Nairobi — The government has moved to regulate market dominance, particularly in the rapidly expanding digital economy, with the introduction of the Competition (Amendment) Bill, 2024.
The Bill, spearheaded by the Competition Authority of Kenya (CAK), seeks to amend existing competition laws to reflect current realities.
According to a legal analysis by Professor Migai Akech, an expert in competition law, the Bill aims to address market imbalances by regulating dominance across various sectors, particularly digital platforms, which have grown significantly in Kenya.
The Bill introduces stringent measures to curb monopolistic tendencies and ensure fair competition in the digital marketplace, where global tech giants and local platforms play a crucial role in commerce.
It outlines several practices that would constitute an abuse of a superior bargaining position, including unilateral contract changes, delayed payments to suppliers, and imposing unfair trading conditions.
The proposed law also introduces specific measures for regulating digital activities such as online intermediation services, search engines, social networking services, video-sharing platforms, and cloud computing services.
Additionally, the Bill proposes that dominance can be established in digital activities even for companies with market shares below 40 percent, provided they exhibit significant market influence through factors like "direct and indirect network effects and entry barriers arising in connection with those network effects," as well as "economies of scale and scope enjoyed by the undertaking, including about the undertaking's access to data relevant for competition."
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The Bill's provisions could significantly impact key players like Safaricom's M-Pesa, global tech giants such as Google and Meta, and emerging local start-ups that depend on digital platforms for visibility and market access.
While the Bill aims to create a fairer marketplace, some analysts warn that its approach to regulating unilateral dominance may lead to over-regulation.
Professor Akech argues that the law should only intervene when harm to economically dependent operators is demonstrated, rather than imposing blanket regulations that could hinder business growth.
He notes that, "regulation should only be justified where harm to economically dependent operators is demonstrated," he said.
"The Bill's approach to regulating unilateral dominance is unduly strict and could lead to over-regulation."
One of the primary concerns is the Bill's dual approach to regulating market dominance, with a set of rules for traditional markets and another for digital markets.
Critics argue that this creates regulatory uncertainty and that a more consistent framework should be applied across all industries while considering the unique characteristics of digital markets.
