We won’t split businesses, take drastic actions that destabilize dominant market players – CA

The Communications Authority of Kenya (CA) is obligated by law to promote, develop and enforce fair competition and equality of treatment among licensees.  Arising from this mandate, the Authority is required to regulate competition in the sector and protect ICT consumers, a responsibility that is carried out through market analysis and targeted interventions in the market. It is worth-noting that the CA and the Competition Authority of Kenya (CAK) have some overlapping as well as varying jurisdiction in the management of competition in the ICT sector in Kenya.

In furtherance of this mandate, the Authority, in May 2016, contracted Analysys Mason of the UK, to undertake the telecommunications competition market study with a view to establishing the degree of competition and its effectiveness in the various telecommunications markets.

In particular, the study was aimed at:

  1. Identifying the relevant sub-markets within the telecommunication sub-sector, the number of players that exist and their respective market shares;
  2. Establishing the levels and extent of competition in the various telecommunications sub-markets and identify players with significant market power.
  3. Identifying the market barriers, if any, that prevent entry, competition and the growth of the players in the era of changing technologies;
  4. Providing proposals on the best way of eliminating barriers to growth
  5. Establishing any anticompetitive behavior and evaluate the extent that this has helped players entrench dominance in sub-sector.
  6. Recommend the optimal regulatory response to the competition issues identified within the existing regulatory and legal framework.

I am happy to note that the consultants undertook the study in close consultations with the industry and CAK and submitted a draft report to the Authority in mid February 2017.  Subsequently the Authority shared the report with the Competition Authority of Kenya as part of the consultation envisaged in the ICT sector law. On 6th March 2017, the Competition Authority of Kenya reverted with comments, which CA is currently reviewing with a view to finalizing the report.

Once the ongoing review is completed, the Authority shall subject the report to a process of stakeholder consultation.  In this regard, the Authority shall engage industry players and other interested parties for further comments and input in line with the constitutional requirements. The Authority is targeting to finalize and release the final report in May 2017.

May I take this opportunity to set the record straight that the Authority has not released the competition study as purported in some quarters.  In the same breath, I wish to allay fears that the Authority is planning to split the business of some market players or take such drastic actions that may destabilize dominant market players. The Dominant Market Power and Regulated Services reports will be released once the required processes as stipulated in the constitution, ICT sector law and the Fair Competition and Equality Treatment as well as the Tariffs Regulations have been concluded.  The rumours that are doing the rounds about the contents of the draft competition report are therefore untrue and unfounded.  I urge the sector and the public at large to totally ignore them.

I further wish to note that it is not the Authority’s intention to punish success but enhance competition so as to foster growth of the telecommunications subsector. The law mandates CA to develop ex-ante competition safeguards to prevent any potential abuse of dominance. This is an exercise that is carried out the world-over in this sector by ICT regulators. The lack of such safeguards can easily degenerate into anti-competitive behaviour to the detriment of sectoral growth, investments and consumer welfare.  I would like to clarify that dominance in any market segment is not in itself an offence. It is the abuse and the potential of abuse of dominance that must be regulated.  Left unregulated, un-competitiveness in the sector has the potential to compromise consumer welfare in terms of limited access to services, poor quality of service, high tariffs and limited choice.  Abuse of significant market power could also create barriers to entry into the market and ultimately result in market failure.

Conversely, a competitive telecommunications landscape promotes consumer welfare and lays a conducive environment for investment in the sector.  It fosters growth of the sector and by implications the socio-economic development of the country. In addition, it stimulates innovation and thereby catalyzes other sectors of the economy.  These are the outcomes that CA would want to see in the local ICT sector consistent with the national ICT Policy objectives. Indeed this is the reason why the Authority has applied ex-ante regulation in the past and will continue to apply it in the future in order to create a more level playing field for all operators in the market.

I wish to assure the industry and other stakeholders that the Authority remains committed to fostering competition and innovations in the ICT sector in order to spur emergence of new services to support the demands of a modern economy.

(This is the media release read on March 14, 2017 by CA board chairman Ngene B. Gituku in reaction to media reports that the regulator would split units of dominant market players).

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