including broadcasting as defined under Section 2 of the
Communications Act, 2013 yet in this instance the Plaintiff was not while the Defendant was
though the Plaintiff insists that it was licensed as such .
In matters of statutory interpretation, guidance have been the provided over the years to the
courts as to the consideration to be had in regards to the basic rule of statutory interpretation with
a number of court decisions giving such guidance. One such case is that of Stanbic Bank and
Others v Attorney General, HCMA No. 645 of 2011 where it was pointed out as follows;
“If the words of the statute are in themselves precise and unambiguous, then no
more can be necessary than to expound those words in their natural and ordinary
sense. The words themselves alone do, in such case, best describe the intention of the
lawgiver”:
The Plaintiff case in the instant suit is that the Defendant owed it a duty which it breached not
only in terms of business relations but by the fact that the Defendant key player and held a
dominant position in the telecommunications and mobile money market in which the Plaintiff
itself was involved.
To prove this contention, the Plaintiff adduced the evidence of several witnesses and tendered in
court a number of documents. Noteworthy is the testimony of Junior Kwebiiha (PW1). This
witness informed the court that the Plaintiff’s primary business was the provision of a platform
which allowed business interests to carry out various communications transactional services
which included the payments of airtime, electricity bills, water bills, money with all these
activities using mobile telephony networks and other electronic media services similar to those
provided by the Defendant and in doing so the Plaintiff provided a level playing field which
made easy for the competitors of the Defendant to access the mobile money market which it did
in addition to providing pre-paid airtime sales services which both Plaintiff and the Defendant
were engaged in meaning that the Defendant was then under the a duty not to limit any access to
its platform by the Plaintiff or any other competitor as that limit the possibility of the Plaintiff
to provide services as the bulk of the Plaintiff’s business was done through dissemination of data
content using telecommunications media and data communication which activities were those of
providing communication services within the meaning of Section 2 of the Communications Act
. The Plaintiff produced a letter dated 28th January 2013 (EX P6) from the Defendant to prove
this point That letter had many things in it but of note were the following word:
“Ezeemoney is in direct competition with MTN in the provision of mobile money
related services”.
The ordinary meaning which can be attributed to these words would tend to confirm the
allegations of the Plaintiff for the Defendant itself appears to indicate that it was stopping
services to the Plaintiff Based on the fact that it considered the Plaintiff a competitor with the
result that the Defendant then took action by disabling the Plaintiff’s clients when it denied them
the use f the Plaintiff’s short code on its network yet a sort code 7711 was granted to the Plaintiff
by the regulator The Uganda Communications Commission (“UCC’) with the medium to be
used by the plaintiff’s customers to subscribe to e-money transfer services using either SMS or
MMS technology which the Plaintiff by an agreement dated 18/01/2013 (EXP11) engaged the
services of Yo! Uganda Limited (“YUL”) who was an aggregator to be able to connect to the
Defendant systems in order to avoid multiple connections it. It is testified to that when YUL
required the Defendant to activate the Plaintiff’s short code on its platform the Defendant
declined to do so on the basis that the Plaintiff was in direct competition with. YUL then seeing
that the Plaintiff could not carry out the business they had agreed together did by a letter dated
7/2/2013 (EXP12) did terminate all services with the Plaintiff as YUL did not want to jeopardize
its relationship with the Defendant. The action of the Defendant of not activating the sort code
and the subsequent cancellation by YUL of its obligation to the Plaintiff is stated to have led to
serious loss of business by the Plaintiff since the Plaintiff is stated to have been denied the
opportunity to aggregate its services to other telecommunications operators using one single
aggregator an act which the Plaintiff states was in direct contravention Section 53 of the Act
which prohibits unfair exclusion or limitation of competition the Defendant through its witness
Anthony Katamba (DW1) opined that such a situation could not have led to the contravention of
the law for that the fact of dominance could only be determined by the regulator yet the
complaint here is that there was contravention of the law by a competitor when necessary
services were cut off for it was not in any way in competition with the Plaintiff and that even it
held no dominant position in the market in relations to the claims of the Plaintiff who could have
used other platforms. However, the plaintiff insists that the law in relations to anti competition
prohibited the kind of behavior of the Defendant which prevented, restricted or distorted business
activity relating to communications services thus insists it was inconvenienced by the Defendant.
