CFTC probes Castel’s exclusive dealing agreements, resale price maintenance

The Competition and Fair Trading Commission (CFTC) has commenced an investigation on Castel Malawi Limited’s two conducts – Exclusive Dealing Agreements and Resale Price Maintenance.

Disclosing the development to YFM Online, the Commission’s spokesperson Innocent Helema said CFTC is conducting the inquiry to understand the extent to which Castel Malawi Limited engages in the two conducts and the advantages and disadvantages of such to consumers and the economy at large.

He said: “CTFC is conducting investigations on Castel’s two arrangements, namely exclusive dealing arrangements and of course the resale price maintenance. We received an application from the company seeking authorisation for them [Castel] to be engaging in the two conducts.

“Now what we are doing is we are conducting the investigations, meeting distributors and of course other traders consumers that sell that engage in to in Castel Malawi Limited products to ascertain whether the two elements, exclusive dealing arrangements and of course resale price maintenance have advantages or disadvantages to the economy.”

Helema said the Commission will make its determination on the applications following the conclusion of the investigations.

“We need to appreciate that the two conducts are only permissible by rule of reason. In that the Commission needs to be convinced that advantages for the conduct are more than disadvantages of the conducts to the economy and of course, consumers,” Helema said.

The Commission understands that exclusive dealing and resale price maintenance are some of the trade practices which are prohibited by the Competition and Fair Trading Act.

However, businesses may apply for authorisation of such practices giving justifications as why they should be allowed to engage in the same. Castel Malawi Limited, in this regard, applied for authorisation of the two conducts.

An exclusive Dealing Arrangement is where a supplier prevents a distributor from selling another supplier’s products.

Resale Price Maintenance is a practice where a manufacturer fixes the minimum or maximum price for the resale of their products.

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