GOVERNANCE AND THE DIGITAL ECONOMY IN AFRICA TECHNICAL BACKGROUND PAPER SERIES Competition Policy in Digital Markets in Africa • a GOVERNANCE AND THE DIGITAL ECONOMY IN AFRICA TECHNICAL BACKGROUND PAPER SERIES Competition Policy in Digital Markets in Africa Copyright © 2023 The World Bank 1818 H Street NW Washington DC 20433 Telephone: 202-473-1000 Internet: www.worldbank.org Disclaimer This work is a product of the staff of The World Bank. The findings, interpretations, and conclusions expressed in this work do not necessarily reflect the views of The World Bank, its Board of Executive Directors, or the governments they represent. Rights and Permissions The material in this work is subject to copyright. Any queries on rights and licenses, including subsidiary rights, should be addressed to: Office of the Publisher The World Bank 1818 H Street NW Washington, DC 20433 USA Fax: 202-522-2422 E-mail: pubrights@worldbank.org. Technical Background Paper: Competition Policy in Digital Markets in Africa Acknowledgements This Background Paper was prepared under the leadership of Georgiana Pop (co-TTL, Senior Economist, and Global Lead for Global Competition Policy, Markets, Competition and Technology Unit of the World Bank). The authors are Georgiana Pop and Gonçalo Coelho (Senior Competition Policy Consultant, Markets, Competition, and Technology Unit, World Bank Group), with contributions from Davida Louise Cannon (Private Sector Development Specialist, Markets, Competition and Technology Unit), and Clara Stinshoff (Junior Professional Officer, Digital Development). The Background Paper builds on “Antitrust and Digital Platforms: An analysis of global patterns and approaches by competition authorities”, EFI Insight, Trade, Investment and Competitiveness (2021) by Sara Nyman (Senior Economist, Markets, Competition, and Technology Unit, World Bank Group) and Rodrigo Barajas (Consultant, Markets, Competition, and Technology Unit, World Bank Group); and from the “World Development Report 2021: Data for Better Lives” (Chapters 3, 7 and 9). The data and analysis herein reflect the situation as of December 2021. The team is grateful to Sara Nyman (Senior Economist, Markets, Competition, and Technology Unit, World Bank Group) and Jerome Bezzina (Senior Digital Development Specialist, Digital Development Africa West/Central and MENA Unit) for excellent peer review comments. Martha Martinez Licetti (Practice Manager, Markets, Competition and Technology Unit) provided overall guidance and oversight. i Technical Background Paper: Competition Policy in Digital Markets in Africa Common Abbreviations and Defined Terms This section explains the common terms and abbreviations used in this paper. Abbreviation / Term Full Terminology / Definition ACF Africa Competition Forum API Application Program Interface BTI Bertelsmann Stiftung’s Transformation Index CAGR Compound Annual Average Growth Rate CAK Competition Authority of Kenya CEMAC Communauté Économique et Monétaire de l’Afrique Centrale CCSA Competition Commission of South Africa COMESA Common Market for Eastern and Southern Africa EAC East African Community EAP East Asia and Pacific ECA Europe and Central Asia ECOWAS Economic Community of West African States EIU Economist Intelligence Unit EMDEs Emerging Markets and Developing Economies EU European Union FTE Full-Time Equivalents GCI Global Competitiveness Index GDP Gross Domestic Product GDPR European Union General Data Protection Regulation GNI Gross National Income GSMA Global System for Mobile Communications Association ICASA Independent Communications Authority of South Africa ICN International Competition Network ICT Information and Communications Technology IoT Internet of Things ITU International Telecommunications Union IXP Internet Exchange Point ii Technical Background Paper: Competition Policy in Digital Markets in Africa Kbit Kilobit LAC Latin American and Caribbean M&A Mergers and Acquisitions Global Digital Antitrust Database of the World Bank’s Markets Competition and MCT DAD Technology Unit MFN Most Favorite Nation MNE Multi-National Enterprise MNO Mobile Network Operator MoU Memorandum of Understanding MVNO Mobile Virtual Network Operator OECD Organisation for Economic Co-operation and Development PIN Personal Identification Number OS Operating System OTT Over-the-Top QR Quick Response code SIM Subscriber Identification Module SME Small- and Medium-Sized Enterprise SMME Small, Medium and Micro Enterprise Tbit Terabit UN United Nations UNCTAD United Nations Conference on Trade and Development USD United States Dollars USSD Unstructured Supplementary Service Data WAEMU West African Economic and Monetary Union WBG World Bank Group WDR World Development Report WOAN Wholesale Open Access Network iii Technical Background Paper: Competition Policy in Digital Markets in Africa Table of Contents EXECUTIVE SUMMARY ..................................................................................................................................... 1 1 INTRODUCTION ....................................................................................................................................... 6 2 COMPETITION IN THE DIGITAL ECONOMY: KEY CHARACTERISTICS AND POLICY ENABLERS ....................... 11 2.1 DIGITAL INFRASTRUCTURE ............................................................................................................................... 12 2.2 DATA ........................................................................................................................................................... 15 2.3 DIGITAL MARKETS .......................................................................................................................................... 17 3 COMPETITION POLICY IMPLEMENTATION IN DIGITAL MARKETS IN AFRICA.............................................. 20 3.1 A LANDSCAPE OF COMPETITION POLICIES AND LAWS ............................................................................................ 20 3.2 COMPETITION ENFORCEMENT IN DIGITAL MARKETS ............................................................................................. 24 3.2.1 Anticompetitive Practices..................................................................................................................... 33 3.2.2 Merger Control ..................................................................................................................................... 38 3.2.3 Cross-cutting enforcement issues ........................................................................................................ 40 3.3 COMPETITION ADVOCACY IN DIGITAL ECONOMY.................................................................................................. 40 4 CONCLUSIONS ....................................................................................................................................... 45 5 BIBLIOGRAPHY ...................................................................................................................................... 46 ANNEX I: GCI CHANGES IN REGIONAL PERFORMANCE BY PILLAR, PERCENTAGE CHANGES 2018-2019 ................ 52 ANNEX II: MOBILE CELLULAR SUBSCRIPTIONS, AFRICAN COUNTRIES, 2019 AND COMPOUND ANNUAL AVERAGE GROWTH RATE (CAGR) (%), 2015-2019............................................................................................................ 53 ANNEX III: ACTIVE MOBILE BROADBAND SUBSCRIPTIONS PER 100 INHABITANTS, 42 AFRICAN COUNTRIES, 2019 ..................................................................................................................................................................... 54 ANNEX IV: FIXED BROADBAND SUBSCRIPTIONS PER 100 INHABITANTS, AFRICA REGION, 2019 ......................... 55 ANNEX V: AFFORDABILITY OF AN ENTRY-LEVEL INTERNET-ENABLED PHONE IN LOW- AND MIDDLE-INCOME COUNTRIES, BY REGION, 2016-2019 ................................................................................................................ 56 ANNEX VI: SOUTH AFRICA’S COMPETITION COMMISSION 2019 DATA SERVICES MARKET INQUIRY ................... 57 ANNEX VII: EX ANTE AND EX POST REGULATION AND COMPETITION ENFORCEMENT ....................................... 58 ANNEX VIII: THE GENERAL DATA PROTECTION REGULATION: AN OVERVIEW .................................................... 60 ANNEX IX: TYPOLOGY OF COMPETITION RISKS IN DIGITAL PLATFORMS ........................................................... 62 ANNEX X: ENFORCEMENT OF COMPETITION LAW IN THE TELECOMS SECTORS IN AFRICA ................................. 64 List of Figures Figure 1: Global Competitiveness Index ICT Pillar, scores (and rank) 2019 ................................................ 7 Figure 2: Regulatory aspects important to enable competition in digital markets .................................12 Figure 3: Competition risks stemming from data-driven digital platforms ..............................................16 Figure 4.Comprehensive Competition Policy Framework .........................................................................20 Figure 5: Status of competition law and authorities across Africa, 2020 .................................................22 Figure 6: Competition law scope in African jurisdictions (2014 survey) ...................................................23 Figure 7: Transparency and Accountability of Competition Authorities in Africa (2014 survey) ............23 Figure 8: Presence of non-antitrust mandates in competition authorities in Africa ...............................24 iv Technical Background Paper: Competition Policy in Digital Markets in Africa Figure 9: Global Competitiveness Index. Selected competition-related variables, averages by region (values, 2019) ......................................................................................................................................25 Figure 10: BTI. Organization of the Market and Competition component, by region (scores, 2020) .....26 Figure 11: EIU. Business risks related to weak competition, by region (score, 2020) ..............................26 Figure 12: Cases by income level classification ..........................................................................................29 Figure 13: Cases by region ..........................................................................................................................29 Figure 14: Sectoral distribution of cases in the MCT DAD, by income level .............................................30 Figure 15: Number of antitrust cases and advocacy initiatives related to the digital economy in Africa .............................................................................................................................................................31 Figure 16: Enforcement cases by income level classification in Africa .....................................................32 Figure 17: Advocacy cases by income level classification in Africa ...........................................................32 Figure 18: Types of case of antitrust cases and advocacy (% of total) ......................................................33 Figure 19: Number of antitrust cases and advocacy initiatives related to the digital economy by segment .............................................................................................................................................................33 Figure 20: Types of abuse of dominance cases ..........................................................................................34 Figure 21: Types of firms involved in abuse of dominance cases .............................................................34 Figure 22: Enforcement cases by type of decision in Africa ......................................................................40 Figure 23: Merger cases by type of decision in Africa ...............................................................................40 Figure 24: Advocacy initiatives in the digital economy, by country .........................................................41 Figure 25: Advocacy strategy per type .......................................................................................................41 Figure 26: GCI Changes in Regional Performance by Pillar, Percentage changes 2018-2019 ..................52 Figure 27: Mobile cellular subscriptions, African countries, 2019 and Compound Annual Average Growth Rate (CAGR) (%), 2015-2019 ...............................................................................................................53 Figure 28: Active mobile broadband subscriptions per 100 inhabitants, 42 African countries, 2019 .....54 Figure 29: Fixed broadband subscriptions per 100 inhabitants, Africa region, 2019 ...............................55 Figure 30: Affordability of an entry-level Internet-enabled phone in Low- and Middle-Income Countries, by region, 2016-2019 ..........................................................................................................................56 List of Tables Table 1: Competition Policy Considerations in Digital Markets in Africa ................................................... 