The Competition Authority of Kenya (CAK) formally received and investigated a Restrictive Trade Practice (RTP) complaint lodged by Atlas Towers Kenya Limited. According to a CAK report for the Financial Year 2022/23, Atlas alleged that Airtel Africa and American Tower Corporation (ATC), had entered into an agreement that would result in vertical restraint of trade.
A vertical restraint of competition is an agreement between companies at different levels of the supply chain that restricts competition. Vertical restraints can facilitate collusion or enable exclusion.
ATC is an American company that provides tower sites for telcos like Airtel. Atlas alleged that Airtel had an agreement with ATC to meet an “Annual Quota” of ATC sites. The complaint claimed that ATC would offer Airtel a financial rebate once it had leased the set number of ATC towers.
With a rebate incentive in place, Atlas alleged that Airtel was less likely to lease sites from ATC competitors such at itself. Hence, the agreement would restrict other market players from offering Airtel their services. Effectively, ATC would become the exclusive provider.
CAK is a State Corporation established by section 7 of the Competition Act No. 12 of 2010 (‘the Act’). Its mandate is to promote and protect effective competition in markets. It is tasked to prevent unfair and misleading market conduct.
CAK Investigations
The Authority reviewed the complaint in line with its regulations which define dominance and the practices that constitute abuse of dominance. Furthermore, CAK reviewed the complaint against the backdrop of its guidelines on restrictive trade practices. These guidelines say that vertical agreements can only be a problem if one or both companies involved have a dominant market position.
After investigations, the authority found that Airtel (a service provider) and ATC (an infrastructure owner) had a vertical relationship. While ATC Kenya held a significant share (38.81%) of the passive infrastructure market in Kenya, Airtel Kenya’s market share was much smaller (0.93%). Importantly, neither company held a dominant position in their respective markets.
According to Kenyan regulations, a dominant player is one which controls not less than one-half of the total goods or services of any description supplied or rendered in Kenya. Consequently, the Authority closed the matter since the threshold for dominance required by section 23 of the Act was not satisfied against Airtel Kenya and ATC Kenya.
