12th March, 2010
LEGAL NOTICE NO. 29
IN EXERCISE of the powers conferred by sections 84R and 84W of the Kenya Communications Act, the Minister for Information and Communication in consultation with the Communications Commission of Kenya makes the following Regulations:—
THE KENYA INFORMATION AND COMMUNICATIONS (FAIR COMPETITION AND EQUALITY OF TREATMENT) REGULATIONS, 2010
These Regulations may be cited as the Kenya Information and Communications (Fair Competition and Equality of Treatment) Regulations, 2010.
In these Regulations unless the context otherwise requires—
“communications services” means all services provided for under the Act;
“licensee” means a person licensed under the Act;
“service agreement” means any agreement between a licensee and a subscriber relating to provision and use of a communications service;
“subscriber” means a person who has entered into a service agreement with a licensee and who is responsible for payment of all charges and rentals.
3. Purpose and object.
(1) The purpose of these Regulations is to—
(a) provide a regulatory framework for the promotion of fair competition and equal treatment in the communications sector; and
(b) protect against the abuse of market power or other anticompetitive practices within the communications sector.
(2) Without prejudice to the generality of paragraph (1), these Regulations seek to—
(a) provide for the standards and procedures to be applied by the Commission in determining whether particular conduct is anti-competitive;
(b) clarify the agreements, conduct or practices that the Commission shall consider to be anti- competitive, and prohibited under the Act; and
(c) provide for the standards and processes that the Commission shall apply when determining whether a communication licencee is dominant in a given market.
4. Mandate of the Commission over competition matters.
(1) The Commission shall have the power to determine, pronounce upon, administer and enforce compliance of all its licensees with competition laws and regulations, that it relate to commercial activities in the communications sector.
(2) In so far as such matters fall concurrently under the jurisdiction of another statutory agency responsible for competition matters, the Commission shall co-operate with the said agency in matters related to fair competition.
5. Determination of breach.
(1) The Commission shall, in order to determine whether a particular agreement or conduct breaches these Regulations-
(a) evaluate the relevant market or market segment that the agreement, conduct in question or practice relates;
(b) determine whether the market and market segment is competitive; and
(c) establish whether a licensee is engaging in anti-competitive practices.
6. Commission to designate market segments.
(1) The Commission shall, from time to time, by notice in the Gazette designate communications market segments.
(2) The Commission shall, when evaluating or designating the relevant market segments, consider—
(a) the communications products that constitute a specific market, whose product dimension shall be assessed by analyzing—
(i) demand-side substitutability in order to measure the extent to which consumers are prepared or able to substitute other communications products or services for the communications products or services subject to considerations at low cost;
(ii) supply-side substitutability to determine the extent to which suppliers are able to supply other communications products or services in place of the communications products or services subject to consideration at low cost;
(b) the geographic scope of the market for a given group of consumers, considering the following conditions—
(i) the geographic distribution of, and evolution over time of market shares;
(ii) the pricing of services across the area under consideration;
(iii) pricing of the different operators as well as its evolution over time in the relevant areas; and
(iv) additional supply and demand characteristics which may indicate the existence of different competitive pressures;
(c) any other factors or issues which are, in the opinion of the Commission, relevant.
7. Dominant market position.
(1) The Commission shall from time to time develop and publish, in the Kenya Gazette, guidelines to be followed when determining whether a licensee in a dominant market position in a specific communications market.
(2) The criteria shall among others include—
(a) the current degree and development of market concentration or the market share of the licensee, determined by reference to revenues, numbers of subscribers or volumes of sales;
(b) the degree to which a licensee’s prices vary over time;
(c) the ability of the licensee to maintain or erect barriers to entry to the market, including, by means of control of essential facilities, access to superior technology, privileged access to resources or capital markets or superior buying or negotiating position, amongst others;
(d) the ability of the licensee to earn supernormal profits;
(e) the global technology and commercial trends affecting market power;
(f) the licensee’s power to make independent rate setting decisions;
(g) the degree of product or service differentiation and sales promotion in the market;
(h) the ability to materially raise prices without suffering a commensurate loss in service demand to other licensees; and
(i) any other matters which the Commission may consider relevant.
