The Competition Authority of Kenya (CAK) is taking aim at the growing influence of digital platforms in Kenya’s economy with a set of fresh regulations designed to curb monopolistic practices.

Through the Competition (Amendment) Bill, 2024, the authority is pushing for reforms to ensure fair competition in both traditional and digital markets, marking a significant shift in how dominance is assessed and regulated.

The proposed changes introduce stricter rules to prevent large corporations from exploiting their market power to the detriment of smaller players.

Practices such as unilateral contract modifications, delayed payments to suppliers, and imposing unfair trading conditions have been flagged as potential abuses of dominance, particularly in the digital economy.

Unlike previous competition laws that defined dominance largely by market share—typically 40 percent or more—the Bill broadens the criteria for identifying dominant players.

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A company can now be classified as dominant if it wields significant influence through factors such as direct and indirect network effects and entry barriers arising in connection with those network effects, as well as economies of scale and scope enjoyed by the undertaking, including the undertaking’s access to data relevant for competition.

This shift means that global tech giants like Google and Meta, alongside local market leaders such as Safaricom’s M-Pesa, could face increased scrutiny even if they do not hold majority market shares.

The Bill also zeroes in on online intermediation platforms, search engines, social networking services, video-sharing platforms, and cloud computing services, sectors that have seen exponential growth in recent years.

Balancing regulation and innovation

While the Bill aims to level the playing field, legal experts caution that its strict approach could result in over-regulation, potentially stifling business growth.

Professor Migai Akech, a specialist in competition law, argues that regulatory intervention should be guided by tangible evidence of harm rather than blanket restrictions.

“Regulation should only be justified where harm to economically dependent operators is demonstrated,” Akech explains.

He further warns that “the Bill’s approach to regulating unilateral dominance is unduly strict and could lead to over-regulation.”

Another concern is the Bill’s decision to separate regulatory frameworks for digital and traditional markets.

Some analysts opine that this fragmented approach could create regulatory uncertainty, making compliance more complex for businesses.

Calls for a unified framework have emerged, with stakeholders pushing for a system that acknowledges the unique nature of digital commerce while ensuring fairness across industries.

With discussions on the Bill still ongoing, its potential impact on Kenya’s digital ecosystem remains a key issue.

If passed, it could usher in a new era of competition oversight—one that could either foster fairness or introduce new barriers to innovation.