Price regulation: Between CPC and DStv

Recently, the Consumer Protection Council (CPC) procured a court injunction restraining MultiChoice Nigeria Limited from implementing a recent increase in DStv subscription rates in Nigeria. Justice Nnamdi Dimgba granted an injunction restraining the video entertainment and Internet Company from implementing the new rates. The court also restrained MultiChoice from any conduct capable of interfering with the regulatory process of CPC.

In a press release stating why it approached the court to stop DSTV from implementing the new rates, the CPC argued that ‘it has a constitutional responsibility to protect the welfare and interest of consumers in Nigeria through the instrumentality of the “the Council”, but was also quick to argue that its action is not in any way intended “to regulate price, or in any way interfere with the commercial interface between Multichoice and its customers in fixing price. It said it acted to prevent “obnoxious practice” and “unscrupulous exploitation”. It said it had an understanding with Multichoice not to change, revise or modify any material term or conditions of service(s) (which naturally includes pricing) for a period of 24 months.

We disagree with the position of CPC. First, it is inconceivable that an ongoing business concern will commit itself to holding its price static for a period of 24 months. Different variables go into the fixing of price – and the company may not control all those variables. One of these is inflation. Inflation has remained at double digits for more than two years now there is no way a company can guarantee fixed price for that long without running at a loss.

What is more, DStv services could not be categorised as essential commodity for which the government will attempt to fix price. People clearly have choices and there is now a semblance of competition in the Cable TV market with the presence of Kwese TV, StarTimes, and TSTV that just came back on stream. There are also different online versions that consumers can turn to. It is therefore inconceivable that CPC is trying to regulate prices in a relatively competitive market while doing nothing in other monopoly markets where no competition exists and where consumers are constantly complaining of poor services and exploitation.

In the power sector, for instance, Discos have been using estimated billings to fleece their customers for long and have ignored directives to ensure that their customers are metered.

Also, in the cement industry, where a semblance of competition exit, the Nigerian Industrial Revolution Plan (NIRP) published in 2014 noted that “Nigerian cement prices are among the highest globally” in spite of the products being of “low finished standards for exports”. Put differently, Nigerians are buying poor quality cements at very high price globally. To make matters worse, cement qualifies as an essential commodity with Nigeria facing an estimated shortfall of 17 million units. What has the CPC done to intervene in these two industries and ensure that Nigerians get value for money?

With the cost of doing business in Nigeria increasing every day, wouldn’t CPC be concerned that DStv did not increase price? There is a general belief that an increase of price for DStv services is actually good for the market as it will enable new entrants like Kwese TV and TSTV get a slice of the market and deepen competition, which will eventually led to lower prices. What would be bad for the industry and an anti-competitive act will be DStv reducing price just to squeeze out the competition and maintain a monopoly.

Besides, BusinessDay investigations has shown that DSTV and GoTV subscription rate paid by Nigerians, even after the rate hike, is the lowest rate charged by MultiChoice when compared to other countries in which it has operations.

Despite the efforts of government to attract investments into the country, actions of agencies like the CPC will continue to cause concern among investors and portray Nigeria as not ready and willing to allow businesses thrive in the country without undue harassment.