Section 53(2)(a) of the Communications Act, 2013 when read in its ordinary meaning seems to
imply that first and foremost the non requirement of one to be a licensed communications
service provider before one van prove being unfairly excluded from business for in the law itself
the phrase “any other party” is used which seems to imply that any entity or person can be
affected by the prohibited behavior of anti competition and can claim inconvenience as a result.
If this is the case then the issue of whether the Plaintiff was licensed or not would be mute for it
has shown that it fell under the category of any other party since it did procure a sort code from
UCC and even went to the extent of contracting with YUL to have its activities aggregated bu for
it to be denied access to the platform of the Defendant which in my view would fall within the
prohibited act as provided for by the law.
The denial of the use of the Defendant’s platform to the Plaintiff by the Defendant would thus
be an act which is prohibited within the meaning of Section 53 (1)(a) of the Act for it limited
competition .
In relations to issue of whether the Defendant held a dominant position or not in the in the
market, it would appear that this would be considered as a non starter for it is apparent that both
parties in this matter agreed to that fact during the scheduling of this matter and therefore the
Defendant would be precluded to bring a witnesses to disapprove that position under Section
114 of the Evidence Act Cap 6 for doing so would be to the detriment of the Plaintiff with such
situations having been variously frowned upon by the courts in various holdings in cases such as
those Stanbic Bank (U) Ltd. v Uganda Cross Ltd S.C.C.A. No.4 of 2004 and Tororo Cement
Co. Ltd. v Frokina International Ltd., S.C.C.A. No. 02 of 2001 with the court in particular in
the case of Excel High School Limited & Others v John Paul Baingana HCMA 1019 of 2014
taking a strong stand in the case of where some applicants having first allowed former advocate
of theirs to conduct their matter in certain a way which made the respondents to believe that they
had no objection to such affairs and subsequently judgment as a result, that the applicants would
be estopped by virtue of Section 114 of the Evidence Act from objecting to what happened in
court. Relating the above decisions of the courts to the instant matter and since the records show
that the parties herein did agree that since both the Plaintiff and the Defendant agreed to the fact
the Defendant held a dominant position in the market then the Defendant here cannot be seen to
deny that fact for doing so would prejudice the Plaintiff’s case taking into account that the
Plaintiff was made to prepare its case to the exclusion of the agreed fact and this would even
preclude the reliance by the Defence on the decision Bank Arabe Espaniol v Bank of Uganda
SSCA NO. 8 of 1998 on for the proposition that it agreeing to the facts was a result of its
counsels’ mistake and as such should not be visited on it for that contention would not help
here even if in general terms it is indeed acceptable for the courts to take into account the fact of
the mistakes of counsel and not visiting the same on their clients with such situations if
maintained would keep a litigant from having his day in court but here where a party has had the
opportunity to be part and process of a trial and even conceding to a Plaintiff adducing specific
evidence in exclusion of the agreed facts then the Defendant cannot be seen to allude to this very
legal principle and thus its preposition would be untenable for the common theme in the
decided cases where such a claim is made is for to alert the court to exercise its discretion in the
interests of justice: See : Essaji v Solanki [1968] EA 218 at 222, Bank Arabe Espaniol v Bank
of Uganda SSCA NO. 8 of 1998, Capt Phillip Ongom v Catherine Nyero Owota SCCA No.
14 of 2001. Thus I would resolve the issue of dominant position of the Defendant as being true.
The other matter which was raised by the Plaintiff is in regard to the denial of the services of
agents of the Defendant. it is apparent that through exclusive agreements the agents of the
Defendant were restricted in providing any services to its competitors in that those agents were
prohibited from handling or selling products of other competitors including the Plaintiff yet the
Defendant’s agents constituted over 50% of the market in that they were over 150,000 at the time
of instituting this suit as testified to Plaintiff’s witness Junior Kwebiiha (PW1) yet such agents
are considered a vital
in the distribution channel of mobile money products. This action
of restriction would be in contravention of the law for it would restrict competition unfairly.
