Safaricom Faces Lawsuit Over Alleged Unfair Dealer Contracts

Kenyan telecom giant Safaricom is facing legal action from Goodweek Inter-Services Limited, one of its long-time dealers, over claims of unfair contract practices. Goodweek alleges that Safaricom leveraged its market dominance to impose unfavorable contract terms, which ultimately led to the non-renewal of their dealership agreement. The lawsuit, now before Kenya’s High Court, also names Vodafone Plc, Vodafone Kenya Limited, and Mobitelea Ventures Limited as respondents.

What Led to the Dispute?

The conflict dates back to April 2024 when Goodweek’s access to Safaricom’s dealer portal was revoked following the expiration of its contract. Safaricom argues that this was standard procedure, as Goodweek simply failed to renew its contract—just as over 400 other dealers successfully did. However, Goodweek challenges this explanation, claiming that the telco set unrealistic sales targets and imposed one-sided agreements that allowed it to terminate dealership contracts at will.

For instance, Goodweek was required to register 20,700 new subscribers in 2023 but only managed 17,322. The company believes these high targets were a deliberate move to justify slashing commissions and other dealer benefits. Now, they are seeking legal redress, arguing that Safaricom’s actions not only harm dealers but also amount to an abuse of market dominance.

A History of Legal Battles

This isn’t the first time Safaricom has come under legal scrutiny for its business practices. In 2018, a group of agents sued the company, claiming they were unfairly cut off from M-PESA services. Additionally, the Competition Authority of Kenya has investigated Safaricom multiple times over allegations of anti-competitive behavior, particularly concerning mobile money operations.

What’s Next?

Safaricom is questioning why Vodafone and Mobitelea have been included in the lawsuit, suggesting that Goodweek might be attempting to escalate a commercial dispute into a constitutional issue. If the court rules in Goodweek’s favor, it could set a precedent that challenges how major telecom operators structure their dealer agreements.

Whatever the outcome, this case could have significant implications for the telecom sector in Kenya, potentially forcing Safaricom and other providers to reassess their dealer contracts to avoid future legal challenges.