INFORMATION AND COMMUNICATIONS AND COMPETITION LAW IN KENYA.

Introduction

Competition law is designed to prevent market distortions caused by anti-competitive business

practices. However, this position presupposes that there is competition to begin with, which in
contemporary digital markets is seldom the case. Economies prosper when markets are
competitive. Competition spurs new ideas, raises the quality of goods and services, gives
customers more choices, and lowers prices. Markets become stagnant and customers lose out
when competition is restricted.

There is a problem, though, with dominant platforms as it relates to competition law, is that these
companies are no longer exclusively in the business of what they set out to do. Because of their
vertical and horizontal integration, they can leverage their success in one market to break into
and dominate others. The law has seriously been outpaced by technological advancements.
However, in addition to competition/antitrust law reform, a number of laws have also
mushroomed around the globe to combat dominant platforms.

The lack of adequate regulation and challenges of enforcement can largely be attributed to two
phenomena. First, the Internet is a borderless medium. This means that even if regulators could
formulate appropriate policies for competition, enforcing them would be difficult as the effects
of the (anti)competitive conduct of one firm are not localized. Coupled with the legal principle of
territoriality, it would be a daunting task to enforce competition laws in every jurisdiction where
anti-competitive behavior has effects. Second, a combination of strong network effects,
substantial economies of scale and scope, low costs, and vertically integrated and conglomerate
business models tend to give rise to the rapid growth and monopolistic behavior of most
platforms.

Government laws and regulations are a key component to the technological changes taking place
and the competitiveness and innovation experienced by Kenya's telecommunications industry.
The high competition in the sector has meant that there is a need for stricter government laws
and regulations that every player must observe to remain in the market. Open democratic space
allows entry and exit of market players as long as the current laws are followed to the letter.

Legal framework
 Kenya Information and Communication (Amendment) Act, 2013

The National Assembly on 31 October 2013 passed the Kenya Information and Communications
(Amendment) Bill 2013, which sought to introduce significant and draconian changes to the
regulation of the media fraternity. The passing of the bill sparked a spirited outcry from the
media industry and civil societies with the public left at bay on whether the bill was a good law.
This bill was referred to the President for assent on 26 November. Pursuant to the powers
conferred to the president under article 115 (1) (b) of the Constitution of Kenya, the president
refused to assent to the bill and referred it back to the National Assembly with a memorandum.
Surprisingly, the reservations expressed by the president were termed as being far more offensive
than the ones passed by the National Assembly with stakeholders lamenting that the president
ignored their advice. However, two weeks after the National Assembly had passed it for the
second time, the President signed it into law on 4th December 2013.1

It is now the Kenya Information and Communications (Amendment) Act 2013 (“hereinafter
referred to as the Amendment Act”). This Amendment Act aims to regulate the Kenyan media on
what to air, how to air it and consequences of non-compliance. Thus, it is perhaps fitting to
explore the different models of media regulation around the world to understand the path Kenya
has chosen and to determine whether that path is the best. This Act of Parliament provides for the
establishment of the Communications Commission of Kenya to facilitate the development of the
information and communications sector sector2 and electronic commerce to provide for the
transfer of the functions, powers, assets and liabilities of the Kenya Posts and
Telecommunication Corporation to the Commission, the Telcom Kenya Limited and the Postal
Corporation of Kenya and for connected purposes.

The Act establishes the Communications Authority of Kenya.3 Section 5A provides for
independence of the Authority. The object and purpose of the Authority shall be to license and
regulate postal, information and communication services. The Act under Part VIC illustrates on
fair competition and equal treatment. The Act states that a licensee under the Act shall not

1
Mwakilishi.com, ‘Controversial Kenya Media Bill Signed into Law.’ (16th December 2013)
http:www.mwakilishi.com/content/articles/2013/12/16/controversial-kenya-media-bill-signed-into-law.html
accessed on 20th February 2014
2
Including broadcasting, multimedia, telecommunications and postal services
3
Section 3 of the Kenya Information and Communication Act
engage in activities, which have or are intended to or likely to have the effect of unfairly
preventing, restricting or distorting competition where such act or omission is done in the course
of.4 The Commission shall ensure that there is fair competition in the sector and in that regard
make a determination in the licensed system and services. It shall also promote, develop and
enforce fair competition and equality of treatment among licensees.

The Commission may investigate any licensee whom it has reason to believe or is alleged to
have committed any act or omission in breach of fair competition or equal access. 5 Any person
having a complaint of a breach of fair competition against a licensee shall lodge a complaint to
the Commission and where the Commission makes a decision that a licensee has committed an
anti-competitive conduct, it shall order the licensee to stop the unfair competition and declare
any anti-competitive agreement or contracts null and void.6

The Act under 84V provides that a licensee shall provide equal opportunity for access to the
same type and quality of service to all customers in a given area at substantially the same tariff
limiting variations to available or appropriate technologies required to serve specific customers.
On regulation on competition issues, the Minister may in consultation with the Commission
make regulations with respect to competition issues.

KICA provides for the regulation of fair competition and as under Sec 84S, it refers to anti-
competitive conduct by licensees in general, but it specifically mentions the communications
sector in point (c). The provision gives the Commission the power to investigate any licensee
who is believed to have committed an act or omission that breaches fair competition or equal
access.

The provision then goes on to provide examples of unfair acts that may constitute anti-
competitive conduct. These include abuse of a dominant position, entering into agreements or
engaging in concerted practices that restrict competition, price fixing, exclusive dealing, tying
arrangements, and market sharing.

4
Ibid s 84Q
5
Ibid s 84T (1)
6
Ibid (6)
By providing these examples, the provision helps to clarify what kinds of conduct the
Commission may investigate and take action against. The examples are consistent with the goals
of promoting competition, protecting consumers, and encouraging innovation in the marketplace.

