Safaricom faces legal battle over alleged unfair dealer contracts 

 The news  

• Goodweek Inter-Services Limited has filed a lawsuit against Safaricom, alleging the misuse of market dominance to enforce unfavourable contract terms.
• The dispute centers on the non-renewal of Goodweek's dealership agreement, which Safaricom insists lapsed due to procedural reasons.
• The outcome of this case could set a significant precedent for the relationship dynamics between major telecom operators and their dealers in Kenya.

A legal dispute has emerged between Safaricom, Kenya's leading telecommunications provider, and Goodweek Inter-Services Limited, a long-standing dealer of Safaricom products.

Goodweek alleges that Safaricom has abused its dominant market position by imposing unfair contract terms, leading to the termination of their dealership agreement. The case, now before Kenya's High Court, also implicates Vodafone Plc, Vodafone Kenya Limited, and Mobitelea Ventures Limited as respondents.

Established in 2002, Goodweek Inter-Services Limited has been a dealer for Safaricom, distributing M-PESA services, SIM cards, and other merchandise.

The partnership encountered challenges in April 2024 when Goodweek's access to Safaricom's dealer portal was revoked following the expiration of their dealership agreement.

Safaricom maintains that this suspension was automatic and in line with standard procedures, as Goodweek did not renew its contract. According to the company, over 400 other dealers successfully renewed their agreements during the same period.

Goodweek disputes Safaricom's narrative, asserting that the telecom giant leveraged its dominant market position to coerce dealers into accepting non-negotiable contract terms. The dealer claims that the new agreement included clauses allowing Safaricom to unilaterally terminate contracts without prior consultation and imposed unrealistic sales targets.

For instance, Goodweek was expected to register 20,700 new subscribers in 2023 but managed 17,322, falling short of the target. The company argues that such high benchmarks were deliberately set to justify withholding commissions and other benefits.

In response to these developments, Goodweek filed a petition with the Constitutional and Human Rights division of Kenya's High Court. By naming Vodafone Plc, Vodafone Kenya Limited, and Mobitelea Ventures Limited as respondents, Goodweek signals its belief that the contractual issues extend beyond Safaricom alone.

Safaricom's legal team, however, questions the relevance of these additional parties, suggesting that their inclusion might be a move to shift the dispute from commercial arbitration to a constitutional platform.

The court's decision could have far-reaching implications, potentially redefining contractual norms and the balance of power within Kenya's telecommunications industry. A ruling in favour of Goodweek might encourage other dealers to challenge existing agreements, prompting a reevaluation of standard practices among major telecom firms.