Indeed the testimonies of the plaintiff are other witnesses show how the Defendant was all out to
deny the Plaintiff a level playing field in the market. For example Sammy Mwathi (PW4) who
told this court that he was mobile money agent of the Defendant informed the court that since
agents like him registered mobile money users, processed cash deposit into registered customers’
accounts and enabled withdrawals of cash by customers such activities were restricted in that
Defendant forced all its those mobile money agents into signing exclusivity agreements whereby
they were not allowed to transact similar business for any other mobile operator platform. This
allegation was confirmed by Eriasaph Twinomujuni (PW2) and Sarah Nambozo (PW3) a
member of the Uganda Mobile Money Agents Association (“UMMAA”) with the sample of such
an exclusivity agreement being exhibited as the plaintiff’s Exhibit P8.
The conclusion from such an exclusivity agreement which denied such agents the opportunity to
maximize their business is clearly a prohibited act for it would appear to unfairly restrict
competition though it is trite that while parties are free to contract as they deem fit an agreement
which is certainly contrary to public policy would certainly be unlawful. Indeed under Section
53 (2) (b ) of Uganda Communications Act, 2013 there is prohibited the entering into
agreements with any other party which unfairly prevents, restricts or distorts competition.
Further, under Regulation 5 (1) (a) of the Communications (Fair Competition) Regulations
2005 anti-competitive agreements are prohibited with even Regulation 6 (2) (c) of the said
Regulations further prohibiting exclusive dealings.
The perusal of the exclusivity agreement itself confirms the position that the Defendant acted
outside the law for it appears it used such coercive methods like denial of services to its agents or
forcing agents to apologise after cutting of services and then making them sign such lopsided
agreements indeed incidents of acts which are prohibited for they denied fair competition thus
confirming the contention that the Defendant made its agents to undertake not to provide
similar services of the Defendant to any other operator including the Plaintiff which is contrary
to the provisions of the law as the said document Exhibit P8 confirms.
Furthermore the use of such exclusivity agreements which seems to suggest and prevent agents
from selling products of competitors is similarly prohibited and condemned in other jurisdiction
as being unhealthy in promoting fair competition with European Commission Anti Competition
Law being such as under Article 81 of the European Commission Treaty (“EC Treaty”)
agreements which promotes affect trade between Member States and which have the effect of
preventing, restricting or distorting of competition within the European common market is
prohibited with the European Court of Justice restating this position in the case of Consten and
Grundig v Commission [1966] ECR 299 where it was found that an exclusive distributorship
agreement with an agent called Consten which provided for the distributorship of electronic
product known as Grundig and which required that the distributor only sells such products in
specific countries such as France, Switzerland and Corsica and was prohibited from selling
electronic appliances of other manufacturers which competed with the makers of Grundig and
neither not to sell the said goods in other territories and when another company called UNEF
decided to deal in Grundig’s products in the same areas the agent Consten sued it on the basis
that its exclusivity territorial space had been infringed, the European Court of Justice held that
the exclusivity agreement held by Consten was in contravention of Article 81 of the European
Community Treaty.
Incidentally that particular provision of the European law is similar to the Ugandan Section 53
(b) of the Communications Act which prohibits all agreements of such nature and thus I am
convinced that the intention of the Uganda legal framework is similar to that of the European
Commission for the underlying factor within the two sets of laws is the prohibition of unfair
competition making the position taken by the European Court of Justice to be persuasive and
thus taking the position of that court I would similarly fault the defendant for making its agents
sign the exclusivity agreement which prohibits fair competition and discard its attempt to
distinguish the authority of Consten and Grundig v European Commission [1996] ECR 299
(above) as entirely missing the point for indeed under the doctrine of precedent case law can be
applied by induction (where it is on all fours) or by analogy (where the facts differ but the legal
principle are similar) with the case of Consten and Grundig (above) in my view being one
which promotes the intention of both Section 53(b) of the Communications Act, 2013 and
Article 81 of the European Community Treaty which is the prohibition of any agreement
which have effect the prevents, restricts or distorts of competition.