Examples of agreements or concerted practices that may breach this provision include price-
fixing, market-sharing, or exclusive dealing arrangements between licensees. These agreements
can artificially limit competition and can lead to higher prices or reduced choice for consumers.
Similarly, licensees who engage in concerted practices, such as coordinated pricing or supply
decisions, can have a similar effect.

It is important to note that not all agreements or concerted practices are anti-competitive or
illegal. For example, joint ventures or collaborations aimed at improving efficiency or innovation
may be permissible under certain circumstances. The provision is aimed at prohibiting only those
agreements or practices that unfairly prevent, restrict or distort competition. The Commission
will analyze each case on its own merits and determine whether an agreement or concerted
practice is anti-competitive or not.

Examples of unfair acts may include:

Predatory pricing: This occurs when a licensee sells goods or services at a very low price
with the intention of driving competitors out of business. Once the competition is
eliminated, the licensee can increase prices and gain a dominant market position. This
practice can harm consumers by creating an unsustainable market dynamic. This can also
limit innovation and investment in the market since competitors may not be able to
compete effectively against the predatory licensee.

Refusal to deal: A licensee may refuse to supply goods or services to another party without
justifiable reason. This may be aimed at preventing competitors from accessing essential
resources, thereby limiting their ability to compete. It can harm consumers by limiting
their choices and potentially leading to higher prices since competitors may not be able to
enter the market to offer lower prices or more innovative products or services.

Market sharing: Two or more licensees may agree to divide a market between themselves,
rather than compete for customers. This reduces competition and can lead to higher prices
 for consumers. It can also limit innovation since the licensees are not competing to offer
better products or services. Consumers may have fewer choices as a result of market
sharing, which can harm their interests.

Tying arrangements: A licensee may require a customer to purchase a particular product or

service as a condition of buying another product or service. This is anti-competitive if the
licensee has a dominant market position in the market for the first product or service.

Price fixing: Two or more licensees may agree to set prices at a certain level. This eliminates
competition and can result in higher prices for consumers. This practice can harm
consumers by eliminating competition and leading to higher prices. It can also limit
innovation in the market since licensees may not need to compete to offer better or more
innovative products or services. Consumers may have fewer choices as a result of price
fixing, which can harm their interests.

Exclusive dealing: A licensee may require a customer to buy its products exclusively,
thereby limiting the customer's ability to purchase from competitors. This can lead to
higher prices for consumers and can limit the ability of new entrants to compete in the
market.This practice can limit competition by preventing competitors from accessing
customers or distribution channels. It can harm consumers by limiting their choices and
potentially leading to higher prices since competitors may not be able to enter the market
to offer lower prices or more innovative products or services. Exclusive dealing can also
limit innovation in the market since competitors may not be able to access the same
distribution channels to offer better or more innovative products or services.

Kenya Information and Communications (Fair Competition and Equality of Treatment)

Regulations, 2010

These regulations were enacted pursuant to section 84 of the KICA. The main purpose of these
KICA Fair Competition Regulations is to provide a regulatory framework for the promotion of
fair competition and equal treatment in the communications sector; and protect against the abuse
of market power or other anticompetitive practices within the communications sector. These
regulations seek to provide for the standards and procedures to be applied by the Commission in
determining whether the particular conduct is anti-competitive, clarify the agreements, conduct
or practices that the Commission shall consider to be anti-competitive and prohibited under Act
and to provide for the standards and processes that the Commission shall apply when
determining whether a telecommunication service provider is dominant in a given market.

The Communications Commission of Kenya shall have the power to determine, pronounce upon,
administer and enforce compliance of all its licensees with competition laws and regulations, that
it relate to commercial activities in the communications sector. The Commission shall in
determination of breach, evaluate the relevant market or market segment that the agreement,
conduct in question or practice relates and determine whether the market or market segment is
competitive or establish whether a licensee is engaging in anti-competitive practices.

On investigations into complaints of unfair competition and discrimination, the Commission may
investigate a licensee whom it has reason to believe has committed an act or omission or is
alleged to have committed an act or omission, or to have engaged in a practice, breaching the
requirement for fair competition or equality of treatment.

Constitution Of Kenya 2010

The 1963 Independence Constitution of Kenya did not provide for the freedom of the media. The
only relevant constitutional provision was section 79 that provided for the freedom of expression.
This by extension catered for journalists and media houses. There was no express provision for
the freedom of the press in Kenya. The Constitution of Kenya, 2010 sought to address this
vacuum and has now expressly provided for the freedom of the media under article 34. The
Constitution now provides that the freedom and independence of electronic, print and all other
types of media be guaranteed. The state shall not exercise control over or interfere with any
person engaged in broadcasting, the production or circulation of any publication or the
dissemination of information by any medium; or penalise any person for any opinion or view or
the content of any broadcast, publication or dissemination.7

The broadcasting and other electronic media have freedom of establishment only subject to
licensing procedures that are necessary to regulate the airwaves and other forms of signal
distribution. This licensing procedure is required to be independent of control by government,
political or commercial interests. The right to freedom of the media correlate with the right to
freedom of expression and access to information. The Constitution requires that exercise of the
right to freedom of expression to respect the rights and reputation of others. On the other hand,
access to information held by the state entails access to correct and true information relayed,
interalia, through the media. The Constitution requires parliament to enact legislation that
provides for the establishment of a body, which shall be independent of control by the
government, political interests or commercial interests; reflects the interests of all sections of the
Kenyan society; sets media standards and regulates and monitors compliance with those
standards.

The national values and principles of governance are outlined in Article 10 and apply to all state
agencies, including those that oversee the ICT industry's competition. This means that in order to
avoid being ruled unconstitutional, competition-related laws, rules, and policies must adhere to
certain principles, such as public participation.

