Illovo Sugar (Malawi) plc risks prosecution for alleged unfair competition after a Competition and Fair Trading Commission (CFTC) investigation found the giant manufacturer guilty in a case that tested the country’s trade and competition laws.

But the Malawi Stock Exchange=listed manufacturer says it is weighing the options on the issue.

Briefing the media in Lilongwe yesterday on the findings, CFTC executive director Vincent Lloyd Nkhoma said Illovo was under probe for alleged unconscionable and misleading conduct following a consumer complaint on the adjustment of its sugar prices.

A statement issued on the sidelines of the press briefing yesterday indicated that the complainant argued that the adjustment was unjustified because the new prices did not reflect the economic factors on the ground.

The complainant further stated that the reasons Illovo brought forward were not related to the company’s cost of production, as such, infringed on the welfare of consumers.

A consumer sampling Illovo Sugar prices

Reading the determination, Nkhoma said the CFTC board sided with the complainants after reasoning that Illovo Sugar, a private business entity, had no mandate to contain smuggling and should have notified the relevant authorities for remedial measures.

The board further observed that Illovo Sugar allegedly took advantage of the consumers’ fears of an impending sugar shortage on the local market to raise the price of sugar without credible justification.

The CFTC has since recommended that Illovo should be prosecuted for violating Section 43 (1)(g) of the Competition and Fair Trading Act and for the commission to write advisory notes to the Ministry of Trade and Industry, the policyholder, to protect consumers’ interests.

Said Nkhoma: “The commission should issue an advisory note to the Ministry of Trade and Industry to ensure that the supply of essential commodities such as sugar are not shielded from import competition in situations where the domestic beneficiaries under the Control of Goods Act are abusing their dominant positions or engaging in unfair trading practices.

“The commission should issue an advisory note to the Ministry of Trade and Industry, as a policyholder, to compel Illovo to reduce sugar prices considering that the Company does not have the mandate to control smuggling using price or any other means.”

Reacting to the recommendations, Centre for Democracy and Economic Development Initiatives (Cdedi) executive director Sylvester Namiwa, whose organisation started a public inquiry on the production and pricing of sugar with Parliament, said the recommendations were a vindication of their efforts to put the spotlight on competition and consumer protection.

The CFTC recommendation will pave the way for the Ministry of Trade and Industry to make the determination.

But in an interview yesterday, Minister of Trade and Industry Simplex Chithyola said he was yet to receive the letter from the commission.

“We have not yet received the letters [from CFTC]. When we do, we will issue a proper communication,” he said.

In a brief e-mail response, Illovo Sugar (Malawi) plc stakeholder relations manager Olive Kawelama said: “We have noted the decision and are considering our options.”

The investigation started in January this year after a complainant petitioned the CFTC to review the decision by Illovo to raise the price of sugar.

In a press statement announcing the new prices in October, Illovo Sugar said it had raised the price of its sugar to make the product expensive on the local market and curb its smuggling to neighbouring countries.

In July, the Ministry of Trade and Industry held off on making a determination on the high-profile inquiry that involved testimony from industrial users of sugar, sugar manufacturing companies and the Malawi Revenue Authority after Illovo requested that the ministry should wait for the conclusion of the CFTC case.

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