Competition, telecoms watchdogs to seek truce over Safaricom

The competition and telecommunications regulators are Wednesday set to end a supremacy battle over who has powers to monitor the abuse of dominance in the telecoms sector with the signing of a memorandum of understanding (MoU).

Wang’ombe Kariuki, the director-general Competition Authority of Kenya (CAK), said Tuesday that the MoU will enable the two regulators define areas of specific mandate and those that need joint or converged operations.

“The MoU will eliminate the friction between us and the CA (Communications Authority of Kenya), outline how we operate in areas of overlap and convergence, and as a result reduce duplication,” Mr Kariuki told the Business Daily in a telephone interview.

“This will also help reduce the pronouncement of contradictory decisions,” he added.

The CAK is the regulatory agency in charge of competition matters in all sectors of the economy while the CA is the telecommunications and broadcast regulator.

The two regulators have in the recent past engaged in a supremacy battle on procedures and processes of declaring an operator dominant in the telecommunications sector.

On March 10, for example, the CA published a set of 11 regulations, including Fair Competition and Equality of Treatment Regulations, that would see any telecommunication or broadcasting firm that controls 51 per cent market share automatically declared dominant.

The regulations are meant to come into force by mid-June.

But the competition watchdog has refrained from declaring any such operator as dominant before a number of factors are established.

For instance, such a firm must have the market power to raise prices without suffering a drop in sales.

Safaricom, which controls 67.4 per cent of the mobile telephony market, has been at the centre of the fights between the two watchdogs.

READ: Competition body backs Safaricom in size row

One of the clauses in the CA regulations saw the communications regulator delete a section of the Kenya Information and Communication (Amendment) Act 2013 – which requires it to prove that a firm is abusing its position before declaring it dominant.

Safaricom protested that it should not be punished for “growing organically”.

Declaring Safaricom dominant would put it in a more restricted business environment with additional obligations on transparency, marketing and product pricing. The company could also be required to split its massive business into independent units.

Mr Kariuki reckons that subjecting a business to restrictive regulations without proving abuse of dominance rubbishes the tenets of competition law and international best practice.

Regulators, he added, should only be worried of dominance and intervene if the firm that possesses superior market power behaves to an appreciable extent independently of its competitors, customers and ultimately consumers.