Due to the prohibition of discrimination in Article 27, market participants cannot be unfairly
treated by laws and regulations governing competition. An administrative action must be fair,
according to Article 47. Every administrative body must follow the requirements of the article to
make decisions that are ‘expeditious, efficient, lawful, reasonable, and procedurally fair’.
Additionally, it stipulates that everyone (including those working in the ICT Sector) has the right
to request judicial relief by appealing or having the judgments of the various regulatory
authorities reviewed.

Consumers have a right (a) to goods and services of reasonable quality,...(c) to the protection of
their health, safety and economic interests, according to Article 46 on consumer rights. This is

7
Orago Nicholas Wasonga, "The 2010 Kenyan Constitution and the hierarchal place of international law in the
Kenyan domestic legal system: A comparative perspective. "African Human Rights Law Journal (2013)
the rationale behind many regulations of competition, which serve the general welfare and
safeguard the interests of consumers of products and services.

According to Article 23, anyone who claims that any of the aforementioned rights have been
violated is entitled to file a case in the High Court and request any of the following reliefs: a
declaration of rights, an injunction, a conservatory order, a declaration of invalidity of any law,
and an order of judicial review.

Hence, the 2010 Kenyan Constitution aims to safeguard the public interest as described in the
public interest theory, which places focus on how the product affects the consumer in the end. In
order to safeguard the public's interests, the Constitution mandates that consumer rights to high-
quality goods be upheld, as well as public participation in administrative bodies' decision-making
processes to guarantee that these bodies' decisions are ‘expeditious, efficient, lawful, reasonable,
and procedurally fair’. In this situation, the Constitution uses the public interest principle/theory
to guide its regulation of the competition.

Competition Act

The amendment of the Fair Competition Act no. 49 of 2016 enacted in 2010 brought about more
benefits such as providing for interaction between the authority and for instance sector regulators
in facilitating through collaboration and ensuring fair competition.

It is crucial to note that S. 5(2) of the Act puts a footprint such that in the event where there is a
conflict between other laws and what is provided for in the Act. The provisions of the Act will
prevail. Truly the drafters of this Act had the interests of fair competition at heart. However, fair
competition and equality in the ICT sector is a crucial element in competition issues because
fairness and equality are the ultimate recipients of the ICT services within the ICT sector, and are
reliant on the ICT being free from inequality and unfairness competitive distortions.

The Competition Act No. 12 of 2010 (the Act) created the Competition Authority of Kenya (the
Authority), a statutory agency. The Authority's mandate is to protect consumers from deceptive
and unfair business practices while promoting and preserving competition in Kenya. The
Authority is to encourage and enforce adherence to the Act, receive and look into complaints
from individuals or organizations representing consumers and examine laws, proposed laws,
government policies, procedures, and programs to determine how they will affect both
competition and the welfare of consumers; and make the findings of these studies public.

The Competition Tribunal was created in accordance with the Act and its mission is to improve
the welfare of Kenyans by fostering and ensuring fair competition in markets, as well as by
eliminating unethical and deceptive market behavior.The Tribunal resolves disagreements
resulting from the Competition Authority of Kenya's rulings (CAK). The following areas may
give rise to disputes:

Restrictive Trade Practices, these agreements prevent the free flow of trade in the market.

Abuse of Dominant Position. This is when a powerful company in the economy abuses its
position to the detriment of healthy competition.

Exemption of Certain Restrictive Trade Practices. If the public benefit overcomes the
reduced competition, a restrictive trade practice may be excused.

Mergers and Acquisition. This refers to acquiring ownership and management over another
company, whether completely or in part.

Case of the Merger: Telcom Kenya Limited & another v Competition Authority of Kenya

In the aforementioned instance, the Kenyan Competition Tribunal (the Tribunal) permitted a
merger to lessen Safaricom's sway as the market leader. On May 4, 2020, the Kenyan
Competition Tribunal (the Tribunal) rejected a number of the restrictions placed on the merger of
Telkom Kenya and Airtel Kenya by the Competition Authority of Kenya (CAK). The CAK has
opposed the Telkom Kenya/Airtel Kenya merger on the basis that it combined the second and
third largest competitors in the Kenyan telecommunications industry, creating a duopoly. The
CAK was worried that the merger would raise obstacles to entry for future entrants rather than
seeing it as establishing a stronger challenger to Safaricom as the market leader. The case
demonstrates how the Kenyan Competition Tribunal (the Tribunal) is committed to breaking up
media monopolies, which helps shield the public from abuse. Evaluating the fair competition act
in terms of how it governs and guarantees fair competition

Unwarranted Concentration of Economic Power.

means that two separate undertakings or businesses that produce substantially comparable goods
or services and have a combined market share of more than 40% have close directorship.
According to Section 51(4), an unwarranted concentration of economic power is considered to be
detrimental to the public interest if it has the following effects, or would have the following
effects, considering the economic conditions in the country and all other factors that are relevant
in the specific circumstances:

1. The profits from the production, supply, or distribution of goods or from the rendering of
any service lessen, distort, prevent, or limit competition in the production, supply, or
distribution of any goods (including their sale or purchase) or the provision of any
services; or

2. Unreasonably increase the cost associated with the production, supply, or distribution of
goods or the provision of any service; or

3. Unreasonably increase the price at which goods are sold;

4. Result in a deficiency in the production, supply or distribution of any goods or services.

Consumer Welfare Cases. These include misrepresentations about a product's or service's

standards, quality, value, grade, composition, style, or model.