3 Table 2: Ex ante and ex post regulation and competition enforcement ..................................................58 Table 3: Typology of competition risks in digital platforms ......................................................................62 Table 4: Enforcers of competition rules in the telecommunications sector in Africa ..............................64 List of Boxes Box 1: Recent trends in SMP regulation .....................................................................................................17 Box 2: Challenges to competition analysis in digital markets ...................................................................26 Box 3: Business models and anticompetitive market outcomes ..............................................................27 Box 4: Exclusivity in vertical agreements ...................................................................................................35 Box 5: Anticompetitive horizontal agreements .........................................................................................37 Box 6: Essential facilities in digital markets ...............................................................................................37 Box 7: Merger control in African digital markets.......................................................................................39 Box 8: Competition advocacy for protecting consumers in digital markets .............................................42 Box 9: Competition advocacy that contributed to streamlining the application of competition law to digital markets ....................................................................................................................................43 Box 10: Regulatory measures triggered by competition agencies enforcement cases ............................44 v Technical Background Paper: Competition Policy in Digital Markets in Africa Box 11: South Africa’s Competition Commission 2019 Data Services Market Inquiry ............................57 Box 12: The General Data Protection Regulation: An Overview ...............................................................60 vi Technical Background Paper: Competition Policy in Digital Markets in Africa Executive Summary This Background Paper explores the effectiveness of competition policy enforcement in the digital markets in Africa along several dimensions, including anticompetitive agreements, abuse of dominance, merger control, as well as competition advocacy . Competition enforcement, or antitrust, is a key enabler of functioning digital markets that encompasses the investigation and punishment of anticompetitive practices, together with the analysis of mergers that may have a negative impact on competition before they are implemented. Besides stopping the anticompetitive behavior in the market being investigated, competition enforcement may also induce a deterrent effect on other firms, that may fear the competition authority is more likely to take enforcement action against them in the future in case of anticompetitive conduct. Improving competition in the digital economy requires acting on broader key policy enablers aside from competition enforcement. A full analysis of the key policy enablers that impact, for example, digital infrastructure, data, and digital markets ex-ante regulation is outside the remit of this Background Paper. However, policymakers should take into account several key aspects that can complement competition enforcement, notably: (i) ensuring an effective ex-ante regulation in digital infrastructure, specifically of operators with market power, while incentivizing an efficient and pro-competitive use of radio spectrum and promoting an effective sharing of infrastructure; (ii) having data protection regulations that facilitate data flows, and (ii) protecting the consumer against misleading commercial practices in digital markets. In what concerns competition enforcement, most countries in Africa have competition laws in place that address the main types of anticompetitive behavior . This includes prohibitions of anticompetitive (horizontal and vertical) agreements, prohibition of abuse of dominance, and a system of merger control that can block mergers and acquisitions that can restrict market competition. Moreover, most African countries also provide for key due process provisions to increase accountability and transparency in implementation. While African competition authorities have not yet dealt with issues in the digital economy to a great extent, they seem to be increasingly aware of the importance of safeguarding competition in digital markets. Overall, enforcement in digital markets is still relatively new in Africa – as in most other regions of the world. Antitrust cases and advocacy activities by competition authorities in African jurisdictions confirm that authorities in Africa have been less active in the digital economy compared to higher-income economies and other regions, with some exceptions. Most competition cases brought by African competition authorities have focused on digital platforms and mobile money and were analyzed in the context of abuse of dominance investigations, or as part of merger review. In particular: - Abuse of dominance: Enforcement of rules against abuse of dominance is especially relevant in digital markets, which are often controlled by a small number of vertically integrated firms that control access to the digital ecosystem. In effect, exclusionary conduct against rival firms stands- out as the most common anticompetitive practice investigated by African competition authorities. Most abuse of dominance cases have focused on the imposition of exclusive obligations by dominant digital platforms and mobile money operators on their business partners. This can be partly explained by the importance of protecting small and medium-size suppliers vis- à-vis large digital platforms that play a key role in connecting small merchants and service 1 Technical Background Paper: Competition Policy in Digital Markets in Africa providers to markets. Albeit more infrequently, African competition authorities have also investigated cases of essential facilities in digital markets (e.g. blocking access of a digital platform, and refusal of access to a key technology to compete downstream). - Anticompetitive agreements : Investigation of agreements between competitors on parameters, such as price, quantity, and customers, has been scant thus far in the African region. Limited enforcement against anticompetitive agreements might be explained by the difficulties in proving the existence of collusion in algorithm-driven markets. - Merger control: Together with abuse of dominance cases, merger review represents the most common type of competition cases in the African digital markets. This might be explained in part by the merger control procedures, which are triggered by merging parties and do not require competition authorities to take a pro-active stance in terms of enforcing the competition rules. Merger control provides competition authorities with a prime instrument to instill competition in digital markets, namely by using remedies to increase the incentives for platforms to grant access to essential data and algorithms, and to prevent self-preferencing of their own downstream activities. The African competition authorities have blocked few mergers, but often imposed remedies as a pre-condition to approving mergers that could otherwise restrict market competition (e.g. mandating the merged entity to grant access to key data and algorithms to competitors). - Competition advocacy: African competition authorities have used market studies and inquiries to assist with the detection and removal of market distortions and entry restrictions, as well as to improve consumer protection in the digital market. One area of concern is that of mobile money, where consumers face high information asymmetry in relation to financial firms. Other noteworthy advocacy initiatives are intended to raise awareness and increase transparency on the economic characteristics of digital markets and emerging technologies and to better streamline the application of competition rules to digital markets (e.g., how to better capture aspects such as non-price dimensions of competition, and how to assess dominance in multi-sided markets). Going forward, the competition authorities in Africa should increase their oversight over the market functioning and outcomes in the digital markets. A growing digital economy on the continent is likely to lead to more competition authorities investigating more cases regarding digital platforms, mobile money, data services, and other segments of digital markets. The African regional competition authorities can also play a decisive role in bringing together national competition authorities in sharing their experience in terms of advocacy and enforcement of competition rules to the digital economy .1 The African competition authorities can also benefit from the experience of other competition agencies in more developed economies, in terms of improving the effectiveness of their competition law frameworks and streamlining the application of competition rules to digital markets. This could include learning from previous competition analyses in other countries from 1 Specifically those with a competition advocacy mandate: Common Market for Eastern and Southern Africa (COMESA), Communauté Économique et Monétaire de l’Afrique Centrale (CEMAC), East African Community (EAC), Economic Community of West African States (ECOWAS), Southern African Development Community (SADC), and West African Economic and Monetary Union (WAEMU) – See Background Paper: Competition Advocacy for Digital Markets in Africa (January 2022). 2 Technical Background Paper: Competition Policy in Digital Markets in Africa the region, particularly in the context of mergers that affect several countries simultaneously. In effect, cross-border mergers and acquisitions (M&A) remain a key vehicle used by multi-national enterprises (MNEs) to gain access to markets and customers in developing countries in search of growth abroad. This means mergers by MNEs have a significant impact in the developing world – particularly in Africa – and drive a need for effective merger control regimes.2 The African competition authorities can further build upon consumer protection initiatives to incorporate a competition angle and adopt pro-competition recommendations. Competition in digital markets can be weak when customers find it hard to identify good value products in a market, switch between providers, or are subject to behavioral biases. Hence, consumer protection initiatives can be important for competition because they allow for switching and encourage greater demand elasticity. The table below puts forward key policy considerations to be considered by African competition authorities in the future. Table 1: Competition Policy Considerations in Digital Markets in Africa Antitrust enforcement and competition advocacy Competition topic Recommendations Relevant authorities/policy makers Abuse of dominance Closely monitor the firms’ behavior National and regional competition operating in the digital economy that authorities might result in the exclusion of competitors, or the exploitation of Data protection authorities consumers. In particular: - The impact of price increases and reductions of quality in multi-sided markets; - Refusals to deal, or to grant interoperability, as well as imposing exclusivity obligations by firms controlling technology, data or algorithms that are key to compete; - Intended or unintended self- preferencing practices by vertically integrated firms operating in the digital economy; - Tying and bundling by digital firms operating in adjacent markets; - Excessive collection of data from users; - Imposing unfair terms and conditions on business users and final consumers. Anticompetitive Closely monitor situations of potential National and regional competition agreements collusion in digital markets, especially the authorities 2 Georgiana Pop’s intervention in Concurrences, Antitrust in Developing and Emerging Economies – 8th Edition, Cross-Border and Multinational Mergers: Impact on Development, Webinar – October 27, 2021; merger analysis based on M&A data from the Refinitiv M&A database collecting data on global public and private M&A activities since 1979 for US transactions and 1985 for non-US transactions. 3 Technical Background Paper: Competition Policy in Digital Markets in Africa functioning of data and algorithms that can facilitate the risks of collusion between firms. Scrutinize vertical agreements between National and regional competition firms in different levels of the digital value authorities chain, which may reduce the ability of (downstream) firms to compete, by, for instance: - Prohibiting online retailers from introducing price discounts in relation to the price set by the manufacturer or distributor (the so-called retail price maintenance); - Prohibiting a business user from selling its products or services at a lower price in a competing platform (through the so- called most-favorite nation clauses). Merger control Evaluate if the existing merger thresholds National Governments (Ministries of capture killer acquisitions where smaller Trade or equivalent); National innovative firms are acquired before Parliaments becoming a competitive threat. National and regional competition Closely scrutinize small mergers or vertical authorities mergers that normally do not pose a risk to competition, but where the target firm Data protection authorities – in relation to holds data or intellectual property that mergers that lead to a consolidation of may provide a competitive advantage to data in the hands of the merging parties the acquirer. National telecommunications regulators – in relation to mergers that impact upstream telecommunications markets National Banks – in relation to mergers that impact digital financial services Competition advocacy Streamline the application of competition National and regional competition rules to digital markets, by clarifying and authorities providing guidance on: - How to better capture aspects, such as non-price dimensions of competition; - How to assess dominance in multi-sided markets. Continuously monitor market outcomes in National and regional competition digital markets and upstream digital authorities infrastructure. Ministries in charge of the digital economy or equivalent (e.g. agency in charge of the digital economy) 4 Technical Background Paper: Competition Policy in Digital Markets in Africa Ministries in charge of telecommunications and telecommunications regulators in relation to digital infrastructure Follow-up regularly on the outcomes of Governments (Ministries of Trade or market studies/inquiries with equivalent), National Parliaments policymakers. Assess the potential anticompetitive National and regional competition effects of regulation in the digital markets. authorities National Parliaments and Governments (Ministries of Trade or equivalent) Ministries in charge of the digital economy or equivalent (e.g. agency in charge of the digital economy) Competition Develop guidelines on how to enforce National and regional competition Authorities’ capacity competition law in digital markets. authorities Train Competition Authorities staff on the intricacies of competition analysis and investigations of anticompetitive practices in digital markets. Allocate adequate financial resources to National Parliaments and Governments prevent and detect the most harmful anti- (Ministries of Trade or equivalent) competitive conduct and promote effective competition advocacy considering the new challenges of the digital economy. Other complementary policy enablers: data and digital markets – Regulators and Government Data protection Develop fully-fledged data protection National Parliaments and Governments regulations that facilitate the flow of data (Ministries of Trade or equivalent) and ensure competitive digital markets Data protection authorities Consumer protection Enforce consumer protection rules that National Parliaments and Governments rules tackle misleading commercial practices in (Ministries of Finance, Trade or digital markets, especially in the areas equivalent) where information asymmetry is more acute (e.g. mobile money) National Banks Consumer protection agencies/other regulators with mandates for consumer protection in digital markets Source: Authors’ elaboration. 