11 February 2014

Malawi: CFTC Orders Game Stores and MSB to Stop Engaging Unfair Trade Practices

Lilongwe — The Competition and Fair Trading Commission (CFTC) has ordered Game Stores and the Malawi Savings Bank (MSB) to cease and desist from engaging in prohibited unfair trading practices.

This follows investigations the commission conducted which established that Game Stores is engaged in misleading advertising by offering massive price discounts on products that were out of stock in violation of the Competition and Fair Trading Act and the Consumer Protection Act.

According to a statement from CFTC, the commission heard that, between September and October 2013, Game Stores advertised price discounts on external hard drives that were out of stock at the time the promotion started.

Investigations into MSB established that the bank engaged in misleading advertising by providing insufficient information to the general public on the criteria for accessing a warehouse credit financing facility.

"Under the advertised warehouse credit financing facility, the Bank claimed that it would extend credit facilities to farmers and traders who deposited their agricultural produce for sale at the AHL Commodity Exchange Ltd provided they opened an account with the Bank.

"It was, however, established that the Bank refused to extend the warehouse credit receipt facility to some farmers and traders on the premise that the applicants did not meet other criteria," said the statement. The commission has since ordered MSB to publish a revised advertisement specifying all the material information necessary for farmers and traders to make an informed decision on this warehouse receipt financing facility.

Charlotte Wezi Malonda, Executive Director of the CFTC said it was important for advertisers to ensure that advertisements carry all the material information needed for consumers to make informed decisions.

Said Malonda, "Advertisers must ensure that an advertisement is truthful and sincere. A good advertisement should not conceal or leave out important facts."

CFTC launched investigations against MSB and Game Stores following complaints received from Afriseed Ltd and Benson Chimbindu, respectively.

Influenced by an MSB advert, Afriseed opened an account with MSB and deposited agricultural produce at AHL Commodity Exchange in order to benefit from an advertised warehouse receipt financing facility.

CFTC is an autonomous agency of the government mandated to regulate, monitor, control and prevent acts or behaviour which is likely to of the adversely affect competition and fair trading in Malawi.

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