The Agency for Consumer Protection

Parts VI of the Act (Sections 55 to 70) are enforced by this Agency. The Agency's primary duty
is to look into complaints about deceptive or false advertising, unethical behavior, and the sale of
dangerous, substandard, or inappropriate items.8 The Agency also looks into projects that don't
adhere to the required Product Information Standards and Consumer Product Safety Standards.
The Agency also works with consumer organizations to promote consumer welfare and educates
consumers about their rights and responsibilities under the Act. 9 These are only a few of the
agency's additional duties. Additionally, they support adherence to the Competition Act and offer

8
Fox, Eleanor M. and Mor Bakhoum. Making markets work for Africa : markets, development and competition law
in Sub-Saharan Africa. Oxford University Press, USA, 2019
9
Munywoki, Maurice N. Consumer Protection Regimes in Kenya with Specific Interest on the Role of Competition
Law and Intellectual Property Law. Diss. University of Nairobi
the Kenyan government advice on issues pertaining to competition, such as how to handle
interactions with local and foreign stakeholders.

Buyer Power

The ability of a buyer to achieve supply conditions that are more advantageous than a supplier's
customary contractual terms is known as buyer power.10 In other words, it refers to the influence
an organization or group of organizations exerts when they are in the position of a supplier of a
good or service to demand more favorable terms from them or to impose a long-term opportunity
cost, such as harm or a benefit that is withheld, which, if carried out, would be significantly
disproportionate to any resulting long-term cost to the organization or group of organizations.

An organization or collection of organizations with purchasing power has the ability, if they so
choose, to influence the negotiation process and ultimately get more advantageous terms of trade
at the expense of the supplier. A monopsony or a bargaining buyer power are two different ways
to define buyer power. A company has monopsony power if it has a significant enough share of
the upstream input market purchases to be able to influence market prices by increasing or
decreasing its purchases.11

Contrarily, the term "bargaining power" refers to the leverage a buyer has over its suppliers as a
result of things like market concentration in both the upstream and downstream sectors.
Therefore, abuse of buyer power can occur when a buyer acts in a way that is solely motivated
by the desire to gain a competitive advantage. This kind of behavior is likely to limit suppliers'
capacity to invest in new production technologies, products, and capacity, which is ultimately
bad for consumer interests. The Department also provides advice in relation to buyer power
abuse.

Achievements of the act in ensuring fair competition and equality

There has been an increase in affordability and consumer choice of services, due to low entry
barriers which has led to an increase of the Small and Medium ICT players in the country. This

10
Amaemba, Cyrus Saul, et all. "Challenges affecting public procurement performance process in Kenya".
International Journal of Research in Management (2013)
11
Wachira, Ruth W. Supplier relationship management and supply chain performance in alcoholic beverage industry
in Kenya. Dies. University of Nairobi, 2013
is as a result of implementation of the Act. Statistics show that as at 2002 only 4 big firms were
dominating the ICT sector, but today we have over seven hundred of them due to the favorable
regulations which created room for expansion. As well, preventing the dominance of one
telecommunication from exploiting developing firms. This was well addressed in the case of
Airtel v Safaricom

The Competition Authority of Kenya has had several engagements in competition and equality
advocacy programmes through educating the public through sensitization forums, which informs
them of their roles in the competitive ICT sector.The establishment of the competition tribunal as
an alternative channel for redress led to the reduction of the case backlogs in normal courts. As
well, it promotes the spirit of ‘exhaustion of remedies principle’, parties have an obligation to
move to the tribunal first before lodging a case at the High Court. This shows growth and
maturity in the dispute resolution mechanisms. The court should not dually serve as the initial
and final port of call if there are other mechanisms that can be exploited before proceeding to
court.

Alternative Dispute Resolution mechanisms are cost effective for instance resolving a dispute at
the tribunal level which is provided for by the Act rather than having a similar dispute resolved
by the court. The CAK has ensured the eradication of anti-competitiveness and inequality acts
done by ICT corporates in the spirit of promoting competition and equality. Inequality has
always been prevented by CAK from companies who use their dominance to the detriment of
others as was the case in Safaricom Plc v Airtel Networks Ltd. The Act as well facilitates and
ensures transparency which is necessary for fair competition and equality attendance. This can be
seen through ensuring fair pricing of services to the public.

International laws and treaties

The Comesa competition Regulations, 200412

Kenya is one of the 19 nations that make up the Common Market for Eastern and Southern
Africa (COMESA), a trade and investment bloc whose goal is to advance regional economic

12
Official Gazette of the Common Market for East and Southern Africa (COMESA), vol 17 No 12, 20th Nov 2012
integration. Kenya joined COMESA on December 21st, 1998, when it ratified the COMESA
treaty.

By virtue of Article 2, the Kenyan Constitution of 2010 permits foreign law (including treaties
approved by Kenya) to be incorporated into Kenyan law.13 According to Article 2 of the treaty,
the goal of these regulations is to protect consumers from deceptive behavior by market actors
and to promote and foster competition by forbidding restrictive business practices and other
restrictions that hinder the effective operation of markets.

Article 3 of the COMESA laws states that all economic operations, whether carried out by
private or public individuals within, or having an effect within, the common market, are subject
to the regulations, with the exception of those activities described in Article 4. This implies that
these rules must be followed in any mergers and acquisitions of telecommunications firms within
the member nations.

Article 5 outlines the responsibilities of member nations. It asserts that member states must make
it easier for the common market's goals to be achieved, i.e., to guarantee fairness and equality in
member states' business activities.

The COMESA regulations' third part addresses unlawful restrictive business practices. They
include any agreements and coordinated actions that may have an impact on trade between
members and have as their goal or result preventing, restricting, or stifling competition in the
common market.

The definitions of a dominant market position and situations that may constitute abuse of a
dominant position are provided in Articles 17 and 18 of the treaty.