5 Technical Background Paper: Competition Policy in Digital Markets in Africa 1 Introduction Promoting an effective competition policy in digital markets is paramount to ensure smaller firms and consumers do not miss out on the economic benefits brought by digitalization . Due to their market characteristics – especially, high network effects and returns of scale – digital markets show a propensity towards increased consolidation and entrenched market power. This gives rise to two types of competition concerns: (i) preserving market contestability, by lowering barriers to entry and expansion, and (ii) protecting competition within digital markets, by deterring anticompetitive behavior vis-à-vis consumers, business users, and providers of complementary services.3 Contestable digital markets require ex-ante regulation - consisting of sector-specific regulation of digital infrastructure, digital platforms, and data - and ex-post competition policy and law enforcement. This paper will focus on competition policy and law enforcement in African digital markets, an area in which most African countries are still taking their first steps while providing an overview of key policy enablers for competition in relation to digital infrastructure, data, and digital markets. Competition policy and law enforcement entails investigating and punishing anticompetitive conduct in the market, notably anticompetitive agreements and abuse of dominance, reviewing mergers to ensure competition is not lessened, and promoting competition advocacy. Africa registered significant progress in terms of competitiveness and ICT adoption. According to the World Economic Forum Global Competitiveness Index (GCI),4 various African countries outperform in terms of ICT adoption. Overall, the highest-ranked African economies in GCI on ICT adoption are Mauritius (43rd out of 141 countries), followed by Seychelles (64th), Algeria (76th ) and Tunisia (83rd) (see Figure 1 below).5 Furthermore, Sub-Saharan Africa registered the highest positive variation between 2018 and 2019 in terms of ICT adoption 6 with a 15.8 percent change in its score (from 29.6 to 34.3 – see Annex I below). ICT adoption has been especially remarkable notably in relation to mobile communications. In effect, around 88.4 percent of Africa’s population is within the reach of a radio mobile signal, with 3G remaining the prevalent technology, covering 77 percent of the population. Several African countries perform better than the world average in terms of mobile cellular subscriptions: mobile cellular 3 World Bank. 2021. World Development Report 2021: Data for Better Lives. Washington, DC: World Bank (“WBG WDR 2021"), Chapter 3; Jacques Crémer, Yves-Alexandre de Montjoye and Heike Schweitzer, “Competition policy for the digital era”, Final Report for the European Commission (2019) ; Stigler Center for the Study of the Economy and the State, Stigler Committee on Digital Platforms (2019). 4 World Economic Forum, Klaus Schwab (Eds), The Global Competitiveness Report (2019). The Index which measures national competitiveness – defined as the set of institutions, policies and factors that determine productivity. – is centered across 12 pillars: Institutions; Infrastructure; ICT adoption; Macroeconomic stability; Health; Skills; Product market; Labour market; Financial system; Market size; Business dynamism; and Innovation capability. A country’s performance on the overall GCI results as well as each of its components is reported as a ‘progress score’ on a 0-to- 100 scale, where 100 represents the ‘frontier’, an ideal state where an issue ceases to be a constraint to productivity growth. 5 The Global Competitiveness Index separates African economies by Middle East and North Africa (Morocco, Tunisia, Algeria and Egypt) and Sub-Saharan Africa (Mauritius, South Africa, Seychelles, Botswana, Namibia, Rwanda, Ghana, Cabo Verde, Senegal, Uganda, Nigeria, Tanzania, Côte d’Ivoire, Gabon, Zambia, Eswatini, Guinea, Cameroon, The Gambia, Benin, Ethiopia, Zimbabwe, Malawi, Mali, Burkina Faso, Lesotho, Madagascar, Mauritania, Burundi, Angola, Mozambique, Democratic Republic of Congo, Chad). 6 The ICT adoption pillar measures: (i) mobile-cellular telephone subscriptions per 100 pop.; (ii) mobile broadband subscriptions per 100 pop.; (iii) fixed broadband Internet subscriptions per 100 pop.; (iv) fiber Internet subscriptions per 100 pop.; and (v) Internet users percent of adult population. 6 Technical Background Paper: Competition Policy in Digital Markets in Africa subscriptions exceed 100 per 100 inhabitants in 12 out of 44 African countries surveyed by the ITU 7 (see Annexes II and III below for mobile cellular subscriptions and mobile broadband subscriptions in Africa in 2019). International bandwidth in Africa has more than doubled from 5 Tbit/s in 2017 to 11 Tbit/s in 2020, even though it only represents around 1.5 percent of the total world international bandwidth.8 Figure 1: Global Competitiveness Index ICT Pillar, scores (and rank) 2019 80 43 70 64 60 76 83 85 GCI Score (0-100) 89 90 91 50 97 100 101 103 104 106 111112 113 115116 40 117 118119 122 123 125 126 128 129 30 130 132 133 134135 136 137 138 20 140 141 10 0 Congo, Dem. Rep. South Africa Côte d'Ivoire Angola Uganda Botswana Zambia Mozambique Madagascar Ethiopia Senegal Rwanda Zimbabwe Kenya Cameroon Mauritius Tanzania Egypt Burundi Mali Seychelles Ghana Namibia Chad Guinea Gabon Mauritania Malawi Algeria Eswatini Gambia, The Cabo Verde Burkina Faso Lesotho Nigeria Tunisia Morocco Benin Source: The Global Competitiveness Report (2019) Despite the strides made in mobile broadband usage, fixed broadband usage remains low throughout Africa. Whilst the number of individual mobile broadband users increased from 24.8 percent in 2017 to 28.6 percent by the end of 2019, fixed Internet access increased only by 0.1 percentage points from 14.2 percent in 2017 to 14.3 percent by the end of 2019. The International Telecommunications Union (ITU) estimates a fixed broadband subscription rate of 0.5 per 100 inhabitants for Africa in 2020, in comparison to the global average of 15.2 subscriptions per 100 inhabitants (see Annex IV below for fix broadband subscriptions in Africa, in 2019). In addition, to a feeble fix broadband deployment, Internet usage in Africa is still characterized by gender and regional gaps. 2019 figures show that only 20.2 percent of women used the Internet, compared with 37.1 percent of men, and that only 6.3 percent of rural households had access to the Internet in 2019, compared with 28 percent of urban households. 9 Lack of affordability remains a critical factor hindering access to ICT on the African continent. According to the ITU, despite recent progress, median prices for ICT services in Africa remain well above world prices.10 In 2020, African economies meeting the 2 percent affordability target of the Broadband 7 Seychelles, South Africa, Botswana, Mauritius, Côte d’Ivoire, Gambia, Gabon, Ghana, Mali, Namibia, Senegal, Cabo Verde and Kenya 8 Kenya has the highest international bandwidth per Internet user in Africa, with 566.41 kbit/s. 9 ITU, Digital trends in Africa 2021: Information and communication technology trends and developments in the Africa region 2017-2020. 10 In Africa data-only mobile-broadband basket prices represented 6.4 per cent of GNI per capita, comparing to only 1.7 per cent worldwide; mobile data and voice low-usage basket prices represented 8.9 per cent of GNI per capita vis-à-vis 1.9 per cent worldwide; mobile cellular low usage basket prices represented 6.1 per cent of GNI per capita 7 Technical Background Paper: Competition Policy in Digital Markets in Africa Commission for Sustainable Development included only Morocco, Algeria, Tunisia, Libya, Egypt, Nigeria, Gabon and Botswana, for mobile broadband, and no country whatsoever for fixed broadband. 11 On the other hand, access to data remains nearly prohibitive in various African countries. For instance, data-only mobile broadband plans represented from 18 percent to more than 32 percent of the monthly average income in Chad, Malawi, Central African Republic, Guinea Bissau, and the Democratic Republic of the Congo (in order of increasing percentage). By contrast, the cheapest available plan represents less than 1 percent in most Europe and Central Asia countries (ECA)12 and stands below 2 percent in comparator Latin America and Caribbean countries (LAC).13 Furthermore, a 2020 GSMA Report still places Sub-Saharan Africa as the region of the world where the cost of an Internet-enabled mobile is higher as a percentage of monthly GDP per capita (see Annex V below for a comparison of the affordability of an entry-level Internet-enabled phone in Low- and Middle-Income Countries). Improving digital infrastructure in Africa can result in substantial economic gains, including in relation to the development of a digital firm ecosystem. In Sub-Saharan Africa alone, mobile technologies and services generated 9% of GDP in Sub-Saharan Africa in 2019. 14 Studies by the ITU show that increasing mobile broadband penetration by 10 percent in Africa would yield an increase of 2.5 percent in GDP per capita. Furthermore, a 10 percent drop in mobile broadband prices would boost the adoption of mobile broadband technology by more than 3.1 percent.15 Broadband connectivity also works as a lever for the creation of new jobs, both directly – demand by tech-based companies – and indirectly – demand by the ecosystem that supports tech companies. For instance, a 2014 study by Deloitte estimated that increasing broadband access in Africa could result in as many as 44 million new jobs in Africa alone. 16 As in other parts of the world, Africa has been experiencing an uptake in digital services and digital platform growth. A 2019 overview of emerging trends in digital platforms shows that 82 percent of the total digital platforms in operation in Africa are homegrown on the continent.17 Notwithstanding, scale- of-usage indicates that the average number of users is three times larger for platforms originating outside ITU, comparing to 1.6 per cent in the rest of the world; and fixed broadband basket prices represented 18.4 per cent in comparison to 2.9 per cent worldwide: The affordability of ICT services 2020, Policy Brief. 11 The African countries assessed for fix and mobile broadband include: Angola, Benin, Botswana, Burkina Faso, Burundi, Cabo Verde, Cameroon, Central African Republic, Chad, Republic of the Congo, Côte d’Ivoire, Democratic Republic of the Congo, Equatorial Guinea, Eritrea, Eswatini, Ethiopia, Gabon, Gambia, Ghana, Guinea, Guiné Bissau, Kenya, Lesotho, Liberia, Libya, Madagascar, Malawi, Mali, Mauritius, Mozambique, Namibia, Niger, Nigeria, Rwanda, São Tomé e Príncipe, Senegal, Seychelles, Sierra Leone, South Africa, South Sudan, Tanzania, Togo, Uganda, Zambia and Zimbabwe. Morocco, Algeria, Tunisia, Libya and Egypt fall in ITU’s category of Arab countries. 12 Luxembourg, Poland, Italy, Spain, France, Norway, Germany, Sweden, Denmark, Kazakhstan, Belgium, Latvia, Czech Republic, Latvia, Iceland, United Kingdom, Switzerland, Slovenia, Georgia, Lithuania, Estonia, Malta, Montenegro, The Netherlands, Belarus, Ireland, Finland, Bulgaria, Greece, Turkey, Cyprus, and Portugal. 13 Costa Rica, Argentina, Uruguay, Panama, Peru and Brazil. 14 https://www.gsma.com/mobileeconomy/sub-saharan-africa/ 15 ITU, Economic contribution of broadband, digitization and ICT regulation Econometric modelling for Africa (2019) 16 Deloitte, Value of Connectivity: Economic and Social Benefits of Expanding Internet Access (February 2014); Broadband Commission Working Group on Broadband for All: A “Digital Infrastructure Moonshot” for Africa October 2019, Connecting Africa Through Broadband A strategy for doubling connectivity by 2021 and reaching universal access by 2030, October 2019. 17 Smit, Herman & Johnson, Chernay & Hunter, Renée & Dunn, Matthew & Janse van Vuuren, Pieter & Makuvaza, Leonard & Chetty, Rinelle & Cenga, Esethu & Ongere, Ruth & Dzinotywei, Chido. (2019). Africa's digital platforms and financial services: An eight-country overview: https://www.researchgate.net/publication/333949106_Africa%27s_digital_platforms_and_financial_services_An_ eight-country_overview. 8 Technical Background Paper: Competition Policy in Digital Markets in Africa the continent, suggesting foreign platforms have a greater capacity to monetize their activities despite being outnumbered by homegrown platforms. Kenya and Nigeria have relatively high numbers of platform firms when controlling for the size of the economy (GDP per capita).18 However, a country-level analysis shows that South Africa has the largest number of homegrown platforms (54), having grown by 52 percent on average, between 2018 and 2019, whilst Kenya registered the fastest growth (71 percent) in the number of platforms between 2018 and 2019 (31 homegrown platforms). Few sectors have been left untouched by the mobile-app digital platform revolution that has been taking place in Africa, even though “place-based digital platforms (i.e., platforms mediating business activities characterized by close physical proximity between worker and consumer) represent the majority of operating platforms (64 percent of the total). In addition, 66 percent of the platforms are services-based, rather than matching assets or goods. As such, digital platforms can play a fundamental role in creating jobs in African countries. 