The other area of contention is the claim by the Plaintiff that the Defendant denied it access to its
network platform unreasonably which is contrary to Section 56 of the Communications Act,
2013 which prohibits an operator from denying any access or service to a customer except for
nonpayment of dues or for any other just cause with the Plaintiff here stating that the Defendant
breached the duty imposed on it when it withdrew its services without just cause. In proof of this
contention the Plaintiff adduced the evidence of Junior Kwebiiha (PW1) who informed this court
that the Plaintiff had acquired thirty (30) post paid lines and an E1 line from the Defendant in
addition to another three hundred (300) pre-paid data lines which it duly paid but that on 11th day
of
February, 2013 shortly after the Plaintiff had engaged the services of YO! Uganda
Limited who was to aggregate its services with that of the Defendant, the Plaintiff received a
letter (EXP7) from the Defendant terminating all telecommunication services to it on the basis
that it did not meet the trade vetting requirements yet according to Kwebiiha, no trade vetting
requirements had ever been placed as a matter precedent to the Plaintiff’s acquiring the services
it had already received from the Defendant nor were such requirements ever disclosed to the
Plaintiff yet the Defendant went ahead to offer its services to the Plaintiff before demanding it to
meet those vetting criteria with no evidence of any prior requirements of the Plaintiff to have met
the same thus when it did terminate its services to the Plaintiff it is clearly one which was made
in bad faith with no justification at all with the Defendant not even presenting in present any
justifiable reason as to why it did so as expected since the legal position would be that to take
such a drastic action one must have a justifiable cause with Black’s Law Dictionary 18th Ed
page 235 defining the term good cause to mean a legally sufficient reason meaning that the
Defendant had the duty to show that it had legally sufficient reason to terminate services to the
Plaintiff.
However, the perusal of the letter terminating the services of the Defendant as referred to earlier
gives no indication as to whether any prior vetting requirements were ever brought to the
attention of the Plaintiff and that the Plaintiff Had failed to comply with them for the letter itself
is very brief and non committal in that respect and since the defendant went ahead to terminate
its services without any justification then it would be held responsible for the consequences of
its illegal act.
4. Whether the Plaintiff suffered any damage as a result of those breaches.:
The Plaintiff avers that the actions of the Defendant caused it great inconvenience resulting into
substantial damages for as indicated by its witness Junior Kwebiiha (PW1) the exclusivity
agreements inhibited the Plaintiff’s growth in such a way that a number of agents who would
have had any commercial relations with it withdrew their services as well as shun the Plaintiff as
even others out of fear of losing business with the market dominant Defendant stopped operating
on the Plaintiff’s platform contributing to a very huge decline in the Plaintiffs business which
with the number of agents of the Plaintiff dropping from 52,155 in January, 2013 by 79% to a
mere 10,906 during the said year . In addition it was the evidence of the Plaintiff, which was not
denied, that due to the Defendant blocking all its services , the Plaintiff had to replace SIM cards
for over 200 terminals that were originally operating with Defendant’s SIM cards which process
indeed necessitated the halting of business of the Plaintiff for some time and according to the
Plaintiff led to a decline in service delivery. Also the replacement and reinstallation of E1
platform previously supplied by the Defendant is said to have caused reputational damage to the
Plaintiff’s business as many customers and even potential customers of the Plaintiff after failing
to get access through the Plaintiff to conduct their business either deserted or viewed the
Plaintiff as not trustworthy thus lost trust in its service provision actions which inevitably
increased the cost of doing business of the Plaintiff for it meant that the customers of the
Defendant would from then on not be able to send or receive money or other services like airtime
through the Plaintiff as it had become more costly to do so for the Plaintiff had to use alternative
but costly means to stay afloat. Thus in view of the claim of the Plaintiff as seen from paragraph
1 thereof of its plaint which is to the effect that the Plaintiff is engaged in the business of
establishment of mobile money platforms which enable individuals to carry out money transfers
and other money transactions with Paragraph 4 (c) (d) and (f) of the same showing that the
Plaintiff was also involved in providing services to people who had or not phone handset for it
provided valuae added services like the payment of utilities, school fees, airtime purchase and
Pay TV fees with such business involving third parties such as banks and agents to constitute the
transactional distribution channel, the conclusion to be had of this is that the Defendant by
cutting of its services to the Plaintiff caused a massive erosion to the Plaintiff’s business thus
ipso facto breached its fundamental duty contrary to Sections 53 (1) and 56 of the Uganda
Communications Act, 2013 for having found as matter of fact that both the Plaintiff and
Defendant did engage in similar services and therefore were in direct competition with each
other , the law imposed upon the Defendant not to unfairly prohibit competition yet
the
Defendant went ahead blatantly to do so since even its selective interpretation of the regulations
prohibiting the same as testified to through its witness Anthony Katamba (DW1) the General
Manager, Corporate Services of the Defendant would not be of any effect for Regulation 6 of
the Communications (Fair Competition) Regulations S.I NO. 10 of 2005 as only in its broad
terms when interpreted indeed applied to not only licensed operators but equally with force to
other players for its intention is the prohibition of unfair competition against a abroad group of
persons who may be even those on the receiving end of those prohibited practices and conduct
which exploits customers like the refusal to supply existing or potential competitors, the applying
of dissimilar conditions to equivalent transactions with other parties which place them at a
competitive disadvantage, the refusal to grant access to facilities, the engaging in unfair methods
that deter new entrants into the communications market, the interference with the end user
relationship and exclusive distribution with all these practices being capable of being inflicted
against persons who are not licensed operators. Ultimately, the conclusion to have on the
insistence by the Defendant through its witness that these regulations applied only to licensed
operators is at best had made either of ignorance of the provisions of the regulations or intended
to mislead the court.
