A PYMNTS Company

“So Much Abuse”: Overhaul of Competition Law Shifts from ‘Buyer Power’ to ‘Superior Bargaining Position’ Abuse

 |  June 21, 2024

By: Joshua Everleigh (African Antitrust)

In late May 2024, the Competition Authority of Kenya (CAK) released a request for public comments on the ‘Draft Competition (Amendment) Bill, 2024’ (the “Amendment Bill”). The Amendment Bill aims to expand the scope of the Competition Act to cover ‘digital activities’ and to replace the current ‘abuse of buyer power’ prohibition with ‘abuse of superior bargaining position.’

The Amendment Bill has defined ‘digital activities’ as:

“the provision of a service by means of the internet, or provision of digital content, for the benefit of business consumers or other consumers (whether paid for or otherwise and whether or not such activity is multisided), and may include:

  • online intermediation services, including online marketplaces and app stores;
  • online search engines;
  • online social networking services;
  • video-sharing platform services;
  • independent interpersonal communication services;
  • operating systems;
  • cloud computing services; and
  • online advertising services.”

The proposed law would also broaden the assessment of competition effects or a firm’s dominance in the digital space. It would include the following considerations:

  • Dominance can be established even with market shares below forty percent, considering factors that grant significant market position, whether from one or multiple markets.
  • Direct and indirect network effects and the entry barriers associated with these effects.
  • Economies of scale and scope, especially regarding access to data relevant for competition.
  • User switching costs and the ability and tendency for users to use multiple services.
  • Competitive pressure driven by innovation.
  • The importance of intermediary services provided by the undertaking for accessing supply and sales markets, including the size of the undertaking, the number of business and individual users, and the duration of this level of importance.

Andreas Stargard, a partner in Primerio’s competition-law group, commented, “It is clear that the CAK is aligning with the global trend of regulating online marketplaces and firms. Our Kenyan colleagues anticipate increased enforcement against firms active in the digital space, particularly given the CAK’s focus on the online sector in its past market studies and investigations.”