19 Digital platform services, notably mobile money, are also increasingly prevalent across all economic sectors in Africa. Mobile money, driving financial inclusion, doubled the number of accounts between 2014-17 in Sub-Saharan Africa.20 In 2020, Africa became the world leader in mobile money markets. Currently, nearly half of all registered mobile money accounts are in Africa (562 million registered accounts out of a universe of 1.2 billion registered accounts). The volume transacted in 2020 reached USD 495 billion, which accounts for nearly 65 percent of all the world transaction value. 21 In addition to being a world leader in terms of volume, Africa has introduced various innovative models in digital payment services. For instance: • Ghana’s launch of a universal QR code enabled all Ghanaians to make instant merchant payments from their mobile money wallets, bank accounts, and international cards.22 • The launch of a partnership by UN Women and Orange Liberia helped provide mobile money services to women and girls, in 2017. 23 • In Niger, CityTaps developed a smart prepaid water meter, incorporating mobile money and machine2machine technologies, allowing households to make micro-payments for their water using mobile money.24 • Orange and Engie partnered in supplying, installing, and maintaining solar panels in rural areas of Senegal, Mali, Guinea, and Côte d’Ivoire, with Orange Money managing customer billing. 25 • A smart ticketing system in Côte d’Ivoire, allowing passengers of SOTRA, Abidjan’s local bus company, to board any of its buses using contactless cards, which can be topped-up with mobile money.26 In addition to the more established mobile money services, data-driven businesses have emerged in agriculture, health, education and transport services . For instance: 18 WBG WDR, Chapter 3 (2021). 19 Insigh2 Impact / Centri / Finmark Trust, Chernay Johnson, Hennie Bester, Pieter Janse van Vuuren and Matthew Dunn, “Africa’s digital platforms” (2019). Overview of emerging trends in the market. 20 Global Findex 2017 21 GSMA, State of the Industry Report on Mobile Money (2021). 22 GSMA, State of the Industry Report on Mobile Money (2021). 23 GSMA, The Mobile Economy, West Africa (2019). 24 GSMA, The Mobile Economy, West Africa (2019). 25 GSMA, The Mobile Economy, West Africa (2019). 26 GSMA, The Mobile Economy, West Africa (2019). 9 Technical Background Paper: Competition Policy in Digital Markets in Africa • In the agriculture sector, Nigeria’s Hello Tractor connects tractor owners and farmers without their own tractor equipment, through the use of a mobile app that locates available tractors. This mechanism allows farmers to save on transaction costs in tracking-down tractors and enables owners to monitor the use of equipment. Kenya’s DigiCow platform matche s farmers and veterinaries and provides digital records for the animals; whilst Digifarm offers a one-stop access to a wide range of products, including financial and credit services, quality farm products, and customized information on best farming practices.27 • In the health sector, Cameroon’s CardioPad provides a tablet paired with sensors that collect data on the patient’s health and transmit them over a mobile network to hospitals where cardiologists can make a diagnosis;28 Nigeria’s LifeBank matches hospitals requesting blood with potential donors, based on current demand and location maps of all institutions involved in blood distribution; and Ghana’s mPedigree enables pharmaceutical manufacturers to counter drugs falsification by adding a code to the drugs packaging which consumers can then verify using their mobile phones. • Other sectors include digital freight matching, whereby cargo is matched to underused drivers and trucks (e.g. Kobo360 in Ghana, Kenya, Nigeria, Togo, Uganda; and LORI in Kenya, Nigeria, Rwanda, South Sudan, Tanzania, Uganda); and education platforms such as Egypt’s Tutorama, which matches students to tutors. In this context, new dynamics – and associated risks of distortions – have emerged in markets where digital market players compete. Section 2 will analyze the key policy enablers for competition in the digital economy across three key dimensions: digital infrastructure, data, and digital markets. Section 3 will describe the overall status of competition law and policy in Africa, building-upon the findings of the upcoming report by the World Bank Group (WBG) and Africa Competition Forum (ACF) on the Institutional Design of African Competition Authorities. Subsequently, the Paper will analyze the ex-post-competition enforcement of the rules prohibiting anticompetitive agreements and abuse of dominance and the ex ante review of mergers that may substantially limit market competition. Further, Section 3 will discuss competition advocacy pursued by the African competition authorities to foster competition in digital markets. 27 WBG WDR 2021, Chapter 3 (2021). 28 WBG, “World Development Report – Data for Better Lives”, Chapter 3 (2021). 10 Technical Background Paper: Competition Policy in Digital Markets in Africa 2 Competition in the Digital Economy: Key Characteristics and Policy Enablers Digitalization of value chains has enabled businesses to earn tremendous value through the use of data; notwithstanding, new risks for competition have also emerged from the use of data in the competitive process. Using data as an input in digital markets has enabled firms to create innovative products and services, which ultimately results in increased productivity, export competitiveness, and growth. By mitigating market fragmentation and reducing transaction costs, digitalization can help balance the level playing field towards the poorest in society as well as bridge the gap between urban and rural areas. 29 In many digital markets, there is a tendency to tip towards dominance and entrenched market power in the hands of a few digital operators. The prevalence of market power in digital markets has been further facilitated by digital business models (e.g., vertical integration, conglomerates), the concentration of data in the hands of a limited number of firms, as well as by the restrictions imposed by the digital players on the flow of data. This winner-takes-most scenario can prevent the development of healthy digital ecosystems to the detriment of suppliers and consumers to digital platforms. In the absence of adequate and effective legal protection, some digital platforms will be able to abuse their power and extract concessions from firms and consumers that would not be attainable in a competitive market. In addition, the data advantage held by vertically-integrated players will allow them to reinforce barriers to competition and engage in self-preferencing of their own offerings whilst excluding rivals from the market.30 At the same time, digitalization presents serious risks for individual welfare stemming from an excessive collection of data on individuals; risks of bias and discrimination due to the increased use of algorithmic and automated decision-making, and a suboptimal investment in data governance and data protection by digital platforms (failure to internalize the cybersecurity risks placed by the collection of big data).31 When regulatory bottlenecks persist across the digital value chain, they can affect competition and efficient market outcomes for firms and consumers. Figure 2 below pinpoints the regulatory aspects that can impact the digital ecosystem, notably the upstream digital infrastructure, digital market operators, and data, which can be used both as an input, as well as an output in digitalized value chains. It is argued that for digital markets (e.g., digital platforms, data and cloud services, and mobile money) to be fully functioning–– it is paramount to have in place a regulatory framework that can effectively tackle existing bottlenecks and promote competitive outcomes in the upstream digital infrastructure, efficient use of data and encourage competition among digital operators. In addition, it is essential to have in place equally effective competition laws comprising: (i) ex-ante merger review that can prevent mergers that substantially reduce market competition, (ii) ex-post enforcement against anticompetitive agreements and abuse of dominance to deter firms from engaging in anticompetitive conduct; 32 and (iii) effective 29 WBG WDR , Chapter 3 (2021). 30 Subcommittee on Antitrust, Commercial and Administrative Law of the Committee on the Judiciary, Investigation of Competition in Digital Markets, Majority Staff Report and Recommendations (2020). 31 WBG WDR, Chapter 3 (2021). 32 Competition authorities typically define the relevant market where the anticompetitive practice takes place. The relevant geographic market refers to the area in which the conditions of competition are sufficiently homogeneous, and which can be distinguished from neighboring areas where the conditions of competition are appreciably different. Th objective of these two concepts is to the objective is to identify substitutes which are sufficiently close that they would prevent a hypothetical monopolist of the focal product in one area from profitably sustaining prices 11 Technical Background Paper: Competition Policy in Digital Markets in Africa competition advocacy tools to promote competition principles across all policies and regulations that may affect the digital economy.33 Figure 2: Regulatory aspects important to enable competition in digital markets Source: Authors’ elaboration. 2.1 Digital Infrastructure Competition in digital infrastructure provides the bedrock for the development of downstream digital markets in Africa.34 This requires a regulatory framework that not only incentivizes the roll-out of digital infrastructure – international gateways, backbone network, and active infrastructure – but also that operators do not limit access to existing infrastructure in a way that is conducive to anticompetitive outcomes. Because digital markets build on a country’s digital infrastructure, the existence of an effective ex-ante regulatory framework is paramount to ensure incumbents do not exclude rivals through anticompetitive conduct. Through ex-ante regulation, sector regulators (i.e., telecom) can impose remedies on operators with significant market power (SMP), which operate in markets where the risks of anticompetitive conduct are high. It is important that markets are reviewed periodically in order not to regulate markets based on outdated market definitions, or under-regulate operators with SMP active in 5 to 10 percent above competitive levels: see Digital Regulation Handbook: Geneva: International Telecommunication Union and the World Bank, 2020. Licence: CC BY-NC-SA 3.0 IGO, Section 2.3. 33 WBG WDR, Chapter 3 (2021). 34 WBG WDR, Chapter 3 (2021). 12 Technical Background Paper: Competition Policy in Digital Markets in Africa markets that have not been assessed yet (e.g. Bénin sets forth a periodic review of telecoms markets every three years).35 An effective regulation of digital infrastructure can contribute to preventing potentially exclusionary behavior by vertically integrated firms. For instance, the high cost of data processing, and the difficulty by data-driven firms to process data closer to the final consumer may enable vertically integrated Internet service providers (ISPs) controlling access to data centers to grant preferential access to their own downstream digital platforms in a way that hinders growth by rival digital platforms.36 By the same token, investment by content providers in international connectivity and caching mechanisms to accelerate the speed of delivery to users – particularly in developing regions – raises exclusionary risks in relation to data traffic by rival firms (and, consequently, can impact the growth of rival digital platforms). Access to digital infrastructure will be even more important in a 5G context since storage and analysis of data generated through Internet of Things (IoT) devices will rely on access to remote storage and processing infrastructure (often located abroad). 37 In another example, big tech companies have been heavily investing in edge infrastructure, both in terms of improving the capacity of devices and through the development of new applications. Investment in edge computing allows big tech firms to leverage their market position in the cloud to the edges of the network by developing capabilities that may support edge computing, with potentially exclusionary effects. Although competition agencies and sector-specific regulators share the same goal of maintaining competition in the market, they pursue different welfare objectives . Typically, competition agencies tend to focus on short-term consumer welfare, whilst telecommunications regulatory authorities pursue longer-term goals of total welfare (e.g., investment in infrastructure). Hence, independently from being applied ex-ante (merger control) or ex-post (antitrust enforcement), competition law’s focus is to preserve the competition status quo and to avoid short-term losses in terms of consumer welfare. Sector-specific regulation, on the other hand, seeks to increase market competition, primarily by imposing behavioral remedies upon companies with significant market power. As compared to regulatory authorities, competition authorities have more investigation powers (including raids and seizures); and have more dissuasive sanctioning powers (i.e. a percentage of the worldwide turnover of the group of companies to which belong the infringing company). in Africa, regulatory and competition authorities have also been active for several years in pursuing investigations and sanctioning anti-competitive practices in the electronic communications sector (see Annex VI for a matrix comparing sector-specific regulation and competition enforcement, both ex-ante and ex-post). In addition to asymmetric rules applicable to operators with SMP, other ex-ante rules may apply to all relevant operators regardless of market power . In this context, rules that incentivize entry by mobile virtual network operators (MVNOs) can have a positive impact in terms of lower prices and innovative market outcomes. For example, First National Bank in South Africa launched an MVNO in 2015, which 35 Pop & Coelho (2020) “Getting the Competition Game Right in Mobile Communications and Radio Spectrum in West Africa: An Assessment of Regulatory Restrictions to Competition”, World Bank Group, mimeo. 