The topic of mergers and acquisitions is covered in Part 4, along with the requirement to get the
COMESA commission's approval in certain specified merger transactions. The fifth section
addresses consumer protection. Hence, where a transaction, such as one involving the acquisition
of any telecommunications business inside the regional block, must be subject to the COMESA
laws, the terms of this international document are applicable.

13
Article 2(5) & (6) of the Kenyan Constitution
Efficacy of regulating competition and equal treatment in Kenya's ICT sector

Information and Communication Technology (ICT) can be grouped into information technology
uses computers, telecommunication technologies14 and network technologies(internet). The role
of competition law is intended to protect the process of competition to ensure efficiency and
maximize consumer welfare. The regulatory framework of competition falls within the domain
of the competition regulator, financial services regulator and telecommunications regulator.

The new Competition Act of Kenya is undoubtedly a major step forward in the development of a
powerful and useful competition policy for the country. The Competition Authority of Kenya
has been active in its mandate. It has been actively advocating for competition policy by advising
other branches of government with respect to policies that may have implications for competition
in Kenyan markets and conducting general educational programmes on competition policy for
Kenyan businesses and consumers at various locations around the country.

The functions of the Competition Authority of Kenya (CAK) a regulator as established under
section 7 of the Competition Act15 is to promote and enforce compliance with the Act and
importantly to foster fair competition in the market among other functions. 16 This goes in line
with the objective of the Competition Act being that of preserving and promoting the free market
and for consumer welfare protection in regulated industries. One of the roles of the Competition
Authority is that it is required to develop, promote and monitor fair competition among key
market players in the ICT industry by ensuring that ICT users are protected from unfair business
practice. The Authority is mandated to negotiate agreements with any regulatory body with
which it has concurrent jurisdiction in respect of any conduct regulated under the Act in order to
identify and establish procedures for management of concurrent jurisdiction.17

14
which includes telephones and the broadcasting of radio and television
15
No. 12 of 2010
16
Section 9 Competition Act 2010
17
Ibid s 5(3)
The financial services regulator which is the Central Bank of Kenya (CBK) is established by
article 231 of the Constitution of Kenya and Section 3 of the Central Bank Kenya Act 18. The
CBK is charged with the mandate of formulating monetary policy, promoting price stability,
issuing currency, formulating and implementing policies to promote the establishment,
regulation and supervision of efficient and effective payment, clearing and settlement systems. It
is also mandated license, regulate and supervise banking and microfinance businesses, regulate
and supervise payment systems and payment services providers.19 Under the National payment
systems regulations, CBK prohibited exclusivity contracts between payment service providers
and agents.20

The Communications Authority of Kenya(CA) established under the Kenya Information and
Communication Act is to license and regulate information and communication services. 21 The
Communication Authority is mandated to promote, develop and regulate information and
communication services in accordance with the provisions of the Act. 22 The Authority is also
mandated under sections 84(q) to 84(w) of the Act to ensure fair competition and equality of
treatment in the information and communication sector. Pursuant to the Kenya Information and
Communication (Fair Competition and Equality Treatment) Regulations, the Authority is also
obligated to cooperate with statutory agencies with which they have concurrent jurisdiction on
competition matters.

The CA investigates complaints on abuse of market dominance and enacts guidelines and
regulations to ensure that commodities such as waves are not used by the dominant market
players at the prejudice of the weaker parties. This is to ensure that there is a competitive market.

The convergence of mobile telecommunication services and financial services has created new
challenges to the regulatory framework for competition. There are several overlaps between the
CBK, CA and the CAK mandates to regulate, investigate and punish anti-competitive practices
in financial services and telecommunications sector. The objective of the competition law is to
preserve and promote free market competition and consumer welfare protection in regulated

18
Cap 491, Laws of Kenya
19
Section 4 Central Bank of Kenya Act
20
regulation 15(2) the National Payment System Regulations, 2014 Kenya Gazette Supplement No. 119
21
Section 4A Kenya Information and Communication Act
22
Ibid, s 5
industries. In order to achieve this objective, competition law generally prohibits restrictive trade
practices23 and abuse of dominance24.

The Communication Authority of Kenya has a wide mandate to regulate competition in

commercial services connected with telecommunications services in Kenya. This mandate
extends to mobile financial services, because these services have been thoroughly integrated into
voice and data service provision25. The CA can also develop standards and procedures for
determining anti-competitive conduct and establishing dominance in telecommunications
sector26, determine anti-competitive breaches in the telecommunications sector 27 and investigate
complaints and allegations of unfair competition and discrimination in the telecommunications
sector. Moreover, the CA is mandated to regulate anti competition conduct such as predatory
pricing, product bundling, exclusive dealing arrangements, cross-subsidy, control of essential
intellectual property and information sharing and to analyze dominance and market
segmentation.28

The CBK is similarly mandated to regulate the banking sector and consequently has access to
sector sensitive information of banks and financial institutions. Moreover, the CBK can
formulate and implement such policies that best promote the establishment, regulation and
supervision of efficient and effective payment, clearing and settlement systems payment systems
in the mobile financial services sector29 and particularly to prohibit exclusive agreements
between operators and agents30. While the CBK, CA and CAK's respective governing laws and
regulations refer to cooperating with other agencies in the area of competition regulation, there is
no explicit framework or mechanism to facilitate such cooperation.