Furthermore, even if this court was to find, which it did not, that the regulations were applicable
to licensed operators, they would certainly be null and void and therefore of no consequence for
they would have been made in contravention of its principal legislation which in no uncertain
terms prohibits unfair as in the hierarchy of laws a subsidiary legislation cannot be seen to oust a
clear provision of its parent law as was held in the case of Stanbic Bank and Others v Attorney
General, HCMA No 645 of 2011.
And as testified by Junior Kwebiiha (PW1) the Plaintiff entered into an agreement with YO!
Uganda Limited (YUL) for the aggregation of services with the said agreement dated 18/01/2013
(is EXP11) to be implemented accordingly but when YUL approached the Defendant to
aggregate the Plaintiff’s services, the Defendant declined to do so on the basis that the Plaintiff
was its competitor in the mobile money business. This conduct led to shortly YUL thereafter
terminate to the detriment of the Plaintiff a contract it had signed with the Plaintiff yet no legal
reason was assigned for the Defendant denying services which YUL required leading to the
Plaintiff to loose the aggregation services.
The other incidences similar to this loss can be seen from the fact that when the Plaintiff
launched its services on the 15th January 2013 within a space of six (6) weeks it had signed up
over 1,000 agents with the majority of them being those already having connections with the
Defendant but then the Defendant forced all those agents into signing with exclusivity
agreements restricting their freedom of trade for they were required to only transact with the
Defendant alone. A copy of that exclusivity agreement (Exhibit P8) proves this point and is
corroborated by the testimonies not only of Junior Kwebiiha (PW1) but by the Defendant’s
agents such as Eriasaph Twinomujuni (PW2), Sarah Nambozo (PW3 who was also member of
the Uganda Mobile Money Agents Association (UMMAA)) and Sammy Mwathi (PW4) with all
these agent confirming the fact of the high handedness of the Defendant in that some of found
themselves cut off from the Defendant’s services and when they went to inquire were made to
apologise for having signed up with the Plaintiff in addition to signing the exclusivity agreement
which stopped them from conducting business with other operators other than the Defendant and
reconnection only done after such undertakings.
Indeed one witness Sammy Mwathi (PW4) who testified that he was one agent of the Defendant
horrified this court when he stated that apart from signing the exclusivity agreement he was even
made to write an apology. He even tendered the apology in court as Plaintiff’s EX P13 and
further stated that later on when approached by Plaintiff to sign up as its agent he declined to do
so for he feared the losing the Defendant’s lines or even being switched off.
Another witness Sarah Nambozo (PW3) agent operating Ka-Circle mobile money agents and a
member of the Uganda Mobile Money Agents Association not only testified of the fact of being
disconnected for dealing with the Plaintiff and others apart from the Defendant even given only
two weeks to do so operators terminals and when she failed to do so her line was blocked and
was only reconnected after signing an exclusivity agreement and even though she had signed up
with the Plaintiff she stopped doing so out of fear of being disconnected by the Defendant.