36 See Digital Regulation Handbook: Geneva: International Telecommunication Union and the World Bank, 2020. Licence: CC BY-NC-SA 3.0 IGO, Section 2.2: “Regulators should be wary of authorizing digital platform providers to construct network infrastructure to avoid leverage dominance into the market for network access, but ways should be sought to ensure that digital platforms contribute to the costs of deploying and maintaining access infrastructure.” 37 WBG WDR, Chapter 3 (2021). 13 Technical Background Paper: Competition Policy in Digital Markets in Africa attracted more than 200,000 customers in its first year of operations. 38 The 2019 Inquiry into data services by the South African Competition Commission proposed further measures aimed at promoting entry by MVNOs to reduce the prices of data bundles in the country (see Annex VII for an analysis of the Sector Inquiry recommendations). Other ex-ante regulatory rules, such as number portability – regardless of the existence of SMP – also act as a key lever for lowering transaction costs for consumers that wish to change operator, and, therefore, a key instrument in curbing market power of operators (countries which such rules include, inter alia, Côte d’Ivoire, Nigeria, Ghana, Cabo Verde and Bénin).39 Effective sharing of active and passive infrastructure can facilitate the roll-out of broadband in unserved and underserved areas, and boost service-based competition. Infrastructure sharing can play an important role in improving the network, especially in rural areas, as it lowers the risk and costs of investing in network expansion. Notwithstanding, adequate competition law safeguards should be put into place in order to mitigate anticompetitive conduct and risks such as the exchange of sensitive information between operators, and potential collusion at the service level.40 A framework for infrastructure sharing that balances the efficiencies and the anticompetitive effects should take into consideration: (i) the degree of cooperation/autonomy between the parties to the agreement, which is also a function of the passive or active nature of the infrastructure; (ii) the parties’ market power; (iii) the duration of the agreement; and (iv) the characteristics of the area covered (broadness and density). Pop and Coelho's (2020) assessment of regulatory restrictions to competition in mobile communications across West Africa shows that nearly all West African countries, with the exception of Cabo Verde and Liberia, have adopted a passive infrastructure sharing framework. On the other hand, active infrastructure sharing is only explicitly allowed in Senegal and Togo within West Africa.41 Within the remit of digital infrastructure, pro-competitive spectrum regulation is especially important in Africa given the overall frailty of fixed infrastructure in the continent. 42 A streamlined system of spectrum management is fundamental for the deployment of 4G (and in the future 5G) technologies, which enable the development of downstream businesses with positive spillovers for African economies. A pro-competitive spectrum regulation involves, first and foremost, the introduction of market-based instruments in spectrum management, chiefly, spectrum auctions and a secondary market where spectrum can be traded and leased. According to Pop and Coelho (2020), Bénin, Cabo Verde, Sierra Leone, Liberia, Guinea, Mali, The Gambia, Togo, Niger, Burkina Faso, Côte d’Ivoire allow spectrum auctions, although they are yet to be implemented; the only countries that had spectrum auctions in West Africa were Nigeria, Ghana, and Senegal. On the other hand, spectrum trading is currently only allowed in Nigeria, Cabo Verde, and The Gambia, although there appears to be no practice in this regard.43 Whilst market-based mechanisms can enable spectrum to be used more efficiently, they can also give rise to 38 Pop & Coelho (2020) “Getting the Competition Game Right in Mobile Communications and Radio Spectrum in West Africa: An Assessment of Regulatory Restrictions to Competition”, World Bank Group, mimeo. 39 Pop & Coelho (2020) “Getting the Competition Game Right in Mobile Communications and Radio Spectrum in West Africa: An Assessment of Regulatory Restrictions to Competition”, World Bank Group, mimeo. 40 GSMA, Enabling Rural Coverage Regulatory and policy recommendations to foster mobile broadband coverage in developing countries (2018). 41 The Policy Note covered the fifteen ECOWAS countries: Bénin, Burkina Faso, Cabo Verde, Côte d’Ivoire, Ghana, Guinea, Guiné Bissau, Liberia, Mali, Niger, Nigeria, Senegal, Sierra Leone, The Gambia, and Togo: see Pop & Coelho (2020) “Getting the Competition Game Right in Mobile Communications and Radio Spectrum in West Africa: An Assessment of Regulatory Restrictions to Competition”, World Bank Group, mimeo. 42 Erik Hersman, Spring 2013, “The Mobile Continent”, Stanford Social Innovation Review. 43 Pop & Coelho (2020) “Getting the Competition Game Right in Mobile Communications and Radio Spectrum in West Africa: An Assessment of Regulatory Restrictions to Competition”, World Bank Group, mimeo. 14 Technical Background Paper: Competition Policy in Digital Markets in Africa competition risks, by further increasing barriers to entry and expansion in mobile markets. Pro- competitive safeguards, including spectrum caps, set-asides, or the creation of a wholesale open access network (WOAN) can limit the market power risks posed by market-based spectrum regulation.44 In West Africa, Nigeria is the only country to have adopted a single WOAN (Bitflux) with open access obligations. In parallel with the promotion of market-based instruments and competition safeguards, it is also important to have enough spectrum allocated for unlicensed use, as this offers a green field for the development of new technologies (e.g. Internet of Things), and reduces entry barriers by businesses using spectrum as an input in downstream, digital markets. African countries with guidelines for the unlicensed use of spectrum include Mali, Nigeria, The Gambia, and Togo.45 2.2 Data Data can provide firms with a competitive edge that can be difficult to match by actual and potential competitors (see Figure 3 below for a description of the competition risks stemming from data-driven platforms). A firm that owns or controls large swaths of data can benefit from network and scope effects that can hinder market entrance or expansion, by creating winner-takes-it-most situations. Moreover, it can facilitate the leveraging of market power into adjacent markets, crowding-out efficient competitors.46 44 Set-asides: remove the incumbent from the bidding process and one or more blocks of spectrum are reserved for a specific type of bidder, such as a new entrant, a smaller operator or a designated entity or group (e.g. minorities, SMMEs, etc.); Spectrum caps: limit the maximum quantity of spectrum that can be held in a specific geographic area. Caps can be applied either to an individual auction or, in more general terms, to a category of radio frequencies. Spectrum caps allow entrants to bid for larger quantities of newly available spectrum, and limit “excessive” concentration of spectrum by incumbents; A WOAN consists of a network that provides wholesale services, in accordance with open access principles, such as transparency and non-discrimination, either on a voluntary basis or under a mandated access regime. See Pop & Coelho (2020) “Getting the Competition Game Right in Mobile Communications and Radio Spectrum in West Africa: An Assessment of Regulatory Restrictions to Competition”, World Bank Group, mimeo. 45 Pop & Coelho (2020) “Getting the Competition Game Right in Mobile Communications and Radio Spectrum in West Africa: An Assessment of Regulatory Restrictions to Competition”, World Bank Group, mimeo. 46 WBG WDR, Chapter 3 (2021). 15 Technical Background Paper: Competition Policy in Digital Markets in Africa Figure 3: Competition risks stemming from data-driven digital platforms Source: WBG WDR, Chapter 3 (2021). Ex ante regulation can be required to prevent firm conduct in data markets and can yield below optimal outcomes in terms of social welfare. Data-driven firms may engage in conduct that may produce anticompetitive outcomes, including: (i) an excessive collection of data: (ii) ineffective and/or insufficient data governance, that fails to fully internalize privacy and cybersecurity concerns; (iii) designing algorithms that facilitate collusion or result in the discriminatory treatment of a category of users. 47 Regulatory options available to deal with market power issues in data-driven industries include facilitating multihoming (use of multiple platforms for the same service); the right to portability of personal data (in essence, the right to move personal data between different controllers); data interoperability (the ability for different systems to share and use data in a coordinated and timely manner); and encouraging data sharing or pooling schemes (where two or more firms agree to merge their data for access by themselves and possibly third parties).48 The balance between rights over data and data sharing may be different in high and low-income countries, as in the latter countries, the gains from protecting data rights in the short-run are typically limited. Nevertheless, it is important to take a forward-looking approach that can anticipate future effects on investments in data. 49 The 2018 European Union General Data Protection Regulation (GDPR) paved the way for the enactment of Data Protection laws across Africa in a short period, and even for the quick establishment of Data Protection agencies (see Annex VIII). The 2021 World Bank desk survey of 29 countries in Africa 50 shows that 14 countries have data authorities in place, as of April 2021: Bénin, Burkina Faso, Cabo Verde, Côte d’Ivoire, Ghana, Guinea, Mali, Niger, Nigeria, Senegal, Angola, Egypt, Kenya, South Africa. 51 Other countries have adopted data protection laws but have not yet established their agencies (Algeria, 47 WBG WDR, Chapter 3 (2021). 48 WBG WDR, Chapter 7 (2021). 49 WBG WDR, Chapter 3 (2021). 50 Bénin, Burkina Faso, Cabo Verde, Côte d’Ivoire, Ghana, Guinea, Guiné Bissau, Liberia, Mali, Niger, Nigeria, Senegal, Sierra Leone, The Gambia, Togo, Algeria, Angola, Botswana, Cameroon, Congo, Egypt, Kenya, Malawi, Namibia, Seychelles, South Africa, Eswatini, Zambia, Zimbabwe. 51 Other African countries with a data protection agency include: Tunisia, Gabon, Maurice, Morocco, Uganda, São Tomé e Príncipe and Tchad. 16 Technical Background Paper: Competition Policy in Digital Markets in Africa Botswana, and Congo), whilst in Zambia and Zimbabwe, the data protection legislation is currently pending Parliamentary approval. In addition, ECOWAS also has regional legislation on data protection, prior to the EU’s GDPR (Supplementary Act A/SA.1/01/10 on Personal Data Protection Within ECOWAS). Notwithstanding the adoption of data protection laws, data portability and interoperability obligations remain exceptional having been implemented in Kenya and Nigeria. 2.3 Digital Markets52 Digital markets are a challenging area for competition enforcers, namely because of their outcomes in relation to non-price dimensions of competition – e.g. privacy and data protection (see Annex IX for a typology of competition risks in digital platforms). 53 Anticompetitive outcomes in digital markets can be the result of discrimination or bias against individuals based on automated decision making, indirect management of the workforce through algorithms; or suboptimal investment in data governance by private firms with potential negative effects on the privacy of final users. Responding to the competition risks in data-driven markets may require a response in terms of asymmetric regulation aimed at platforms with a gatekeeper position 54 that is applied ex post. In fact, and as explained in Box 1 below, the future role of the regulator is going to be much more one of monitoring agreements rather than intervening to set prices or determine quality of service levels. Furthermore, it is important to protect consumers and small suppliers of data-driven businesses through regulatory remedies other than competition law (e.g., consumer protection laws, unfair competition laws) regardless of market power considerations.55 Box 1: Recent trends in SMP regulation The features of digital markets lead to market outcomes that might be difficult to regulate through traditional ex- ante asymmetric regulation. Such outcomes include: • A race for scale, as a consequence of first-mover advantages that contribute to maintaining or reinforcing a dominant position in the market; • A winner-takes-most scenario where market power is concentrated in the hands of few digital platforms to the exclusion of smaller operators; • Transnational and global markets stemming from high economies of scale; • The fracturing of traditional telecommunication regulation, with digital platforms operating outside the traditional regulated space, but nevertheless competing with telecommunication network service providers. These market outcomes can be challenging for regulators to design effective ex ante regulatory remedies, primarily because: 52 Although digital markets can generally relate to the meeting of supply and demand for digital goods and services, for the purposes of this Note, the concept of digital markets refers to those markets where digital platforms operate. A digital platform can be defined as “an economic agent with a business model that permits interactions and exchanges of information, goods, and/or services between multiple types of users, which can be producers, consumers, or a community, through digital means.”: see 2021. Antitrust and Digital Platforms: An analysis of global patterns and approaches by competition authorities. EFI Insight-Trade, Investment and Competitiveness. Washington, DC: World Bank. 53 WBG WDR 2021, chapter 3. 54 In the European Union, “gatekeepers” have been described in the Proposal for a Regulation of the European Parliament and of the Council on contestable and fair markets in the digital sector (Digital Markets Act) as those enjoying “an entrenched and durable position, often as a result of the creation of conglomerate ecosystems around their core platform services, which reinforces existing entry barriers.” (Article 3(1). 55 WBG WDR, Chapter 3 (2021). 