(3) (Deleted by L.N. 150/2010)
8. Dominant market power reports.
(1) The Commission may on its own motion or on the application of an interested person, prepare a dominant market power report to determine whether a license dominant in a service or geographic communications markets.
(2) The Commission shall, among other factors, use the criteria in regulations 6(2) and 7(2) when assessing or designating a communications market.
(3) The Commission may, where it determines in a dominant market report that a licensee is dominant by considering the criteria established in regulation 7 (2), it shall declare that licensee as dominant in a specific communications market.
(4) The Commission may, on its own motion or pursuant to an application by a licensee, review the dominant market power report to determine whether a licensee is still dominant and shall within, twenty-one days, make a determination that the licensee is not dominant or that the licensee shall continue to be designated as dominant.
(5) (Deleted by L.N. 150/2010).
8A. Investigations in respect of competition concerns.
(1) The Commission may, on its own motion or pursuant to a complaint made by a licensee, conduct an investigation to determine if the conduct of a communications licensee gives rise to a competition concern under paragraph (2).
(2) Competition concerns shall arise where there is a likelihood that a licensee will engage in any of the following practices—
(a) directly or indirectly impose purchase or selling prices or other trading conditions that unfairly prevent, restrict or distort competition;
(b) limit production, markets or technical development to the prejudice of consumers and other licensees;
(c) apply dissimilar conditions to equivalent transactions with other trading parties, thereby placing them at a competitive disadvantage;
(d) make the conclusion of contracts subject to acceptance by the other parties of supplementary obligations which, by their nature or according to commercial usage, have no connection with the subject of the contracts; and
(e) any other practices that the Commission may determine from time to time.
(3) Where the Commission determines that there is a competition concern, it may impose appropriate and proportionate remedies in accordance with regulation 9.
9. Interconnection obligations of a dominant telecommunications service provider.
(1) Where the Commission has, pursuant to paragraph 8A, found a competition concern, the Commission may impose any or all of the following remedies —
(a) meet all reasonable requests for access to its public telecommunications network, in particular access at any technically feasible point on its telecommunications network;
(b) adhere to the principle of non-discrimination with regard to interconnection offered to other interconnecting licensees, particularly-
(i) apply similar conditions in similar circumstances to interconnecting licensees providing similar services and
(ii) provide interconnection facilities and information to other telecommunications licensees under the same conditions and of the same quality as it provides for its own services or those of its affiliates or subsidiaries;
(c) make available, on request, to other interconnecting licensees considering interconnection with its public telecommunications network, all information and specifications reasonably necessary, in order to facilitate conclusion of an agreement for interconnection, including information on changes planned for implementation within the next six months, unless provided otherwise by the Commission;
(d) submit to the Commission for approval and publish a Reference Interconnection Offer, sufficiently unbundled, giving the description of the interconnection offerings broken down into components according to the market needs and the associated terms and conditions including tariffs; and
(e) provide access to the technical standards and specifications of its telecommunications network with which another interconnecting licensee shall be interconnected.
(2) Where a dominant telecommunications service provider abuses its position when negotiating interconnection agreements, the Commission shall—
(a) require the dominant telecommunications service provider to desist, change its conduct or adopt a particular conduct; or
(b) declare the interconnection agreement wholly or partially invalid.
(3) The Commission shall, before taking the action in paragraph (2) (b) of this Regulation, request the dominant telecommunications service provider to refrain from the conduct that is inconsistent with these regulations.
(4) A dominant telecommunications service provider shall set charges for interconnection based on an objective criteria, observe the principles of transparency and cost orientation as set out in Regulation 11.
(5) The Commission may request the dominant telecommunications service provider to prove that its interconnection charges are based on actual cost and, where necessary request an adjustment of the charges or impose default interconnection charges in the event the proposed adjustment is not implemented by the dominant telecommunications service provider.
(6) A licensee that has been declared dominant in a market segment shall—
(a) notify the Commission in writing of any proposal to change interconnection charges in the form and manner as prescribed by the Commission from time to time;
(b) sufficiently unbundle charges for interconnection, so that the telecommunications licensee requesting the interconnection is not required to pay for any item that is not related to the service requested;
(c) maintain a cost accounting system that—
(i) complies with the cost accounting guidelines that may be published by the Commission from time to time;
(ii) demonstrates that its charges for interconnection have been fairly and properly calculated;
(d) avail to the Commission, on request, a description of its cost accounting system showing the main categories under which costs are grouped and the guidelines for allocation of costs to interconnection and the Commission’s, or any other competent body; regulations or guidelines have been adhered to.