From the testimonies of all these witnesses it is clear to this court PW1 the effecting of an
exclusivity agreement by the Defendant with its agents who had either signed up also with the
Plaintiff or intended to do so sled to a massive erosion of the Plaintiff’s business for either
several mobile money agents withdrew or declined from
providing to provide services to the
Plaintiff or out of fear of the Defendant did not want to associate with the Plaintiff leading the
Defendant clearly being liable for inducing breach of contract, a legal principle which was
established in the famous case of Lumley v Gye [1853] 2 E & B 216 and restated in the case of
OBG v Allan and Others [2007] 4 All ER 545, [2008] 1 AC 1 by Lord Hoffman as follows in
regards to one being liable for inducing breach of contract, the following elements must exist ;
a. One must be in the know that one is inducing a breach of a contract.
b. The knowledge of such inducement may be actual knowledge or deliberate,
c. The act of inducement must be tendered to make one disregard something or
avoid the fact or truth of something .
d. The act of knowing may be either reckless or indifferent.
From the above, there can be no doubt that the actions of the Defendant were intentional and
made in such a way to expressly deny the Defendant’s agents from operating with the Plaintiff
which action was intentional as well as unlawful for several of the agents were forced to break
their contractual relations with the Plaintiff upon the signing of the exclusivity agreements as
well as being either cut off or forced to make apologies .e were actions geared towards inducing
the agents to act contrary to the truth thus arising from the above, therefore, I would hold the
Defendant liable for the consequences of all those breaches as well as the loss of business by the
Plaintiff for it acted unlawfully in breach of Section 56 of The Communications Act, 2013
and to paraphrase the holding of Lord Hoffman held in the case of OBG v Allan and Others
(supra) I would find that the Defendant committed a tort of wrongful interference with the
actions of third parties in which the Plaintiff had clear economic interest and that interference led
to the plaintiff making substantial loss.
5. Whether the Plaintiff is entitled to the remedies it seeks.
It is generally recognised that anyone including private individuals who suffers loss as a result of
breach of statutory duty can recover damages for such breach this was the position of the court in
the case of Garden Cottage Foods Limited v Milk Marketing Board [1983] 2 ALL ER 770
and such damage can take the form of general damages or otherwise.
As for General damages this will always arise whenever there is a breach of any kind as was held
in the case of Dr. Asaba George v Western Uganda Cotton Company HCCS 353 of 2009.
From the findings this court has already made the actions of the Defendant caused damage to the
signing of illegal exclusivity agreements with its agents inhibited the Plaintiff’s growth for a
number of the Defendant’s agents withdrew from rendering mutual economic services to the
Plaintiff with others out of fear completely severing any contact with the Plaintiff even when
they had signed contracts to the contrary and all these were arising from real or latent threats
imposed over them by the Defendant.
Additionally and as testified to by Kwebiiha Junior(PW1) the actions of the Defendant resulted
into a huge decline in business of the Plaintiff from nearly 79% for it was forced replace all its
business SIM cards for over 300 terminals that were originally operating with the Defendant’s
cards with others which exercise indeed contributed substantially to the halting of the business of
the Plaintiff until such a time as all those cards were replaced with the result that the Plaintiff’s
business declined leading to real and actual business loss.
Furthermore, the use harassment tactic by the Defendant on its f agents affected the business of
the Plaintiff with the result that nearly 65% of its centers becoming inactive an act which not led
to loss of trust and hence reputation but occasioned substantial business loss for when the
Defendant closed its facilities to the Plaintiff this led to the closure of the Plaintiff’s business
thus causing many of its customers and potential customers to shun it after perceiving it as being
unreliable or of no potential economic value to work with and a fraud. Arising from the above I
would find that in causing unlawfully disruptions to the Plaintiff’ business, the Defendant not
only acted contrary to the law which prohibited unfair competition but led to loss of substantial
business by the Plaintiff for which I hold it solely responsible and in the premises I would
condemn to general damages to the tune of Uganda Shillings Eight Hundred Million Only
(UGX. 800,000,000/=) which amount this court believes will restore the Plaintiff back to its the
financial position before the anti competition practices of the Defendant ensued.
