Airtel tower deal gets green light from Kenyan regulator after a probe found no violations. Kenya’s Competition Authority (CAK) has given the green light to a deal between Airtel Africa, a telecom company, and American Tower Corporation (ATC), a US communications infrastructure firm.
Airtel Tower Deal Gets Green Light from Kenyan Regulator
During the financial year 2022, Atlas Towers Kenya Limited, an independent wireless infrastructure company in Kenya, raised concerns about a trade agreement between Airtel Africa and American Tower Corporation (ATC). This agreement, according to Atlas, could lead to vertical restraint of trade.
Vertical restraint of trade refers to agreements between companies at different levels of the supply chain that could limit competition. Such restraints are frowned upon because they might encourage collusion or prevent fair market competition.
In this case, ATC provides tower sites for telecom companies like Airtel. Atlas alleged that Airtel and ATC agreed on an “Annual Quota” for tower sites, wherein ATC would offer financial incentives to Airtel once the telco leased a certain number of ATC towers.
Atlas claimed that this financial incentive could discourage Airtel from working with other infrastructure companies, effectively making ATC the exclusive provider.
The Competition Authority of Kenya (CAK) Received and Investigated This Complaint
The Competition Authority of Kenya (CAK), responsible for promoting fair market competition and preventing unfair practices, received and investigated this complaint. They reviewed the complaint in line with regulations covering market dominance and restrictive trade practices.
According to CAK guidelines, vertical agreements are only concerning if one or both parties hold a dominant market position. However, after investigation, CAK found that neither Airtel nor ATC held a dominant position in their respective markets in Kenya.
Airtel had a market share of 0.93% as a service provider, while ATC held a significant share of 38.81% in the passive infrastructure market.
What the CAK Concluded On the Agreement
As a result, CAK concluded that the trade agreement did not pose a threat to fair competition in the market.
Under Kenyan regulations, a company is considered dominant in its market if it controls at least half of the total goods or services supplied or rendered in the country. Since neither Airtel Africa nor ATC met this threshold, the regulator closed its investigation into their deal without finding any wrongdoing.
Similarly, the Common Market for Eastern and Southern Africa (COMESA) Competition Commission recently announced an investigation into possible anti-competitive behavior between Airtel Africa and ATC regarding their tower deal across Nigeria, Kenya, Niger, and Uganda.
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