The High Court has ruled that a government regulator had no legal basis to prevent a fertilizer supplier from adjusting its prices, setting a crucial precedent for business regulation in Malawi.
The decision has sparked both celebration and concern among industry players and consumers.
The court found that the Competition and Fair-Trading Commission (CFTC) acted without sufficient evidence and failed to follow due process in its attempt to curb alleged price gouging.
The case stems from growing concerns over rising fertilizer prices in Malawi, a country where agriculture is the backbone of the economy.
In recent months, the industry has been hit hard by foreign currency shortages and inflation, forcing suppliers like ETG Inputs Limited to raise prices.
This drew the attention of the CFTC, which, on January 27, 2025, issued an interim order barring the company from increasing prices or limiting the supply of fertilizer and other farm inputs.
Signed by CFTC Chairman Dr. Jerry Jana, the order warned that any violation would result in criminal prosecution.
ETG Inputs Limited, however, saw this as an unjustified interference in the free market and swiftly took legal action. On March 7, 2025, the company applied to the High Court to overturn the order, arguing that the Commission had no reasonable grounds to suspect it of excessive pricing or market manipulation.
The company further contended that the order effectively imposed price controls, which were beyond the CFTC’s legal mandate. It warned that being forced to sell at controlled prices would threaten its financial viability and disrupt Malawi’s fertilizer supply chain.
“The market is free and not subject to any price control,” argued Ashish Lakhotia, a director at ETG Inputs Limited, in his sworn statement. “If we are forced to sell at artificially low prices, we will be driven out of business, ultimately leading to a shortage of fertilizer in the country.”
The CFTC defended its decision, citing a regional study by COMESA, which found that fertilizer prices in Malawi were among the highest in East and Southern Africa. The Commission argued that recent mergers had reduced competition, leading to excessive pricing.
However, ETG Inputs Limited countered that the study focused on regional trends rather than Malawi’s specific market conditions and that no proper analysis had been conducted to determine whether its pricing was unfair or exploitative.
Presiding over the case, Justice Trouble Kalua ruled in favor of ETG Inputs Limited, stating that the CFTC had failed to provide sufficient grounds for its intervention.
He pointed out that the company had not been given an opportunity to explain its pricing before the order was issued, violating the principles of due process.
“No person is to be condemned unheard,” Justice Kalua declared, emphasizing the need for procedural fairness.
He also noted that the COMESA study was an unreliable basis for action, as it examined regional rather than national market conditions.
“The fact that the product is cheaper in Zambia, for instance, does not help us in this inquiry,” he said. “We do not know the circumstances there. Maybe fuel is cheaper in Zambia. Maybe storage costs are lower. Who knows? We cannot begin to speculate.”
Furthermore, the court found that the Commission had overstepped its mandate by attempting to regulate prices in an open and competitive market.
Justice Kalua stressed that an increase in price does not necessarily equate to excessive pricing. He added that any determination of price fairness must involve a thorough analysis of production costs, market competition, and profit margins.
“What is excessive pricing cannot be determined in thin air,” he said. “It is a product of a fair analysis of the cost of production as well as general market prices.”
With the interim order now set aside, ETG Inputs Limited is free to adjust its prices according to market conditions. The ruling sets a significant precedent for regulatory oversight in Malawi’s commercial sector, clarifying the limits of the CFTC’s authority.
While businesses may view this as a victory for free enterprise, consumers remain concerned about affordability, as fertilizer is a critical input for food production.
The broader debate over fair pricing and market regulation in Malawi’s agricultural sector is far from over. Moving forward, the CFTC may refine its investigative processes to ensure that any future interventions are backed by stronger evidence and adherence to due process.
As Malawi continues to navigate economic challenges, the need for a balanced approach—one that protects consumers without stifling business viability—remains a pressing issue.
Collins Mtika produced this story for the Centre for Investigative Journalism Malawi (CIJM), as part of the Centre’s aim to expose corruption, hold power accountable, and amplify marginalised voices. CIJM: ‘Uncovering the Truth. Empowering change’.
