Kenyan Regulator Approves Deal Between Airtel Africa and American Tower Corporation

Kenyan regulator, Competition Authority of Kenya (CAK), has approved the deal between Airtel Africa and American Tower Corporation. Airtel Africa is a telecommunication service provider in Kenya, while American Tower Corporation is a US communications infrastructure company.

Atlas Towers Kenya Limited, a standard Kenyan company, filed a complaint against the deal. The company stated that the agreement between Airtel Africa and ATC would possibly result in a vertical restriction of trade. This concern caused the Kenyan regulators to investigate the complaint.

CAK Investigates Vertical Restriction of Trade Complaints

A vertical restriction of trade is an agreement between companies at different levels of production and distribution chain; this may affect the operation of other companies. These agreements disrupt the order of operation in the market. The agreement between Airtel Africa and American Tower Corporation depicts such an agreement, hence the complaint to the regulators.

Also read: Airtel Africa Repays $550 Million Bond

Atlas claimed ATC agreed to offer money back to Airtel Africa as an incentive once the telcos had leased the agreed number of ATC towers. With such a financial discount, Atlas highlighted that Airtel would be less inclined to do business with ATC’s competitors, such as itself.

What does CAK do?

According to the CAK, it was a worthy complaint to investigate. The Kenyan regulation was founded by Section 7 of the Competition Act No. 12 of 2010. The regulation was established to provide and maintain effective market competition.

This is done while preventing unfair and misleading market conduct and it has the right to exercise its regulatory powers and investigate when needed. It reviews the complaints received and checks if it opposes the stipulated regulations slated for the Kenyan market. The regulations cover dominance, abuse of dominance, and business guidelines on restrictive trades.

Also read: Airtel Africa and ATC Deal Receives Approval after Probe

CAK Rules Atlas’ Complaints Void

According to CAK, vertical restriction of trade is only an issue when one company has a dominant position over the other company in the market. However, neither of the two companies, Airtel Africa and ATC, held a dominant position in the market. It leaves Atlas’ complaint void.

CAK highlighted that for a company to be dominant over another, it has to control at least half of the total products of any description supplied or provided in the country. Airtel Africa, a service provider in Kenya, controls a market share of 0.93%, while ATC, the infrastructure owner, controls a share of 38.81% of the infrastructure market in Kenya. This reveals that none of the companies control one-half of the total services they supply.

Also read: Airtel Africa Announces the Construction of First Data Center in Lagos

The regulators ended the investigation and approved the deal between the two companies. The agreement was not seen as a threat to the market or competitors.

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