The Proposed Acquisition of 80% of the Issued Share Capital of IwayAfrica Kenya Limited by
EchoTel International Proprietary Limited

23
Section 9 Competition Act
24
Ibid s 24
25
Jeremy Okonjo Odhiambo, 'Convergence between Mobile Telecommunications and Financial Services
implications for Regulation of Mobile Telecommunications in Kenya', (LLM thesis University of Nairobi) 2013
26
Section 3 Kenya Information and Communication (Fair Competition and Equality of Treatment Regulations) 2010
27
Ibid s 4
28
Ibid s 2
29
Section 17, National Payments Systems Act No. 39 of 2011, Laws of Kenya
30
The National Payment System Regulations 2014, Regulation 15
Parties Involved: EchoTel International Proprietary Limited (EchoTel) and IwayAfrica Kenya
Limited (IwayAfrica)

Facts of the Case:

EchoTel International Proprietary Limited, a South African company, proposed to acquire 80%
of the issued share capital of IwayAfrica Kenya Limited, a Kenyan-based internet service
provider. The proposed acquisition would allow EchoTel to expand its operations in the East
African region and would provide IwayAfrica with additional resources to enhance its services.

IwayAfrica's shareholders were notified of the proposed acquisition and were provided with
information regarding the terms of the deal. The terms included the purchase price and the
conditions for the acquisition. EchoTel agreed to pay a cash consideration of KES 150 million
(Kenyan Shillings) to acquire the 80% stake in IwayAfrica.

The transaction was subject to the approval of the Communications Authority of Kenya (CAK).
EchoTel and IwayAfrica submitted an application to the CAK, providing dqetails of the
proposed acquisition. The application included information on the companies' financial standing,
the nature of their businesses, and the potential impact of the acquisition on the market.

The CAK reviewed the application and conducted a market analysis to assess the potential
impact of the acquisition on competition in the market. The CAK found that the proposed
acquisition was not likely to substantially lessen competition in the market, and approved the
transaction subject to certain conditions.

One of the conditions required EchoTel to provide a plan for the transfer of technology and skills
to local Kenyan employees. The plan would ensure that the acquisition would result in the
development of local talent and the transfer of knowledge to Kenyan employees.

Issue:

The issue in this case is whether the proposed acquisition of 80% of the issued share capital of
IwayAfrica Kenya Limited by EchoTel International Proprietary Limited would substantially
lessen competition in the market and whether the proposed acquisition meets the requirements of
the Communications Authority of Kenya.
Holding:

The Communications Authority of Kenya approved the proposed acquisition of 80% of the
issued share capital of IwayAfrica Kenya Limited by EchoTel International Proprietary Limited,
subject to certain conditions. The CAK found that the proposed acquisition was not likely to
substantially lessen competition in the market, and that the conditions imposed on the transaction
would ensure that the acquisition would result in the development of local talent and the transfer
of knowledge to Kenyan employees.

Reasoning:

The Communications Authority of Kenya conducted a market analysis to assess the potential
impact of the acquisition on competition in the market. The CAK found that the proposed
acquisition was not likely to substantially lessen competition in the market, as EchoTel and
IwayAfrica were not close competitors in the market. The CAK also found that the proposed
acquisition would provide IwayAfrica with additional resources to enhance its services, and
would allow EchoTel to expand its operations in the East African region.

The CAK imposed certain conditions on the transaction to ensure that the acquisition would
result in the development of local talent and the transfer of knowledge to Kenyan employees.
One of the conditions required EchoTel to provide a plan for the transfer of technology and skills
to local Kenyan employees.

Airtel Networks Kenya Ltd v Communications Authority of Kenya & Safaricom Ltd

Facts of the case:

Airtel Networks Kenya Ltd (Airtel) filed a case against the Communications Authority of Kenya
(CA) and Safaricom Ltd (Safaricom) for alleged abuse of dominance by Safaricom. Airtel
claimed that Safaricom had engaged in unfair business practices that were detrimental to
competition in the telecommunication industry, and had abused its market dominance in
contravention of the Kenyan Competition Act.

Safaricom had a market share of 64.2%, while Airtel's market share was 16.8% and Telkom
Kenya's market share was 5.6%. Airtel alleged that Safaricom had abused its dominant position
by engaging in predatory pricing, margin squeeze, and refusal to supply essential facilities, such
as mobile money interoperability, to Airtel and Telkom.

Issues:

The main issue before the court was whether Safaricom had engaged in abusive conduct in
contravention of the Kenyan Competition Act.

Decision:

The High Court found that Safaricom had indeed abused its dominant position in the market by
engaging in anti-competitive practices. The court held that Safaricom's conduct had resulted in a
substantial lessening of competition in the market, and that this had an adverse impact on
consumer welfare and innovation.

The court ordered Safaricom to pay a fine of Kshs. 311,118,000 (approximately USD 3 million)
for abusing its dominant position in the market. The court also directed Safaricom to open up its
mobile money infrastructure to its competitors, Airtel and Telkom.

The court further directed the Communications Authority of Kenya to ensure that Safaricom
complied with the orders of the court, and to take steps to promote competition in the
telecommunication industry.

Radio Africa Limited v Standard Group Plc & another: [2018] eKLR

Facts:

Radio Africa Limited (RAL) filed a suit against Standard Group Plc and another defendant,
seeking an injunction to restrain the defendants from infringing its intellectual property rights.
RAL claimed that the defendants had used its registered trademark "KISS 100 FM" and its
associated logo without its permission. The trial court dismissed the suit, holding that RAL had
failed to prove that the defendants had used its trademark and that it had suffered any loss or
damage as a result of the alleged infringement. RAL appealed the decision.

Issues:
Whether the trial court erred in finding that RAL had failed to prove that the defendants had used
its trademark.

Whether the trial court erred in finding that RAL had failed to prove that it had suffered any loss
or damage as a result of the alleged infringement.

Decision:

The Court of Appeal allowed the appeal and set aside the decision of the trial court. The court
held that RAL had established that the defendants had used its trademark without its permission
and that it had suffered loss and damage as a result of the infringement.

