competition management
TRANSCRIPT
Managing Competition
Competition, Tariffs and Market Analysis Communications Authority of Kenya
By Eva Mwasho
Why Manage Competition?
To ensure a level playing ground for all players in the sector
What Regulation?
Competition;
Pricing/tariffs;
Market Analysis/R&D
Why Economic Regulation?
Market Failures
Pursuit of market efficiencies
Enhancing Competition
Licensing new operators Identification & Removal of entry barriers in the market; ie MVNO’s
Addressing practices that are anti-competitive
Regulation of natural monopoly segments
Designation and Regulation of Dominant Market Players (DMP)
Curbing Anticompetitive Behavior
Ex-ante: before market behaviour is
allowed to occur e.g tariff reg
Ex-post: remedy after an
anticompetitive action e.g penalties
Tariff Regulation
Optimum tariff setting ensures: Maximized profits for the operator, encourages appropriate levels of investment and reflects costs Appropriate level of consumption-affordability to consumers Externalities internalized
In competitive markets, efficient prices are determined by the forces of demand and supply-maximizes welfare
Source: kiplimochemirmir.wordpress.com
…Tariff Regulation
In non-competitive markets, prices are determined by the
Authority e.g wholesale tariffs (termination rates)
Source: dsxmedia.com
In line with economic efficiency principles and interconnection rates are based on the economic costs of providing such interconnection services Done through cost study and issuing of determination to the industry. E.g Determination 2010 MTR contributed to reduction in tariffs
Promotion Regulation
The general rule : Operators should ensure that all promotion and special offers are not discriminatory or anti-competitive.
Also promoters not allowed to overstate the consumers’ chances of winning prizes or gaining from the promotion;
Infrastructure Sharing
It is common practise in nascent Communication markets for operators to capitalize on expansive network infrastructure in order to gain a competitive edge Building and operating communication infrastructure is a significant cost(sunk) for operators
Source: aurecongroup.com
…Infrastructure Sharing
Limits duplication gears investment toward underserved areas product innovation improved customer service
Competitors are becoming partners in order to lower their increasing investments
Source: biztechafrica.com
Significant Market Power (SMP)
Basic steps taken when identifying
SMP
1. Defining Relevant Markets in terms product/services, customer
groups, retail/wholesale and geographic/route
2. Analyzing each Relevant Market, to determine
whether any providers have SMP
3. Issue decisions as to providers having SMP in a
Relevant Market
4. Imposing regulatory obligations on those
providers identified as having SMP
Outcomes of Competition
Growth in the
economy
Innovative services,
competitive prices and
more production
Competitive market
Conclusion
Well-function market based on the demand and supply principles is hard to come by; Regulatory intervention especially in developing and emerging economies will continue being desirable for sometimes; Regulatory frameworks would need to be regularly monitored and reviewed so as to ensure their effectiveness and suitability with a view to guaranteeing maximization of consumer welfare and productivity efficiency.
Thank You!
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