Malawi’s competition trade agency bites hard on NICO, Goodwill funeral Services over monopoly

By Chrissy Nkumba

LILONGWE-(MaraviPost)-The country’s Competition and Fair Trading Commission (CFTC) has slapped Goodwill Funerals with a MK68 million fine for being greedy with funerals

The commission found out that that Goodwill Funerals signed a deal funeral with NICO, making him the only funeral service provider for funerals of people under MASM, which has an agreement with NICO Life.

It is alleged that if someone is under MASM Cover, it would be mandatory for that person to engage Goodwill Funerals.

CFTC) has therefore strongly Condemned the act by Nico life insurance Limited and Goodwill funeral services on alleged Anti- Competitive Business Practices.

This comes after a complaint from funeral service providers received by the Commission on 22 September, 2020.

The complaints alleged that Medical Aid Society of Malawi (MASM), Goodwill funeral services and NICO life insurance Company were engaged in Anti-Competitive Conduct.

In a statement made available to Maravi Post signed by Apoche Itimu, Acting Executive Director for the Commission, the complaint was as a result of an agreement for group insurance cover that MASM had with Nico Life Insurance.

The complainants alleged that following that agreement funeral services were provided for mainly by Goodwill to their detriment, whereas they had been able to provide those services prior to the agreement.

The statement also indicates that prior to the agreement, they had directly dealt with MASM whereas they were now required to deal wth NICO life only through Goodwill who would delay with their payments and would deduct commission from their payments. And it was also alleged that Goodwill was taking advantage of customers by overpricing their products without disclosure to customers about their insurance cover with MASM.

The statement further states that on January 20, 2022 the Commission deliberated over the evidence gathered in the case as well as submissions made by the parties during and after the public hearing that was held by the Commission in the matter but the Commission did not find any evidence to substantiate the allegations above.

In the statement the Commission established that the agreement between Nico Life Insurance and MASM did not contain any Anti- Competitive clauses and further following the entry into force, MASM ceased directly with funeral service providers who were dealing directly with NICO Life.

The Commission also found out that the agreement between Nico Life and Goodwill was oral which was Anti-Competitive and the further the decision and engagements are anti competitive in violation of section 32(1) of the CFTA.

Meanwhile the Commission has noted with concern that the offense was equally committed by NICO Life and Goodwill however the financial gain from the offense could only be established on the part of Goodwill.

CFTC’S DECISION ON ALLEGED ANTI-COMPETITVE BUSINESS PRACTICES BY
NICO LIFE INSURANCE LIMITED AND GOODWILL FUNERAL SERVICES STATEMENT

The Competition and Fair Trading Commission (CFTC) held a special meeting on 20th
January, 2022 in Lilongwe. Among others, the Commission made a decision on alleged
anti-competitive business practices by NICO Life Insurance Limited and Goodwill Funeral
Services.
On 22nd September, 2020, the Commission received a complaint from funeral service
providers. The Complainants alleged that Medical Aid Society of Malawi (MASM),
Goodwill Funeral Services and NICO Life Insurance Company were engaging in anticompetitive conduct.
In summary, the Complainants alleged that MASM, Nico Life and Goodwill were engaging
in anti-competitive conduct as a result of an agreement for group insurance cover that
MASM had entered into with Nico Life. The Complainants alleged that following that
agreement funeral services were provided for mainly by Goodwill to their detriment,
whereas they 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. It was also alleged that
Goodwill was taking advantage of customers by overpricing their products without
disclosure to customers about their insurance cover with MASM.
On 20th January, 2022, the Commission deliberated over the evidence gathered in the
case as well as submissions made by the Parties during and after the public hearing that
was held by the Commission in the matter.

In summary, the Commission did not find any evidence to substantiate the allegation that
Goodwill was overpricing its products and was not informing Members of the limits of their
cover under MASM so as to take advantage of them. The Commission thus dismissed
those allegations.
The Commission also established that the agreement between Nico Life and MASM did
not contain anti-competitive clauses and further that following the entry into force of the
agreement, MASM ceased to deal directly with funeral service providers who were to deal
directly with NICO Life.
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 concerted
practices that were anti-competitive in violation of Section 32(1) of the CFTA.
The finding was based on the following:
a. 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;
b. Nico Life and Goodwill reached this agreement without affording other providers
the opportunity to also be registered by Nico Life through a competitive process;
c. 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;
d. 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.
In light of the findings, the Commission issued, among others, the following orders:
i. That NICO Life should open up to other funeral service providers by entering into
agreements with them through competitive bidding processes.
ii. That NICO Life should pay a fine of Five Hundred Thousand Kwacha (MK500,000)
for engaging in anticompetitive conduct;
iii. That Goodwill should pay a fine amounting to Sixty-Eight Million Seven Hundred
and Thirty-Six Thousand Nine Hundred and Forty-One Kwacha
(MK68,736,941.00) being financial gain generated from engaging in the
anticompetitive conduct.
The Commission also noted with concern that the offence was equally committed by Nico
Life and Goodwill, however, the financial gain from the offence could only be established
on the part of Goodwill.
For more information on this statement, contact Innocent Helema on 0880725075 or
email [email protected] or [email protected].
APOCHE ITIMU
ACTING EXECUTIVE DIRECTO