Reprieve for Safaricom as CAK refutes its dominant player tag

CAK director -general Francis Wang’ombe on Wednesday said that there was no complaint before the agency to declare that Safaricom has abused its dominant position. PHOTO | FILE

There is no evidence that Safaricom is abusing its dominant position in the market, the Competition Authority of Kenya (CAK) has said offering reprieve to the telco, which has been under the spotlight of the communications regulator.

CAK director -general Francis Wang’ombe on Wednesday said in an interview with NTV that while the authority has previously found Safaricom guilty of abuse of its dominant position in the mobile money market, the firm later agreed to open up its more than 85,000 M-Pesa agents to rivals Airtel and Orange.

Mr Wang’ombe’s reaction follows an announcement on Tuesday by the Communications Authority of Kenya (CA) that it has started a process to formulate regulations that will give it powers to automatically declare any firm with more than 50 per cent market share as a dominant player.

“There is no complaint before us (CAK) to declare that Safaricom has abused its dominant position… my opinion is that the players, lets say like the market leaders in print media, have attained this position due to their innovative products,” said Mr Wang’ombe.

He, however, said it is not clear who ( between the Ministry of Information and Communications or the CA) should declare a firm dominant and under what law, stating that his agency is only mandated to deal with the abuse of the dominant position.

For a company to be found to have abused its dominant position there are a number of factors that competition regulators throughout the world consider, among them being that the firm must have market power, for example to raise prices without suffering a drop in sales.

It is also taken into consideration whether the market dominance is permanent or transitional and whether the player is using predatory pricing to erect market barriers for new or small operators.  

“In the sense that you have over 50 per cent (market share) but you are still worried over your rivals pricing, means that you don’t have market power, Safaricom does not have market power because it is still threatened by the action of its competitors,” he added.

Mr Wang’ombe said abuse of dominant market position is a criminal offence, but pointed out that in most cases competition regulators engage with the offending firm to make up in areas that it has been abusing its market dominance but if the situation persists then a criminal case is instituted.   

The CA’s proposed set of 11 regulations meant to come into force by mid-June, include a Fair Competition and Equality of Treatment clause.

The move is in line with the quest to align the existing law to the Kenya Communications Amendment Act, 2013.

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