17 Technical Background Paper: Competition Policy in Digital Markets in Africa • Digital platforms are borderless, too large and too wide to regulate; • There is limited scope for competition in the market (de facto monopolies); • Consumer data funds the system in non-transparent and potentially harmful ways; • Digital platforms are not making a consistent and proportionate contribution to the national infrastructure that they depend upon. A possible solution for averting the problems associated with the ex ante regulation of digital platforms may lie in existing net neutrality regulation, especially its three main principles: no blocking, no throttling, and no-paid prioritization. These principles establish a guide for ex-post intervention on a case-by-case basis as required. Similar to traditional telecom operators, faced with the inability to extract further revenue, digital platforms may seek instead to block content, throttle demand or prioritize paid traffic simply to cover costs. Hence, it is expected that regulation is increasingly conducted ex post, and with a focus on monitoring agreements and resolving disputes between telecommunication network providers and digital platforms, based on clear principles such as those governing net neutrality. Source: Digital Regulation Handbook: Geneva: International Telecommunication Union and the World Bank, 2020. Licence: CC BY-NC-SA 3.0 IGO The tendency for digital markets to tip toward concentrated market structures and entrenched market power can negatively impact the development of healthy digital ecosystems to the detriment of suppliers and consumers to digital platforms. In the absence of adequate and effective legal protection, some digital platforms will be able to abuse their power and extract concessions from firms and consumers that would not be attainable in a competitive market. In addition, their data advantage will allow them to reinforce barriers to competition and engage in self-preferencing of their own offerings whilst excluding rivals from the market. 56 For example, an analysis of 631 business-to-consumer online marketplaces in Africa, shown that Jumia alone concentrated 24 percent of website users in 2019. 57 Although market concentration in itself is not a synonym of market power, it can act as a facilitator for anticompetitive behavior both in terms of exclusionary practices vis-à-vis as efficient competitors and exploitative practices as regards business and final consumers. Market concentration in the digital sector can hamper the emergence and growth of SMEs, especially in developing economies where access to capital markets and specialized workforce tends to be more limited. In Africa, 77 percent of the total private funding for the highest-funded disruptive tech firms has been channeled to the three largest Internet players: Naspers, Jumia, and Ringier One Africa Media.58 At the same time, digitalization presents additional risks for individual welfare stemming from: (i) an excessive collection of data on individuals; (ii) risks of bias and discrimination due to the increased use of algorithmic and automated decision-making; (iii) and a suboptimal investment in data governance and data protection by digital platforms (failure to internalize the cybersecurity risks placed by the collection of big data). 59 In addition to data protection, consumer protection initiatives can be important for competition where they allow for switching and greater demand elasticity. Besides bridging the information asymmetry between sellers and consumers, consumer protection rules can play a decisive role in enabling consumers to change suppliers and, therefore, limiting the market power of incumbents. In addition, due to the multi- 56 Subcommittee on Antitrust, Commercial and Administrative Law of the Committee on the Judiciary, Investigation of Competition in Digital Markets, Majority Staff Report and Recommendations (2020). 57 WBG WDR, Chapter 3 (2021). 58 CBInsights (2020). Private market funding refers to the total amount of money that a firm has received, including from financial institutions and venture funding. Money raised on public markets is excluded. 59 WBG WDR, Chapter 7 (2021). 18 Technical Background Paper: Competition Policy in Digital Markets in Africa sided nature of digital markets, consumers are often offered so-called ‘free’ products and services, which are ultimately subsidized via data collection or the sale of advertising services. 60 Unfair commercial practices vis-à-vis consumers have been a prime matter of concern for competition agencies in Africa with various examples of market studies aimed at increasing the protection of consumers. These market studies have covered a wide array of unfair practices from the security of online payments (Algeria, 2018), to transparency in digital lending markets (Kenya, 2019), including billing system transparency (Seychelles, 2020) – see Box 7 below. Competition authorities can build on their existing capacity on consumer protection matters and momentum on consumer protection initiatives to incorporate the competition angle and pro-competition recommendations. Given new risks of competition distortions, the next section will focus on competition policy enforcement and key challenges for digital markets in Africa . 60 WBG WDR, Chapter 3 (2021). 19 Technical Background Paper: Competition Policy in Digital Markets in Africa 3 Competition Policy Implementation in Digital Markets in Africa 3.1 A Landscape of Competition Policies and Laws A comprehensive competition policy framework can support productivity and job creation. It includes a set of policies and laws ensuring that competition in the marketplace is not restricted in such a way as to reduce economic welfare. An effective competition policy framework evolves around three key pillars: (i) fostering pro-competition regulations and government interventions in markets, (ii) promoting competitive neutrality and non-distortive public aid, and (iii) enabling effective competition law and antitrust enforcement (see Figure 4 below). The first pillar includes measures to reduce market distortions caused by sector regulation and government interventions in markets that reinforce dominance or limit entry, facilitate collusive outcomes or increase the cost to compete in markets, and that discriminate and protect vested interests. The second pillar encompasses the introduction of pro-competition principles in broader government policies such as public procurement, state aid, trade policy, foreign direct investment policy, and governance of state-owned enterprises. The third pillar includes the effective enforcement of well-designed antitrust laws (typically constituted by merger control and rules against abuse of dominance and anticompetitive agreements) that aim at controlling distortions caused by non-competitive market structures and strategic behavior of firms. Figure 4.Comprehensive Competition Policy Framework FOSTERING COMPETITION IN MARKETS Pro-competition Regulations and Government Competitive Neutrality and Non- Effective Competition Law and Interventions: Opening Markets and Removing Distortive Public Aid Support Antitrust Enforcement Anticompetitive Sectoral Regulation Reform policies and regulations that strengthen Control state aid to avoid Tackle cartel agreements that dominance: restrictions to the number of firms, favouritism and minimize raise the costs of key inputs and statutory monopolies, bans towards private distortions on competition final products and reduce investment, lack of access regulation for essential access to a broader variety of facilities. products Eliminate government interventions that are Ensure competitive neutrality conducive to collusive outcomes or increase the including vis-a vis SOEs Prevent anticompetitive costs of competing: controls on prices and other mergers market variables that increase business risk Strengthen the general antitrust and institutional Reform government interventions that discriminate and harm competition on the merits: framework to combat frameworks that distort the level playing field or grant high levels of discretion anticompetitive conduct and abuse of dominance Source: World Bank Staff adaptation from Kitzmuller and Licetti (2012). Anticompetitive practices can prevent entry and restrict competition, harming productivity and consumer welfare.61 When firms collude on prices, consumers end-up paying on average 49 percent 61 Coordinated practices are those that involve either explicit or implicit agreement regarding strategic behavior of firms. Some coordinated practices among competitors are the most harmful to competition, such as hardcore 20 Technical Background Paper: Competition Policy in Digital Markets in Africa more, harming both consumer welfare and the competitiveness of value chains. 62 The effects of cartels are especially pervasive in developing economies, with literature based on a selected number of hardcore cartels in developing economies between 1995 and 2013 showing that affected sales of cartel members can reach up to 6.4% of GDP;63 and that that 3.4% to 8.4% of imports in developing countries are affected by cartel agreements.64 Although empirical analysis of the market effects of abuse of dominance is scarcer, a study by London Economics (2011) shows that for each abuse of dominance case, 12 potential infringements are deterred.65 In the digital markets field alone, the European Commission estimated the efficiency gains from a more efficient digital single market in the EU, where gatekeepers are effectively regulated, to range between ranges 0.44 to 0.82 percent changes in GDP and between 307 and 561 thousand additional full-time equivalents (‘FTEs’). 66 In Africa, the number of national and regional competition authorities has increased significantly in the last decade, boosting the potential for competition law enforcement against anticompetitive conduct. According to recent research by the World Bank (WBG) and Africa Competition Forum (ACF), as of November 2020, at least 43 African countries had a national competition law or were members of a regional agreement establishing antitrust regulations, accounting for more than 88 percent of the continent’s population and 93 percent of the GDP (see Figure 5 below).67 Out of the 43 African countries surveyed, at least 26 have a functional competition authority in place.68 cartels. Therefore, their detection and sanction are paramount for the effectiveness of competition policy. On the other hand, unilateral practices are characterized by strategic behavior that although being independent in nature can harm competition dynamics by creating barriers to entry, excluding current and potential competitors and exploiting consumers. However, unilateral strategic behavior is also the driver of competition – such as pricing strategies. Here, it is essential to create institutions and legal frameworks able to differentiate pro-competitive from anticompetitive behavior. 62 See Connor, John M., Price-Fixing Overcharges: Revised 3rd Edition (February 24, 2014) 63 Ivald; Jenny, Khimich (2015). Cartel Damages to the Economy: An Assessment for Developing Countries. CEPR PEDL program. 64 Levenstein, Suslow, Oswald (2003) International Price-Fixing Cartels and Developing Countries: A Discussion of Effects and Policy Remedies. National Bureau of Economic Research. 65 London Economics (2011), "The impact of competition interventions on compliance and deterrence", OFT Report No. 1391, December 2011. 66 European Commission Staff Working Document, Executive Summary of the Impact Assessment Report accompanying the document Regulation of the European Parliament and of the Council on contestable and fair markets in the digital sector (Digital Markets Act) from December 15, 2020; M. Christensen, A. Conte, F. Di Pietro, P. Lecca, G. Mandras, & S. Salotti (2018), The third pillar of the Investment Plan for Europe: An impact assessment using the RHOMOLO model (No. 02/2018). JRC Working Papers on Territorial Modelling and Analysis. 67 ACF-World Bank II (forthcoming 2022), The Institutional Gauge: Ensuring Sound Outcomes for Competition Policy in Africa. 68 Operational national authorities are present in Algeria, Angola, Botswana, Burkina Faso, Cameroon, Democratic Republic of Congo, Egypt, Eswatini, Gambia, Ivory Coast, Kenya, Liberia, Madagascar, Malawi, Mauritius, Morocco, Namibia, Nigeria, Republic of Congo, Senegal, Seychelles, Tanzania, Tunisia, Zambia, Zimbabwe, and South Africa. 21 Technical Background Paper: Competition Policy in Digital Markets in Africa Figure 5: Status of competition law and authorities across Africa, 2020 Source: ACF-World Bank II (forthcoming 2022), The Institutional Gauge: Ensuring Sound Outcomes for Competition Policy in Africa. In many countries, sector regulators — either alone or concurrently with competition agencies —are granted enforcement mandates around competition issues in the telecom sector, a key enabler of competition in digital markets (see Annex X for an overview of the bodies with powers to enforce competition rules in the telecoms sector in Africa). 69 Effective competition enforcement in digital infrastructure is paramount for the development of downstream digital markets. An effective enforcement of competition law can contribute to alleviating the market power concerns that may stem from telecom-related bottlenecks. The countries where both sector regulators and competition agencies can enforce competition rules in the telecoms sector are Cameroon, Egypt, Ethiopia, Kenya, Madagascar, Mauritius, Namibia, Seychelles, South Africa, Eswatini, Tanzania, Zambia, Zimbabwe, Tunisia, and Gabon.70 Various African countries attribute competition enforcement powers in the telecoms sector to the telecom regulators. This is the case of those countries: (i) without a functioning competition agency (Cabo Verde, Guinea, Liberia, Mauritania, Rwanda, São Tomé e Príncipe and Tchad); (ii) where the national competition agencies do not have enforcement powers (Burkina Faso, Côte d’Ivoire, Senegal, Central Africa Republic, Republic of Congo, Democratic Republic of Congo); 71 and (iii) where the telecoms regulator has exclusive competition law enforcement powers over its sector (Morocco). The overall trend in the African region has been towards aligning competition policy and law frameworks with international best practices. A 2014 survey by the WBG and the ACF found that nearly 69 See, for example, Kenya (the Communications Authority); Rwanda (the Utilities Regulatory Authority); Cape Verde (the Multi-Sector Regulatory Agency for the Economy). 