The court noted that the defendants had used RAL's registered trademark "KISS 100 FM" and its
associated logo in their advertisements and promotions. The court further held that the use of the
trademark by the defendants was likely to cause confusion among the public and lead to a loss of
goodwill and reputation for RAL.

The court awarded RAL damages for the infringement of its trademark and also granted an
injunction restraining the defendants from using the trademark in the future.

Safaricom PLC v Communications Authority of Kenya; Iristel Kenya Limited (Interested

Party) [2019] eKLR

Facts:

Safaricom PLC filed a suit against the Communications Authority of Kenya (CA) and Iristel
Kenya Limited (Iristel) seeking a declaration that the decision of the CA to grant a license to
Iristel to operate in Kenya was null and void. Safaricom claimed that the decision was made in
contravention of the law and that it was likely to cause it substantial harm. Safaricom argued that
the CA had failed to follow the proper procedure in granting the license to Iristel and that the
license would allow Iristel to operate on a frequency that would interfere with Safaricom's
network. Iristel, the interested party, opposed the suit and argued that it had followed all the
necessary procedures in obtaining the license and that it would not cause any interference to
Safaricom's network.
Issues:

Whether the CA's decision to grant a license to Iristel was null and void.

Whether the license granted to Iristel would cause interference to Safaricom's network.

Decision:

The High Court dismissed Safaricom's suit and upheld the CA's decision to grant a license to
Iristel. The court held that the CA had followed the proper procedure in granting the license and
that there was no evidence to suggest that the license would cause interference to Safaricom's
network.The court also held that Safaricom had failed to prove that it would suffer any
substantial harm as a result of Iristel's operations in Kenya.

Reasoning:

The High Court considered the evidence presented by both parties and held that the CA had
followed the proper procedure in granting the license to Iristel. The court found that Iristel had
met all the necessary requirements for obtaining the license and that there was no evidence to
suggest that the license would cause interference to Safaricom's network.

The court also noted that Safaricom had failed to present any evidence to support its claim that it
would suffer substantial harm as a result of Iristel's operations in Kenya. The court held that
Safaricom's fears of interference were speculative and unsupported by evidence.

The court further held that the grant of a license to Iristel would promote competition in the
telecommunications industry in Kenya, which was in the public interest.

Challenges faced in regulating competition and equality in ICT sector

1). Overlap in the mandate of Communication Authority and Competition Authority

There exists an overlap in the mandate of Communication Authority and Competition Authority
of Kenya with regard to competition. Whereas the Communication Authority is mandated to
ensure competition within the telecommunication subsector, Competition Authority of Kenya is
given a broader economy wide mandate to enforce competition under Competition Act, 2010. As
an independent body contemplated under Article 34(5),31 Communication Authority would be a
more relevant enforcer of competition in the subsector, as a regulator with relevant expertise in
the subsector. Communication Authority to consult with Competition Authority of Kenya on any
interventions that may have implications extending beyond the subsector.

2). Abuse of buyer power

Buyers have the power to influence price and the quantity of products sold. Powerful buyers can
bargain on volume or switch costs or they can find substitute products. This manifest abuse of
buyer power which results in inequality. A firm with buyer power may influence the bargaining
process to impose terms of supply that are more onerous than is usual in the normal business
practice or the supplier's ordinary contractual terms to the detriment of the supplier. The
Competition Act (Amendment), 2016 provides a list of practices that typically constitute abuse
of buyer power. They include delayed payment by the buyer without justifiable reasons in breach
of contractual terms, demand for preferential terms by a buyer which are unfavorable to the
supplier, unilateral termination of a commercial relationship without notice or even transferring
risks and operational costs to suppliers.

3). Information asymmetry between consumers and providers

The providers of services in ICT sector are deemed to possess more information than the
consumers of their services and thus leads to inequality in information. This leads to difficulty in
regulating competition and equality in the sector because of the difference in understanding
about the services offered by various ICT sectors which can occasion to exploitation as well as
misleading information to the consumers. There is lack of a realistic opportunity for consumers
to inspect and test the goods during an online sell.

4). Lack of enough funds, ICT infrastructure and electricity.

Many Kenyans still cannot access the internet at present because of lack of electricity
connection. Electricity connection is key to access of essential ICT services such as online
marketing, making of phone calls, watching news and other broad services available online.
Various parts like Garissa, Turkana and even Tana River counties are just but example of places
31
Article 34(5) constitution of Kenya, 2010
where internet connectivity as well as electricity is unserved and also underserved. Inequality is
therefore manifested in this case and it makes it difficult for people in such areas to compete
favourably with those in places where there is sufficient internet connectivity as well as
electricity. Also, the government has not provided for enough funds to cater for implantation of
ICT policies in the area of competition and equality, hence a challenge to achieving its objectives
of equality and fair competition.

5) COVID-19 pandemic

The outbreak of COVID-19 in 2020 around the world has made it difficult to forecast long term
impact of competition law. The unpredictable circumstance makes it hard for government to
regulate the competition and equality around such times especially in ICT because such
pandemics bring a lot of issues with it. For example, during this period, most businesses were
carried out online due to restrictions on movement and prices were increased without justifiable
reasons by the sellers. Goods were hoarded and abuse of buyer power was much manifested
during this time. It was difficult to regulate competition and equality in the market during this
period because it was not anticipated. Such unforseen circumstances and events make it difficult
for the government to regulate competition and equality in the ICT sector as well as other
sectors.

6). Expensive licensing fees and allocation of spectrum

There has been complaints by various stakeholders in ICT that complain about the excessive fees
charged to license them in order to operate in the sector. They also report that there is
discrimination in the allocation of spectrum as the dominant players in the sector are able to be
allocated much spectrum due to their ability to pay while small firms are unable to get an equal
share of the spectrum due to their inability to pay large amounts of money. The unfairness in the
allocation of spectrum and high licensing fees is an encumbrance to realizing fair competition
and equality in the ICT sector.

