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Kenyan regulator okays Airtel tower deal after probe found no violations

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The news: 

  • The Competition Authority of Kenya (CAK) has approved the deal between Airtel Africa, a telco, and US communications infrastructure company American Tower Corporation (ATC).
  • Per a CAK report for the financial year 2022, Atlas Towers Kenya Limited, a Kenya-based independent wireless infrastructure company, alleged that Airtel Africa and ATC had signed a trade agreement that would result in vertical restraint of trade. 
  • Performing its regulatory duties, the CAK formally received and investigated the Restrictive Trade Practice (RTP) complaint. 

 A vertical restraint of competition or trade describes agreements between companies at various levels of the supply chain that might restrict competition. 

Vertical restraints are prohibited because they can encourage collusion or allow exclusion, disrupting the market. 

The American infrastructure company provides tower sites for telcos like Airtel. Consequently, Atlas alleged that Airtel agreed with ATC to meet an “Annual Quota” of its tower sites. 

According to Atlas, ATC agreed to offer some money back to Airtel as an incentive once the telcos had leased the stipulated number of ATC towers. With a financial rebate like that, Atlas claimed that Airtel would be less inclined to do business with ATC’s competitors, such as itself. 

Therefore, the agreement would effectively hinder other communications infrastructure companies in the market from offering their services to Airtel, consequently making ATC the exclusive provider.

Having received this complaint, CAK, established by Section 7 of the Competition Act No. 12 of 2010 to promote and protect effective market competition while preventing unfair and misleading market conduct, had to exercise its regulatory powers and investigate. 

The regulator reviewed the complaint in line with its regulations, which cover dominance and what constitutes abuse of dominance, and its guidelines on restrictive trade practices. 

Vertical agreements, according to CAK guidelines, are only problematic if one or both of the companies involved hold a dominant market position.

However, the CAK discovered that neither company held a dominant position in their respective markets in Kenya, with Airtel (a service provider) controlling a minor market share of 0.93% and ATC (an infrastructure owner) controlling a significant share of 38.81% of the passive infrastructure market in the East African nation. 

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Per Kenyan regulations, for a company to be considered a dominant player in its market, it must control at least one-half of the total goods or services of any description supplied or rendered in the country. 

This led the regulator to close its investigation, finding no foul play with the Airtel-ATC deal since the threshold for dominance required by its regulation was not satisfied.Similarly, the Common Market for Eastern and Southern Africa (COMESA) Competition Commission announced last month that it was looking into possible anti-competitive behaviour between Airtel Africa and ATC over their tower deal across Nigeria, Kenya, Niger, and Uganda.

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