The Plaintiff also prayed for punitive and or exemplary damages to be awarded against the
Defendant. Such damages are usually awardable to punish, deter, express outrage of the court at
a
defendant’s egregious, highhanded, malicious, vindictive,
oppressive and or malicious
conduct and unlike general andor aggravated damages the focus of punitive damages is on a
defendant’s misconduct and not the injury or loss suffered by a claimant plaintiff and thus they
are usually in the nature of a fine to appease a victim of one’s illegal conduct and to discourage
revenge with a warning to the persons of similar intention that the society views those kind of
conduct as an affront to it and to the court’s sense of decency as was held in the case of Uganda
Revenue Authority v David Wanume Kitamirike Civil Appeal No. 43 of 2011 thus for these
very reasons, I find that by virtue of the Defendant being in a dominant position in the business
which the Plaintiff was also involved decided to act maliciously, high handedly, egregiously,
vindictively and oppressively towards the Plaintiff when it withdrew its telecommunications
services from the Plaintiff for no valid legal reasons in addition to actually deploying illegal
harassment tactics as against mobile money agents who had freely signed up with the Plaintiff in
the belief that this is a free economy were healthy economic competition is allowed for any
person to prosper legally with those illegal actions rendering the Plaintiff to become inoperative
ending up losing its business while the Defendant continued to prosper to the disadvantage of
the Plaintiff for from its website in reports to its investors and the general public in 2014 alone
the Defendant grossed revenue of over United States Dollars Four Hundred Million Only (Us $
400,000,000)
as
can
be
seen
from
https://www.mtn.com/Investors/FinancialReporting/pages/AnnualResults.aspx, a sign that it
could have as a result of its illegal conduct benefited unfairly in the mobile money market after
stifling the competition from the Plaintiff and thus must be made to rethink how it behaves
towards other business entities like the Plaintiff and from then on act fairly and squarely within
the law . Thus as a result this court would award as punitive damages to the Plaintiff against the
Defendant an amount of Uganda Shillings One Billion Five Hundred Only (Ug Shillings
1,500,000,000/=) which is believed will act as a deterrent to Defendant and any similar entity c
from acting maliciously and highhandedly against the competition in an oppressive nature for
businesses which are legally constituted must be conducted ethically and within the law and not
otherwise and where a company such as the Defendant finds itself in a dominant position in a
market especially in a fledging economy like Uganda’s then it would entails it setting the legally
accepted conduct of business which will secure Uganda for other similar investments for the
betterment and prosperity for all.
The plaintiff also prayed or interest on the sums above from the date of judgment until
payment in full. Under Section 26(2) of the Civil Procedure Act a court may order
interest on the decretal sums from the date of the decree till payment in full. In this matter as this
court has awarded the Plaintiff both general and punitive damages after assessing them they
would deserve interests as well for the Plaintiff is overall the is the successful party in this matter
therefore the Defendant is ordered to pay interest on each of those decreed amounts at the court
rate of 6% per annum from the date of judgment till payment in full.
6. Orders:
The Plaintiff is the successful party in this suit and thus the following orders issued in its favour
as against the Defendant.
a. This court declares that the exclusivity agreements between the Defendant and it’s the
agents infringe Section 53(1) (b) of the Communications Act, 2013 and hereby declare
the same to be null and void.
b. This court issues a permanent injunction against the Defendant prohibiting it from acting
in an unlawful and anti-competitive manner as against the Plaintiff.
c. This court issues an injunction restraining the Defendant from inducing any third parties
to breach their contract with the Plaintiff.
d. The Plaintiff is awarded Uganda Shillings Eight hundred Million only (Ug. Shs
800,000,000/=) being general damages for loss of business arising from anti competition
actions of the Defendant.
e. The Plaintiff is awarded an amount of Uganda Shillings One Billion Five Hundred Only
(Ug Shillings 1,500,000,000/=) being punitive damages against the Defendant which
amount is to act as a deterrent to the Defendant and other entities with similar anti
competition conduct to stand warned that the court will not tolerate illegal conduct and
highhandedness in the conduct of business .
f. Interests on (d) and (e) above to be at the court rate of 6% per annum from the date of this
judgment.
g. The Plaintiff being the successful party in this suit is also is awarded costs of the suit.
I do so order accordingly.
HENRY PETER ADONYO
JUDGE
6TH NOVEMBER, 2015