70 In the following countries, there is a MoU in place between the competition agency and telecoms regulators: Eswatini, Mauritius, Namibia. 71 Opinions 01/2020, of July 7, 2020 and 003/2000 of June 20, 2000, of the Court of Justice of WAEMU: In the West African Economic and Monetary Union (WAEMU), competition enforcement is exclusively entrusted to the regional WAEMU Commission. 22 Technical Background Paper: Competition Policy in Digital Markets in Africa all African jurisdictions surveyed covered all key antitrust topics in their competition laws, notably prohibitions of anticompetitive (horizontal and vertical) agreements, prohibition of abuse of dominance, and a system of merger control that can block mergers and acquisitions that can restrict market competition (see Figure 6 below).72 In tandem with establishing a comprehensive system of competition law prohibitions, most African jurisdictions were also found to have in place key due process provisions to increase accountability and transparency in implementation (see Figure 7 below). The latter is crucial to ensure legal certainty amongst private operators and to strengthen the integrity and quality of the competition agency’s decisions, in a way that provides for transparency and accountability of the competition agency’s enforcement. Figure 6: Competition law scope in African jurisdictions (2014 survey) Source: ACF-World Bank II (forthcoming 2022), The Institutional Gauge: Ensuring Sound Outcomes for Competition Policy in Africa , based on ACF-WBG 2014 database. Note: The graph considers the following jurisdictions as of 2014: Algeria, Botswana, Cameroon, COMESA, Egypt, Kenya, Malawi, Mauritius, Morocco, Namibia, Seychelles, South Africa, Tunisia, and Zambia. Figure 7: Transparency and Accountability of Competition Authorities in Africa (2014 survey) Source: ACF-World Bank II (forthcoming 2022), The Institutional Gauge: Ensuring Sound Outcomes for Competition Policy in Africa based on ACF-WBG 2014 database. Note. The graph considers the following jurisdictions as of 2014: Algeria, Botswana, Cameroon, COMESA, Egypt, Kenya, Malawi, Mauritius, Morocco, Namibia, Seychelles, South Africa, Tunisia, and Zambia. Nevertheless, there is still room for improving the independence safeguards of African competition agencies in a way that effectively shields them from undue private and public influence. The 2019/20 WBG-ACF survey meant to assess the independence and efficiency of competition authorities in Africa indicates that out of 19 agencies surveyed, only 42 percent of agencies identified themselves as structurally independent from the executive branch (Algeria, Botswana, COMESA, Egypt, Kenya, Mauritius, Morocco, Nigeria, Eswatini, Zimbabwe and Tunisia). 73 In terms of financial independence, only 57 percent of the surveyed agencies considered themselves to be financially independent from the executive branch. In fact, even though their budgets are allocated by Parliament, most African 72 See World Bank Group. 2016. Breaking Down Barriers: Unlocking Africa's Potential through Vigorous Competition Policy. Washington, DC: World Bank Group. 73 ACF-World Bank II (forthcoming 2022), The Institutional Gauge: Ensuring Sound Outcomes for Competition Policy in Africa. 23 Technical Background Paper: Competition Policy in Digital Markets in Africa competition agencies still rely on a Minister to send through their budget request to Parliament. This overall situation of fragile independence is confirmed by the fact that only 4 of the 19 agencies combine both structural and financial independence -Mauritius and Botswana.74 At the same time, African competition agencies have often focused on the fulfillment of non- competition mandates. This shows that competition policy goals are not yet fully prioritized and scarce administrative resources are not always being put to their most effective use. For example, data collected in the context of the ACF-World Bank II (forthcoming 2022) shows that, for the multi-mandate authorities, the number of non-antitrust cases largely surpassed the number of competition cases in the period 2016-2018 (i.e., between 40 percent and 4,000 percent). Furthermore, only around half of these jurisdictions have specialized staff for pursuing the agency’s competition law mandate, and only 27 percent implemented independent budget allocation for its various mandates. These elements increase the risk of the agency favoring demand-driven non-antitrust mandates, such as consumer complaints, over the investigation of anticompetitive practices that typically have a larger impact in terms of consumer welfare loss (see Figure 8 below). Figure 8: Presence of non-antitrust mandates in competition authorities in Africa Source: ACF-World Bank II (forthcoming 2022), The Institutional Gauge: Ensuring Sound Outcomes for Competition Policy in Africa. 3.2 Competition Enforcement in Digital Markets African competition agencies have been increasingly active in terms of competition enforcement and advocacy, even though the perception is that of limited competition across the continent . The data collected for the WBG-ACF 2014 survey showed agencies in Africa concluded 42 horizontal agreement cases, 58 abuse of dominance cases, 12 vertical agreements cases, and 1216 merger cases in the period between 2013-2014, across key markets like fertilizers, food (including wheat, maize, and bread), pharmaceuticals, construction materials (including cement). This is the equivalent of an average of 1.6 74 ACF-World Bank II (forthcoming 2022), The Institutional Gauge: Ensuring Sound Outcomes for Competition Policy in Africa. 24 Technical Background Paper: Competition Policy in Digital Markets in Africa cases per staff per year during 2013-2014.75 At the same time, the average of cases per staff per year increased to 4.7 during 2016-2018 indicating increased focus on competition enforcement.76 Albeit an increased level of enforcement, various competition perception indicators still point-out to an overall low level of competition in Africa compared to other regions . The 2019 Global Competitiveness Index (GCI)77 competition perception indicators - the extent of market dominance and competition in services indicators - find the average performance of African countries to consistently lag behind the averages of other regions (see Figure 9 below). Similarly, the Bertelsmann Stiftung’s Transformation Index (BTI, 2020) “Market Organization and Competition” indicators show the African countries have the lowest average performance compared to other regions (Figure 10 below).78 According to the Economist Intelligence Unit (EIU, 2020), firms consider that their ability to compete is more likely to be impaired by government intervention, such as discrimination, price control, unfair practices, and protectionism in Africa than in any other region of the world (Figure 11 below). Figure 9: Global Competitiveness Index. Selected competition-related variables, averages by region (values, 2019) Source: ACF-World Bank II (forthcoming 2022), The Institutional Gauge: Ensuring Sound Outcomes for Competition Policy in Africa, based on World Economic Forum GCI 2019. Notes: Database included 141 countries. Value (1-7, best, per variable). The Figure is adding up scores from 5 indicators. Top 5 (average best 5 performers in the database), EAP (East Asia and Pacific), ECA (Europe and Central Asia), LAC (Latin America and Caribbean). 75 According to the ACF-WBG 2014 survey. Numbers refer to practices and merger cases and technical staff working on core activities. Surveyed countries include Tunisia, Togo, Tanzania, South Africa, Seychelles, Namibia, Mauritius, Malawi, Kenya, Egypt, Botswana, Algeria. 76 Zimbabwe, Swaziland, South Africa, Seychelles, Mauritius, Malawi, Kenya, Gambia, Egypt, COMESA, Botswana. 77 The Global Competitiveness Index (GCI, 2019) gathers data across 141 economies. The GCI 4.0 is the product of an aggregation of 103 individual indicators, derived from a combination of data from international organizations as well as from the World Economic Forum’s Executive Opinion Survey. Indicators are organized into 12 pillars, in cluding the “product market pillar” that includes the indicators on “extent of market dominance” and “competition in services” (covering professional, retail and network services). See detailed methodology on World Economic Forum (2019). The Global Competitiveness Report 2019, available at http://www3.weforum.org/docs/WEF_TheGlobalCompetitivenessReport2019.pdf. the Global Competitiveness Report for 2020 did not update the Index. According to the Report, which is entitled 'How Countries are Performing on the Road to Recovery': "In this Special Edition, at this turbulent time for the global economy, we pause comparative country rankings on the Global Competitiveness Index. Instead we take a fundamental look at how economies should think about revival and transformation as they recover and redesign their economic systems to enhance human development and compatibility with the environment." 78 Criteria such as competition policy indicators (antitrust), market organization (anticompetitive rules and regulations) and liberalization of foreign trade. See BTI methodology: https://www.bti- project.org/en/methodology.html 25 Technical Background Paper: Competition Policy in Digital Markets in Africa Figure 10: BTI. Organization of the Market and Figure 11: EIU. Business risks related to weak Competition component, by region (scores, 2020) competition, by region (score, 2020) Source: ACF-World Bank II (forthcoming 2022), The Source: ACF-World Bank II (forthcoming 2022), The Institutional Gauge: Ensuring Sound Outcomes for Competition Institutional Gauge: Ensuring Sound Outcomes for Policy in Africa, based on BTI 2020. BTI included 137 countries. Competition Policy in Africa, based on EUI database 2015- Scores (1-10, best) 2020. Notes: database include 179 countries. Scores (0 - 4, worst, per variable). The Figure is adding up scores from 4 variables Competition law enforcement in digital markets presents various challenges. These challenges include the multi-sided nature of digital platforms, with often zero-priced goods; the need to take into consideration factors other than price when assessing the impact of firm conduct or mergers and acquisitions upon consumer welfare (e.g. impact on personal data and privacy); the difficulties of assessing market power of platforms that are present in multi-sided markets; or the fact that mergers in digital markets can end-up escaping review because they do not have sufficient tangible assets or revenues to meet traditional thresholds for merger notification (see Box 2 below). Box 2: Challenges to competition analysis in digital markets Traditional antitrust tools require adaptation when it comes to data-driven markets. New market dynamics arising from data-driven markets have sparked policy makers to rethink their approach to antitrust rules, with new strategies published by jurisdictions around the world. Digital platforms require competition authorities to adopt a multi-sided approach to their analyses. The multi- sided nature of data platforms allows for interaction between different groups of users (including advertisers in some cases), complicating the definition of markets and raising the potential for cross-subsidization between users. This ties in with the emergence of “attention markets” where firms use content to compete for the time of users to be able to sell that time to advertisers. Not accounting for the multisided characteristic of most digital markets could lead to incomplete and incorrect analysis of competitive structures and dynamics in these markets that can have negative impacts on decision making by authorities Delineating market definition in digital markets can be more challenging than in traditional markets. Most common frameworks, such as the small but significant non-transitory increase in price and the hypothetical monopolist test, can be more difficult to utilize due to the fact that many digital platforms’ services are free to one or more sides of the market since technology allows them to monetize the information conveyed by users (e.g. revenue source coming from advertising). Nominally free products or “zero price” is a characteristic that is 26 Technical Background Paper: Competition Policy in Digital Markets in Africa not frequently present outside of digital economy markets. This leads to prices not necessarily being an appropriate criterion for competition analysis in digital markets since users frequently are instead “paying” with data for the services provided by platforms. Particularly challenging is how to assess consumer harm in markets where goods and services are nominally provided for “free”, how to detect collusive algorithms, and how to account for non-price dimensions of competition, such as data protection privacy. Therefore, competition analysis in digital markets may need to broaden the concept of consumer welfare beyond prices and should consider data flows, personal data protection, and privacy, among others Market power is also more difficult to assess due to the multisided nature of digital platforms. Authorities must not only estimate the impacts that a price rise on one side of the platform would have on users on that same side but also on the demand, prices, and quality dimensions on the other sides of the platform. Similarly, market shares on one side should only be interpreted simultaneously with other sides of the market. Profitability should be measured at a platform level and not just on sales on one side of the market. Access to and control of data may also need to be considered as a key determinant of market power, which is frequently reinforced by the existence of indirect network effects. In addition, platform firms typically exist in a digital ecosystem, where providers of complementary digital products interconnect and regularly exchange data to provide consumer products. To the extent these complementor firms may also act as nascent competitors to larger platform firms, the effect of competition restrictions on these complementary products is important to understand alongside the direct effect on the users of a platform. The potential for platforms to acquire potential competitors in complementary markets before they can become a competitive threat —and either shut them down or prevent further development of their products—has also become a