Managing Competition

Competition, Tariffs and Market Analysis Communications Authority of Kenya

By Eva Mwasho

Why Manage Competition?

To ensure a level playing ground for all players in the sector

What Regulation?

Competition;

Pricing/tariffs;

Market Analysis/R&D

Why Economic Regulation?

Market Failures

Pursuit of market efficiencies

Enhancing Competition

Licensing new operators Identification & Removal of entry barriers in the market; ie MVNO’s

Addressing practices that are anti-competitive

Regulation of natural monopoly segments

Designation and Regulation of Dominant Market Players (DMP)

Curbing Anticompetitive Behavior

Ex-ante: before market behaviour is

allowed to occur e.g tariff reg

Ex-post: remedy after an

anticompetitive action e.g penalties

Tariff Regulation

Optimum tariff setting ensures: Maximized profits for the operator, encourages appropriate levels of investment and reflects costs Appropriate level of consumption-affordability to consumers Externalities internalized

In competitive markets, efficient prices are determined by the forces of demand and supply-maximizes welfare

Source: kiplimochemirmir.wordpress.com

…Tariff Regulation

In non-competitive markets, prices are determined by the

Authority e.g wholesale tariffs (termination rates)

Source: dsxmedia.com

In line with economic efficiency principles and interconnection rates are based on the economic costs of providing such interconnection services Done through cost study and issuing of determination to the industry. E.g Determination 2010 MTR contributed to reduction in tariffs

Promotion Regulation

The general rule : Operators should ensure that all promotion and special offers are not discriminatory or anti-competitive.

Also promoters not allowed to overstate the consumers’ chances of winning prizes or gaining from the promotion;

Infrastructure Sharing

It is common practise in nascent Communication markets for operators to capitalize on expansive network infrastructure in order to gain a competitive edge Building and operating communication infrastructure is a significant cost(sunk) for operators

Source: aurecongroup.com

…Infrastructure Sharing

Limits duplication gears investment toward underserved areas product innovation improved customer service

Competitors are becoming partners in order to lower their increasing investments

Source: biztechafrica.com

Significant Market Power (SMP)

Basic steps taken when identifying

SMP

1. Defining Relevant Markets in terms product/services, customer

groups, retail/wholesale and geographic/route

2. Analyzing each Relevant Market, to determine

whether any providers have SMP

3. Issue decisions as to providers having SMP in a

Relevant Market

4. Imposing regulatory obligations on those

providers identified as having SMP

Outcomes of Competition

Growth in the

economy

Innovative services,

competitive prices and

more production

Competitive market

Conclusion

Well-function market based on the demand and supply principles is hard to come by; Regulatory intervention especially in developing and emerging economies will continue being desirable for sometimes; Regulatory frameworks would need to be regularly monitored and reviewed so as to ensure their effectiveness and suitability with a view to guaranteeing maximization of consumer welfare and productivity efficiency.

Thank You!

info@ca.go.ke

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