(7) A dominant telecommunications service provider shall promptly, on request supply financial information to the Commission to the level of detail specified by the Commission.
(8) The Commission shall upon satisfying that the dominant telecommunications service provider has fully complied with these regulations together with any other guidelines that it may have prescribed, publish a compliance report.
(9) In addition, the Commission while taking account of considerations of commercial confidentiality, may publish such financial information in order to contribute to an open and competitive telecommunications market.
(1) A licensee shall maintain separate books of account for each service as may be prescribed by the Commission from time to time and shall not cross-subsidize the prices for any service it offers in the market with revenue from the sale of communication systems and services.
(2) A licensee shall maintain accounting separation techniques to be focused on the separation of revenues, costs and capital employed into categories in order to ensure that there is no discrimination between internal and external pricing in all services provided by the licensee.
(3) Where the interconnection services are not provided through a structurally separated subsidiary, a dominant telecommunications service provider shall keep separate accounts as if the telecommunications activities in question were in fact carried out by legally independent companies, to identify all elements of cost and revenue together with the basis of their calculation and the detailed attribution methods used.
(4) A dominant telecommunications service provider shall maintain separate accounts in respect of interconnection services and its core telecommunications services and the accounts shall be submitted for independent audit and thereafter published.
(5) The Commission shall from time to time develop guidelines providing for the system of transfer charges to be applied to services and products provided from one licensee to another and for the implementation of this regulation.
(6) A licensee shall promptly, on request, supply financial information to the Commission to the level of detail specified by the Commission.
11. Obligations of licensees.
(1) All licensees shall provide uniform, non-preferential service on a first-come-first-served basis to all persons within a covered geographical area or a given class who request for such service.
(2) A licensee shall not violate the principle of equal access and non preferential treatment if it—
(a) considers the ability of a person to pay for a service when deciding whether to provide a service to the person; or,
(b) makes other rational classifications among subscribers, such as business and residential, and to provide service on the basis of the classification.
(1) Where a licensee intends to enter into an agreement or take any action that may affect another licensee in the same market segment, it may seek guidance from the Commission at least thirty days prior to the entering into the agreement or taking of such action.
(2) The Commission’s shall respond within thirty days of receiving the request under paragraph (1) stating whether the agreement or conduct is likely to contravene these Regulations;
(3) Notwithstanding the provision of these Regulations, a licensee shall ensure that all its agreements and conduct are lawful.
13. Investigations into complaints of unfair competition and discrimination.
(1) The Commission may, on its own motion or upon a complaint, investigate a licensee whom it has reason to believe has committed an act or omission, or is alleged to have committed an act or omission, or to have engaged in a practice, breaching the requirement for fair competition or equality of treatment.
(2) When conducting an investigation under section 84S and 84T of the Act, the Commission may—
(a) require the production of any document or information that is specified or that falls within a specified category, which it considers relates to any matter relevant to the investigation, at a time and place, and in the manner or form specified;
(b) take copies of, or extracts from any document produced;
(c) require an explanation of any such document; and
(d) where a document is not produced, require a statement specifying where it can be found;
(e) enter any premises with a warrant and require the production of any document appearing to be the kind in respect of which the warrant was granted or relevant to the investigation and require any relevant information held in computer to be produced in a form in which it can be read and taken away;
(f) enter premises with a warrant search the premises and take copies of, or extracts from, any documents appearing to be the kind in respect of which the warrant was granted and require any relevant information held in a computer to be produced in a form in which it can be read and taken away.
(1) These Regulations shall not apply to conduct which is necessary—
(a) for a licensee entrusted with the operation of essential communications services that relate to, among others, health, national security and any other circumstance that the Commission may prescribe, insofar as the application of the Regulations would obstruct the performance of the tasks assigned to the licensee;
(b) to comply with a legal requirement; or
(c) to avoid conflict with international obligations.
5. Revocation of Part IV of L.N 68 of 2001
Part IV of the Kenya Communications Regulations, 2001 is revoked.
Made on the 23rd March, 2010.
Minister for Information and Communications.