7). Lack of regulations on the digital economy and Big Data

The world is evolving rapidly and digital economy is taking over the analogue one. Kenya has
embraced a digital economy where services are rendered online by various stakeholders. There is
emergence of big data companies such as TikTok and Instagram which had not been anticipated
earlier by law. There has been unauthorized collection of personal data about consumers by these
emerging big data companies. Data privacy has been compromised by these companies as well
as data of consumers being not protected. There need to be regulations on this sector to protect
consumers.

Recommendations

The Competition Authority of Kenya to carry out advocacy initiatives aimed at creating
awareness on the adverse effects of anticompetitive practices, consumer protection and abuse of
buyer power. Enhanced disclosure and transparency of fees and charges by digital financial
services so that consumers can make informed choices increasing demand driven competition.
Also, there should be collaboration with education institutions in order to deepen the competition
culture and protection of consumer rights. The government should allocate enough funds to the
ICT sector in order to implement the policy set objectives. Market integrity and competitive
honesty should be maintained by preventing and promptly punishing unfair or misleading market
conduct. Timely resolution of consumer complaints and fostering competitive neutrality in ICT
sector.

The Competition Authority of Kenya should raise awareness among consumers and businesses
of their rights and obligations, designing pro-competition market regulation by opening specific
markets to competition, reducing government interventions that may shelter less efficient firms.
On the issue of abuse of buyer power, the Competition Authority Act was amended and section
31 expanded to enable the Authority monitor the activities of the sector where there is ongoing or
likelihood of abuse of buyer power, and may require industries and sectors to develop and
publish binding code of practice. The Act now makes it mandatory for contracts between buyers
and supplier undertaking to contain certain minimum requirements, including terms of payment,
conditions for termination and variation of contracts and mechanism for dispute resolution.
COMPARATIVE STUDY

South Africa

1) The Competition Act, 1998

The Act provides the main object of the Act as that of establishing the Competition Commission
responsible for the investigation, control, and evaluation of restrictive practices, abuse of
dominant position, and mergers; for the establishment of a Competition Tribunal responsible to
adjudicate such matters and for the establishment of a Competition Appeal Court.32 Part A of the
Act is elaborate in restrictive on trade practices like the Kenyan Competition Act. However,
unlike the Kenyan Act, this Act clearly categorizes restrictive trade practices into vertical and
horizontal practices.33 The two types of trade restrictive practices are prohibited by the Act in
order to foster competition in all markets including the telecommunication field.34

2) Electronic Communications Act, 2005

The Act gives a specific mandate of investigating any anticompetitive conduct in the
communication market to the Competition Commission. It is provided under section 67(9) of the
Electronic Communications Act that provides that "subject to the provisions of this Act, the
Competition Act applies to competition matters in the electronic communications industry."

3) Promotion of Diversity and Competition on Digital Terrestrial Television Regulations

These regulations were enacted by the Independent Communications Authority of South Africa
pursuant to section 3(7) (c) and (d) of the Electronic Communications Act, 2005. The purpose of
the regulation is to promote diversity and competition on the Digital Terrestrial Television
platform. These regulations are comparable to the Kenya Information and Communications (Fair
Competition and Equality of Treatment) Regulations, 2010. Section 8 of the Regulations
32
Short title, Competition Act, 1998, Laws of South Africa
33
Section 4 and 5 of the Competition Act
34
Ibid, s 6 & 7
empower the complaints and compliance committee established by ICASA Act to penalize a
television broadcasting service for failure to comply with these competition promoting
regulations.

4) Independent Communications Authority of South Africa (ICASA)

The Authority is created under the ICASA Amendment Act, 2014 and it is the primary
regulatory authority for the information communications technology sector comprising telecoms,
broadcasting and postal services. It is responsible for licensing, compliance, monitoring,
complaints, sanctions and making regulations. It has power to address competition in the sector
under chapter 10 of the Electronic Communications Act, 2005. ICASA's power of enforcement
are limited to imposing license conditions of a particular type on licensees that have significant
market power in that market.

5) The Competition Commission

Established pursuant to section 19 of the Competition Act, 1998. 35 It has concurrent jurisdiction
with ICASA over ICT sector by virtue of its national oversight over competition in the Republic.
The Commission's jurisdiction covers mergers of regulated entities including the acquisition of
control in some areas and it can also address anticompetitive conduct by licensees. ICASA must
however be consulted in all matters.

6) Competition Tribunal and Appeal Court

Competition Tribunal is created under section 26 of the Competition Act, 1998. According to
section 18 of the Act, anyone dissatisfied with the decision of the Tribunal should lodge an
appeal with the Competition Tribunal. It is also mandated to publish a notice of the decision
made by it in the Gazette and further issue written reasons for its decisions.36

Competition Appeal Court is established under section 36 of the Act composed of at least three
judges of the High Court. It has authority to either agree with the tribunal or overturn their
decisions altogether. These provisions show that contrary to the Kenyan position, three
authorities are involved in determining competition issues. Small mergers are dealt with by the
35
Ibid, s 19
36
Ibid, s 16
commission, larger mergers are approved by the tribunal and the special court of Appeal
determines appeals from the tribunal. In Kenya, this is done by the Competition Tribunal that
exercise appellate jurisdiction over Competition Authority. There is no specialized court in
Kenya to deal with competition issues.

Conclusion

The Kenyan context envisages substantial regulatory overlaps between the competition regulator
and sector regulators, therefore the degree of interaction to ensure regulatory oversight will be
equally substantial. In the circumstances, it is only appropriate that the regulatory approach
adopted will create some level of certainty by putting in place a predetermined regulation
outlining the degree of cooperation and coordination.