An insight into the ground-breaking case of Emtel Ltd V The Information and Communication Technologies Authority & Others 2017 SCJ 294.
On the 9th of August 2017, the Supreme Court of Mauritius delivered a judgment that created waves in the Mauritian legal sphere. The conclusion of this case marks the ephemeral end of nearly two decades of a dispute that will, in due course, become a landmark case for the interpretation and better understanding of competition law in Mauritius. The Supreme Court of Mauritius awarded Emtel, the Plaintiff, a total amount of MUR 554,139,900 (approx. USD 16,806,000). The judgment relied on Article 1382 of the Mauritius Civil Code as a result of the joint “fautes” of the Information and Communication Technologies Authority (“ICTA”), Mauritius Telecom Ltd (“MT”) and Cellplus Mobile Communications Ltd (“Cellplus”) who were ordered to pay the award jointly and in solido. The judgment in this case is nothing short of a novel situation in Mauritius given that this is the first time that a state-controlled entity has been found liable for unfair competition.
From humble beginnings on the 29th of May 1989, Emtel has grown to become a key player in the telecommunications industry in Mauritius. Having for long been the underdog operating under the shadow of a quasi-monopoly led by Mauritius Telecom and Cellplus, Emtel has sought to consolidate its position in the industry by investing massively and seeking strategic partnerships.
Emtel’s claim was entered on the 2nd of June 2000 and tried by the Supreme Court of Mauritius in May and June 2016 over a period of seven weeks. This was effectively the conclusion of the longest running case in Mauritius. Emtel’s contention against ICTA, formerly the Telecommunication Authority, was that it failed and neglected to exercise, and/or refrained from exercising, its statutory powers to ensure that the conditions of the global system for mobile communications (“GSM”) licence issued to Cellplus were complied with. Emtel claimed that the then Telecommunication Authority failed in, and neglected, its duty to protect, and/or refrained from protecting, Emtel from unfair competition by Cellplus and Mauritius Telecom and as a result, this gave rise to a “faute”, a dereliction of duty and/or tortious bias causing prejudice to Emtel.
Emtel’s contention against MT and Cellplus was that MT abused its dominant position in the market to destroy and/or harm Emtel giving rise to “faute”, the claim being that the cross-subsidisation procured by MT to Cellplus was tortious and gave Cellplus an unfair advantage over its competitors. Emtel estimated its past losses amounting to MUR 1,100,000,000.
In an 89-page long judgment, the Supreme Court of Mauritius found that ICTA had a responsibility to ensure compliance with the conditions which it had itself set but instead chose to completely disregard its responsibility, failed to administer “des prescriptions plus fermes” (stricter prescriptions) and showed tolerance of the breach of the conditions of the GSM licence by MT and Cellplus.
The Supreme Court also highlighted that the tort in an unfair competition action should no longer be identified solely by the breaches of professional uses, but could also reside in the more general idea of a rupture of equality in competition. An intentional, negligent or imprudent creation of means that facilitate breaches of equality in competition is a “faute” and the offender renders itself liable for unfair competition.
This case also sets a precedence and clarifies the stance of the courts in the calculation of damages. Estimation of damages has always been a grey area in Mauritius. The Court approved the “margin squeeze” test. Margin squeeze is a distinct form of anti-competitive behaviour. It happens when in a vertically integrated business, the upstream operating arm of the dominant company offers low charges to its own downstream operator but offers high charges to a competitor of its downstream operator.
The Supreme Court referred to an article entitled L’Évaluation des Préjudices Économiques by Professeur Maurice Nussenbaum and published in the Revue de Droit Bancaire et Financier – Revue Bimestrielle Lexis Nexis Jurisclasseur – Mai-Juin 2013.
The Supreme Court highlighted that in a case where the economic loss has been proved but the quantum is uncertain, then the defendant should be required to give its assessment “mis à contribution.” In doing so, the Supreme Court has laid the foundation for the development of the law inasmuch as the Mauritian Legal System currently has no such requirement and it is for the Plaintiff to prove its case. Economic loss is loss sustained in connection with an economic activity. It is assessed by an analysis of the economic situation resulting from a tortious act and that which would have been “but for” the tortious act. The Supreme Court relied on Article 1153 of the Mauritian Civil Code to find that “where the defendant has on account of his bad faith caused to the claimant a loss distinct and separate from the loss resulting from the delay in settling an amount due, an award in compensatory damages with interest may be made.”
The Supreme Court held that “it has been amply proved that although the act giving rise to liability “fait générateur” differs quoad the Authority, MT and Cellplus, yet the breach of licence conditions on the part of MT and Cellplus on the one hand and the tolerance shown on the part of the Authority together caused Emtel’s loss. The Authority, MT and Cellplus should therefore be held jointly liable.”
The Defendants have appealed the decision of the Supreme Court and it remains to be seen what the appellate court will make of this judgment. We can be sure that this is not the end of the battle between David and Goliath.
The LEX Africa member for Mauritius is Chambres d'Erriah.