Competition Policy and Market Dynamics
Explore the fundamentals of competition policy, market dynamics, and strategies such as predatory pricing in various contexts like dominance and market share analysis. Learn about the role of competition authorities and considerations for a competitive market landscape.
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Presentation Transcript
Day 2 Competition Policy Exercise 4 Feedback Exercise 5 Feedback Exercise 6 Feedback AFRALTI
Competition Two or more suppliers compete for same customer with similar product No single supplier has market power Government only intervenes on market failure No collusion of suppliers to artificially fix product prices AFRALTI
Competition Policy In USA referred to as antitrust policy Sometimes applied to limit abuse of market power Stop powerful organizations forcing competitors out of the market Must take account of suppliers and consumers AFRALTI
Competition Authority Sometimes role of Telecommunications Regulator Sometimes specific Regulator New Zealand relies on Competition Law AFRALTI
Competition Considerations Market Definition Suitable Product The Geography Barriers to entry Market Power and Dominance Significant Market Power Essential Facilities AFRALTI
Predatory Pricing Predatory pricing (also undercutting) is a pricing strategy where a product or service is set at a very low price, intending to drive competitors out of the market, or create barriers to entry for potential new competitors. A predator must have market power The predator must charge prices that fall below an agreed standard There must be evidence of a clear policy of selling at predatory prices not sporadic or reactive price cutting Reasonable expectation that predator can recover his losses AFRALTI
Dominance AFRALTI
Dominance Market Dominance of Incumbent Conduct by dominant firm preventing competition AFRALTI
The case of Kenya Market Share Kenya Mobile Connections Q3 2010 S/n Mobile Company 1 Safaricom 2 Yu 3 Airtel 4 Orange Market Share (%) 82 8 6 4 Source: Company reports, GSMA Intelligence AFRALTI 9
The case of Kenya Market Share Mobile Subscription per Operator (March 2014) Market Share (%) 68 16 8 8 S/n Name of Operator 1 Safaricom Limited 2 Airtel Networks Limited 3 Essar Telecom Limited 4 Telkom Kenya (Orange) Source: Communications Authority of Kenya AFRALTI 10
The case of United Republic of Tanzania Market share Subscription Market Share (June 2014) S/n 1 2 3 4 5 6 Mobile Company Vodacom Airtel Tigo Zantel TTCL Benson Market share (%) 37 32 24 6 0.998 0.002 Source: TCRA Website AFRALTI 11
