Although Mtn Uganda is super rich and unstoppable Ugandan court has
ordered MTN Uganda to pay over shs11.3 billion (approximately $3 million
USD) to a value-added services company, VAS Garage Ltd., in a legal
dispute over unfair competition.
Justice Stephen Mubiru, Head of the High Court’s Commercial Division,
ruled on April 21 that MTN Uganda breached its contract with VAS Garage
and engaged in unfair competition.
The ruling stemmed from MTN Uganda’s decision to expire or delete VAS
Garage’s subscriber database, citing a directive from the Uganda
Communications Commission (UCC) to implement a “Do-Not-Disturb”
solution aimed at stopping unsolicited messages.
Justice Mubiru stated that MTN Uganda’s actions prevented VAS Garage
from providing services to its subscribers and earning revenue under their
agreement. He also found that MTN Uganda, which also provides value-
added services, viewed VAS Garage as a competitor.
The court determined that the UCC directive did not authorize MTN
Uganda to expire or delete VAS Garage’s keywords and databases or to
stop billing VAS Garage’s customers. Instead, Justice Mubiru concluded
that MTN Uganda’s actions were intended to unfairly restrict competition.
Court documents showed that VAS Garage entered into a “Content
Provision Agreement” with MTN Uganda in 2012 to provide value-added
services to the telecom’s subscribers. VAS Garage invested in advertising
to build a subscriber base for its unique content services.
MTN Uganda later informed VAS Garage of the UCC directive regarding
unsolicited SMS and implemented a “Do-Not-Disturb” system allowing
customers to block such messages.
VAS Garage argued that MTN Uganda selectively implemented the UCC
directive to eliminate competition and boost its own services, noting that
MTN Uganda did not expire its own parallel “Play” services managed by an
international partner. The contract termination occurred shortly after MTN
Uganda complained to the UCC.