Safaricom Dominance in the Telecoms Market is Instilling Fear in Regulators

According to experts on market competition issues, market power is considered a power over price and output. Each operator competing in differentiated products and services has degree of market power. Dominance however, is a legal concept and is generally understood to exist when firm holds significant market power (SMP), that is, a high degree of market power.

The main characteristics of a dominant firm (or a firm in a dominant position) in a relevant market is its ability to act to a significant extent independently of its competitors, customers and ultimately of its consumers. This frees the dominant firm from the pressures that normally shape a firm’s conduct in an effectively competitive market.

Competition and regulatory authorities would normally rely on market share and other competitive constraints and market factors including but not limited to pricing, constraints form existing and potential competitors, barriers to entry and expansion of relevant market and the degree to which the company commands the capacity to offset the effect of pricing offered by its competitors seeking advantage over it.

The Communications Authority of Kenya appointed an independent international consultant to make an independent assessment of the telecommunications market, and give it a report for its reference and action in the creation of a level playing field for all operators in Kenya.

In its report of the findings of its study, the consultant pointed out that the electronic communications networks are widely regarded as the backbone of the information society and are critical to the growth of the economy. They also pointed averred that ex-ante regulation is often required in nascent or growing telecoms markets in the interests of sustainable competition in network infrastructures and services.

They also pointed out that regulation is seen as temporary, needed only until normal market conditions develop, and is applied regardless of the technology, stimulating innovation, protecting the consumer, driving choice, improving quality of service, and ensuring that prices are reasonable. Their view on sole reliance on ex-post regulation is that it may result in significant harm to competition, noting that “the patient may have died by the time the ex-post penalty is applied, and the ex-post penalty does not directly have an effect on market structure.”

The powers of the Communications Authority (CA) includes the promotion of competition, both ex-ante and ex-post as provided for in the Kenya Information and Communications Act, 1998 with its amendments in 2013 and 2014. There are also several […]

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