The Competition Authority of Kenya (CAK) authorized the tower site deal between Airtel Africa, a telecom company, and American Tower Corporation (ATC), a global wireless infrastructure provider. According to a statement released by the CAK for the financial year 2022/23, which ended in June 2023.
Atlas Towers Kenya Limited filed a complaint, claiming that Airtel Africa and ATC made a deal that could cause a vertical trade restriction (refers to a limitation on the ability of companies at different stages of the supply chain to engage in trade or competition with one another freely).
The complaint further includes an agreement that ATC would provide a financial rebate to Airtel Africa in exchange for a certain number of sites acquired by Airtel Africa from ATC annually.
ATC and Atlas provide tower sites for telecommunications businesses such as Airtel Africa. According to Atlas, Airtel was less likely to lease sites from ATC competitors like itself due to the rebate incentive, which prevented other companies in the market from supplying services to Airtel. In essence, ATC would become the exclusive provider.
CAK reviewed the complaint based on the essence of its establishment following Section 7 of the Competition Act No. 12 of 2010 to prevent unfair and misleading market conduct and to promote and safeguard effective market competition.
CAK investigated the complaint in line with its regulations, which outline what dominance is and what behaviours are considered abuses, using its guidelines about restrictive trade practices.
These guidelines say that agreements between companies operating at different levels of the supply chain might be a problem only if one or both have a dominant position in the market.
The investigations revealed that Airtel Africa and ATC had a vertical relationship. Airtel’s share in the Kenyan market was far less (0.93%) than that of ATC, which controlled a substantial 38.81% part of Kenya’s passive infrastructure market. CAK found out that none of the companies dominated its respective market.
Kenyan regulations state that a corporation has dominated its market if it controls at least half of the goods or services supplied or rendered in Kenya.
As a result, CAK closed the probe since Airtel’s tower arrangement with ATC failed to meet the threshold for dominance needed by its regulations.
