The Competition Authority is set to launch investigations into the operations of MultiChoice Africa, the owners of DStv, for abuse of market dominance following the collapse of its rivals in Kenya’s pay-TV market. Photo/FILE
The Competition Authority is set to launch investigations into the operations of MultiChoice Africa, the owners of DStv, for abuse of market dominance following the collapse of its rivals in Kenya’s pay-TV market.
The newly established authority – charged with promoting fair competition – says its probe will seek to establish whether DStv has unwarranted concentration of economic power that makes it lock the majority of Kenyans into its network, thus new operators fail to break even.
The probe follows the collapse of Smart TV early this month on low uptake of it service and inadequate funding, making it the second pay-television operator in Kenya to close shop after GTV fell into financial distress in 2009.
Both firms left thousands of its subscribers and dealers with obsolete decoders and cemented DStv’s 15 years dominance of Kenya’s pay-TV market.
“We are looking at the whole pay-TV market to establish whether the dominance of one player is behind the recent collapse of the operators or it was the inefficiencies of the collapsed companies,” said Wang’ombe Kariuki, the acting director-general of the Competition Authority in a telephone interview with the Business Daily.
This will be the first act of the Competition Authority—which came into force in August 2011 with enhanced powers and muscle to fight price-fixing and abuse of market dominance by companies that have a substantial marketshare.
Previously, it was a department in Treasury, but now it’s autonomous and can fine companies and individuals Sh10 million or jail terms of five years or both.
This is up from the maximum fine of Sh200, 000 or a jail term of up to three years for offending companies, which was a light sentence for companies whose annual turnovers are over a billion shillings.
DStv has maintained a stranglehold of the region’s pay-TV segment for the last 20 years, managing to win a loyal following of about three million subscribers in several African markets.
It recently moved to diversify its product offering by delving into mobile TV products, launching a new service that will allow mobile subscribers to watch satellite television on their handsets at a low cost.
If the authority establishes that DStv has abused its market dominance, it can compel it to resell its exclusive rights in premium content such as the English Premier League to local rivals in a bid to level the playing field.
Resale deal
Its rivals, led by Wananchi reckon that they have faced difficulties sourcing content for subscribers in the face of DStv dominance and want the authority to compel the South African to enter into a resale deal with them.
Mr Richard Bell, the Wananchi Group CEO, claims that despite DStv being unable to grow the number of subscribers in the country beyond 120,000 due to high charges, the new entrants were unable to take root because DStv had exclusive rights to the premium content.
“The current monopolistic tendencies are killing the pay-TV sector in this country, “ he said in an earlier interview.
