Economy

Safaricom hits at regulator over dominance laws

BOB

Safaricom chief executive Bob Collymore. PHOTO | FILE

Summary

  • The proposed law empowers the Communications Authority of Kenya to automatically declare any telecommunication firm with a market share of more than 50 per cent as dominant.
  • Safaricom says the proposed regulations will automatically declare it a dominant operator without any evidence showing that it is abusing its dominant position

Safaricom has differed with the Communications Authority of Kenya (CA) on a proposed set of rules aimed at curbing abuse of market dominance, saying the regulator did not take on any of its suggestions at the public consultation stage. 

The proposed set of 14 rules, to be passed on to Parliament, include a Fair Competition and Equality of Treatment clause that empowers CA to automatically declare any telecommunication firm with a market share of more than 50 per cent as dominant.

Safaricom on Thursday said the proposed regulations will automatically declare it a dominant operator without any evidence showing that it is abusing its dominant position, contrary to international best practices.

“Safaricom has expressed its disappointment with CA on the proposed regulations in particular on the Fair Competition and Equality of Treatment and the Tariffs regulations,” said Safaricom director of corporate affairs Stephen Chege in an interview.

Once declared dominant, Safaricom would operate in a more restricted business environment in terms of marketing and pricing.

The regulator will have powers to set prices for any firm declared dominant.

This, Mr Chege said, goes against the normal practice in a liberalised economy.

READ: CA seeks powers to reduce Safaricom’s market share

Any firm declared dominant will also be subjected to at least a 45-day tariff approval process, while its rivals can change their tariffs within a day’s notice.

The ICT secretary Fred Matiang’i on Thursday said the regulations will be forwarded to the National Assembly next week.

Under the proposed regulations, any operator found to have abused its dominance or engaged in anti-competitive conduct will be liable to a fine not exceeding the equivalent of 10 per cent of its gross turnover in the preceding year, for each financial year that the breach persists.

The CA deleted Section 3A of the Kenya Information and Communication (Amendment) Bill 2013 that previously required the regulator to establish if the operator was abusing a dominant status before penalising it.

“With the new amendment on the tariff regulations, it will take Safaricom at least two-and-a-half months to react to any price adjustment by competitors, since we will be subject to a 45 days approval process by the CA which includes publishing the rates in the Kenya Gazette, compared to other operators that will only require a day,” said Mr Chege.

The CA director-general Francis Wangusi separately said that after the regulations are passed by Parliament, the regulator will come up with data showing which operator is dominant in each market segment before taking action.