Competition Authority Of Kenya Moves To Curb Digital Monopolies

The Competition Authority of Kenya (CAK) has introduced the Competition (Amendment) Bill, 2024, aiming to crack down on digital monopolies and level the playing field for businesses in the digital economy. 

If passed, this bill will have far-reaching consequences for major tech companies operating in Kenya, including Google, Meta (Facebook, Instagram, and WhatsApp), Amazon, and Safaricom.

Under the proposed law, dominance in the digital space will no longer be determined solely by market share but also by other factors, such as network effects, access to data, and switching costs for users. According to the bill, dominance can be established even with market shares below forty percent if a company possesses significant market power due to its digital activities.

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The bill introduces stricter regulations for businesses operating in online intermediation services, online marketplaces, app stores, online search engines, social networking services, video-sharing platforms, independent communication services, operating systems, cloud computing services, and online advertising.

Most tech giants will face increased scrutiny over their market practices, especially in how they engage with smaller businesses and consumers.

One of the bill’s most significant provisions is its focus on abuse of superior bargaining position. This concept expands on previous regulations against abuse of buyer power, allowing the CAK to penalize companies that impose unfair conditions on business partners.

These include abusive behaviors like delays in payment of suppliers, unilateral termination of contracts without justifiable reason, and unreasonable collection or processing of data of the counterparty.

The competition (amendment) bill 2024 also strengthens enforcement mechanisms. Companies that violate its provisions could face financial penalties of up to 10 per cent of their annual turnover or even imprisonment for individuals responsible for non-compliance. The CAK has also been given more power to monitor sectors and enforce compliance proactively.

Tech companies with significant market influence, such as Google, which dominates search engines, and Meta, which controls multiple major social media platforms, are likely to feel the impact of these changes. Safaricom’s M-Pesa, the leading mobile money service in Kenya, may also come under increased scrutiny due to its critical role in financial transactions.

With the bill expected to shake up the digital economy, industry players will be closely watching how Parliament handles its passage. While the government argues that these measures will promote fair competition, tech firms are likely to push back, citing concerns about overregulation and innovation constraints.