topic of debate. The potential for firms to engage in these so-called “killer” or “zombie” acquisitions may merit consideration in merger reviews. Likewise, authorities should also be increasingly alert to the harms to competition and innovation that can come from mergers that are driven by the desire to acquire new data or data-relevant intellectual property such as algorithms. Moreover, under traditional antitrust regimes, mergers involving data-driven firms may be less likely to trigger a review by the antitrust authority because such firms typically do not have sufficient tangible assets or revenues to meet traditional thresholds for merger notification. Although the urgency of these concerns for developing countries will depend on the start-up environment in a country, thresholds for merger notification could be revamped to allow antitrust authorities to review potentially anticompetitive mergers involving data-driven firms that may currently appear small but have the potential to rapidly become market challengers through exponential growth. This has already happened in Austria, Germany, and Japan, which have adopted thresholds for digital markets based on transaction values. Another option may be to require notification before mergers for any planned acquisition by dominant firms and/or to consider shifting presumptions for future mergers so that an acquisition by a dominant platform would be presumed anticompetitive unless the merging parties could show otherwise. Source: Nyman & Barajas, Antitrust and Digital Platforms: An analysis of global patterns and approaches by competition authorities. EFI Insight-Trade, Investment and Competitiveness (2021). To systematically tackle anticompetitive practices in digital markets, it is paramount to understand the different business models that characterize data-driven platforms. African competition authorities should therefore develop a good understanding of the characteristics of different business models, in order to identify the risks of anticompetitive behavior they may give rise to. Building such understanding should allow the development of common theories of harm for certain types of business models, which can then be used to deter anticompetitive practices and design more effective remedies (see Box 3 below). Box 3: Business models and anticompetitive market outcomes 27 Technical Background Paper: Competition Policy in Digital Markets in Africa Different sectors of the digital economy tend to be characterized by the adoption of specific types of anticompetitive behavior by digital platforms, depending on the typical business models that are prevalent in such sectors. For instance: • The e-commerce and tourism sectors is prone to vertical restraints since most market is supplied by SMEs; • In multi-sided platforms combining online search and advertising, there is a tendency for the use of self- preferencing algorithms, that may represent abusive exclusionary practices; • Sectors characterized by the presence of software and operating systems (OS) tend to be more prone to tying and bundling practices as dominant firms seek to extend their market power into adjacent markets; • In the app passenger transport sector, the use of algorithms can facilitate collusion, potentially due to the use of pricing algorithms in this sector. Source: Nyman & Barajas, Antitrust and Digital Platforms: An analysis of global patterns and approaches by competition authorities. EFI Insight-Trade, Investment and Competitiveness (2021). Competition authorities across the world have stepped up their investigation of cases in the digital economy – but the extent and type of enforcement activities varies by region and income level. The Global Digital Antitrust Database of the World Bank’s Markets Competition and Technology Unit (MCT DAD) 79 and subsequent updates collected information on enforcement activity and advocacy initiatives 79 This database was developed by the World Bank Global Competition Policy team. The database is focused on cases in which the firm or firms involved primarily operate as digital platforms. Cases where digital aspects (or a platform specifically) were not the main concern are not included. As of January 2020, the database comprised 102 cases involving digital platforms tackled by antitrust authorities in 26 jurisdictions across all regions. Updates up to April 2021 include additional 25 cases on broader digital economy solely pertaining to the Africa region. See also Nyman & Barajas, Antitrust and Digital Platforms: An analysis of global patterns and approaches by competition authorities. EFI Insight-Trade, Investment and Competitiveness (2021). 28 Technical Background Paper: Competition Policy in Digital Markets in Africa of competition authorities concerning digital platforms and the broader digital economy.80 A total of 110 antitrust cases and advocacy initiatives worldwide focus on digital platforms, of which 53 percent belong to high-income-, 26% to upper middle-income- and 16 to lower middle-income jurisdictions (see Figure 12). While European authorities, including the EU, have finalized most cases (31 percent of cases), other regions have also been active with East Asia Pacific (EAP) accounting for 16 percent, LAC and Sub-Saharan Africa (SSA) for 14 percent, North America for 12 percent, South Asia for 7 percent, Central Asia for 4 percent and Middle East and North Africa for 3 percent of cases (see Figure 13). Figure 12: Cases by income level Figure 13: Cases by region classification South Central Middle Asia, Asia, 3.6% East and 7.3% North Upper North Africa, middle America, 2.7% income, Europe, 11.8% 26.4% 30.9% High income, 57.3% East Lower Sub- Asia middle Saharan and Africa, Pacific Latin income, 13.6% , America 16.4% 16.4% and Caribbean, 13.6% Source: WBG MCT DAD (2020). Current competition enforcement practice regarding digital platforms’ behavior varies across sectors between developing and developed countries. Whilst developing and developed countries have reviewed an equal proportion of antitrust cases and advocacy initiatives in e-commerce (26 percent compared to 22 percent, respectively), agencies in developing countries have been more active in the passenger transport and mobile financial services sectors (see Figure 14 below). In turn, agencies in developed countries have targeted the tourism and social media/communications sectors more frequently. Differences among income levels of jurisdictions likely reflect the relative importance of various sectors. A sector like mobile money might be more important in developing nations, whereas spending on online advertising is concentrated in developed countries. In terms of case types, abuses of dominance are more common in developing regions, a factor that might reflect a concern for the exclusion of smaller rivals by competition authorities in developing countries. Similarly, merger cases are more common in developing than in developed jurisdictions, which could indicate a more reactive stance toward investigating cases involving digital platforms by developing countries.81 80 To expand the MCT DAD, a team at the World Bank collected further cases and advocacy initiatives by Africa authorities, covering digital platforms, and later the broader digital economy, including mobile financial services and e-commerce. 81 Nyman & Barajas, Antitrust and Digital Platforms: An analysis of global patterns and approaches by competition authorities. EFI Insight-Trade, Investment and Competitiveness (2021). 29 Technical Background Paper: Competition Policy in Digital Markets in Africa Competition in advertising markets has not yet been a major focus of enforcement and advocacy initiatives by African competition agencies. This might be explained by the fact that advertising markets are relatively less pertinent in the African context, but also by the complex legal and economic analysis required in multi-sided markets and the difficulties of collective action by consumers in bringing complaints before competition agencies. Notwithstanding, competition agencies in Africa should closely scrutinize issues of potential excessive collection of data on individuals, including for advertising purposes. Such practices can give rise to data privacy concerns in the absence of informed consent by individuals, especially when it concerns data on children and other vulnerable groups. Hence, they can impair the reliability of digital markets, and therefore demand a strong and effective consumer protection regulatory framework.82 Figure 14: Sectoral distribution of cases in the MCT DAD, by income level a) Developed jurisdictions b) Developing jurisdictions Note 1: There are currently no low-income jurisdictions currently represented in the database since no cases have been finalized in low-income countries. Therefore the “developing” category only contains information from middle-income countries. This will be updated as more cases are finalized. Note 2: “Others” for developed jurisdictions include: digital music, e -books, educational materials, food delivery, online comparison platforms, dating platforms, and ticketing. “Others” for developing jurisdictions include: Online delivery services, ticketing, and tourism. Source: WBG MCT DAD (2020). New features associated with the digital economy – in particular, those related to the non-price dimension of competition – appear to be more frequently assessed by developed jurisdictions. Some areas where developing jurisdictions may be able to build on the experience from developed jurisdictions (i.e. where developed jurisdictions have more frequently analyzed certain features) include assessment of data83 (data as essential facility/barrier to entry and data protection/privacy), particularly in abuse of dominance cases. While authorities might be hesitant to include these factors given ongoing debates on their relevance for competition analysis, more analysis of these issues in investigations could produce a better understanding of this question from a developing country perspective. Issuing discussion papers and publishing guidelines can be a first step taken by competition agencies in Africa and elsewhere in 82UNCTAD, Consumer protection in electronic commerce, Note by the UNCTAD secretariat (July 2017). 83Notably, the Egyptian Competition Authority (ECA) considered data as barrier to entry in the Uber-Careem merger review. It alleged that the merged entity would have access to superior mapping data due to its control over the combined datasets of the two firms. ECA found that the time and cost for potential entrants to collect and create similar efficient mapping systems would likely deter potential new entry into the market. See Nyman and Barajas, Antitrust and Digital Platforms: An analysis of global patterns and approaches by competition authorities. 30 Technical Background Paper: Competition Policy in Digital Markets in Africa tackling these issues while providing clarity to firms on the approach that will be taken to regulate their conduct and factors that will be assessed in antitrust cases. For instance, Kenya’s competition authority recently published new Market Definition Guidelines precisely to better capture non-price dimensions of competition in multi-sided markets.84 In Africa, competition authorities on the continent have engaged in relatively few cases and advocacy initiatives involving both digital platforms and the broader digital economy thus far. According to the MCT DAD and subsequent research that broadened the type of sectors to include other digital economy markets (including digital platforms),85 eleven African authorities 86 have investigated 29 antitrust cases and engaged in 6 advocacy initiatives between 2008 and 2021. The relatively low engagement of African competition authorities (relative to the number of countries) could indicate that competition issues in the digital economy are still emerging in their practice. It might also be the result of resource and capacity constraints for antitrust investigations and advocacy initiatives on the continent. Among the authorities that have engaged in digital economy cases and initiatives, the Competition Commission of South Africa (CCSA) appears as the most active authority on the continent (16 cases overall or 46 percent of cases), followed by the Competition Authority of Kenya (CAK) that has finalized five cases and the COMESA Competition Commission with three cases (see Figure 15 below). Figure 15: Number of antitrust cases and advocacy initiatives related to the digital economy in Africa South Africa 6 2 1 7 Kenya 2 3 COMESA 3 Tanzania 2 Egypt 1 1 Botswana 2 Zimbabwe 1 Seychelles 1 Nigeria 1 Mauritius 1 Algeria 1 Abuse of dominance Advocacy Anticompetitive agreement Merger Note: Cases include enforcement activities and advocacy initiatives, including in Digital platforms, Digital advertising, Digital financial services, Software & data services, Wearables, or on the digital economy as a whole (without singling out sectors). At the time of writing (April 15, 2021), the team was not able to access all documents on the website of the Seychelles Fair Trading Commission and may thus be missing cases. Source: WBG Competition policy team The majority of antitrust cases and advocacy initiatives in Africa have taken place in upper-middle- income countries, even though low-middle-income countries appear to be catching up. Whilst high and upper-middle income and high-income African countries represent over 60 percent of competition enforcement cases, in terms of advocacy initiatives, lower-middle-income African countries have largely 84 https://www.cak.go.ke/sites/default/files/Guidelines%20on%20Relevant%20Market%20Definition%20(1).pdf 85 In addition to digital platforms, antitrust cases from the following sectors were included: Digital advertising, Digital financial services, Software & data services, Wearables and All. 86 Algeria, Botswana, COMESA, Egypt, Kenya, Mauritius, Nigeria, Seychelles, South Africa, Tanzania, Zimbabwe. 31 Technical Background Paper: Competition Policy in Digital Markets in Africa surpassed upper-middle income, with 67 percent of the initiatives analyzed. This appears to suggest that low-middle-income countries have not neglected analyzing the competition issues in digital markets, especially through the use of competition advocacy tools (see Figures 16 and 17 below). Figure 16: Enforcement cases by income level Figure 17: Advocacy cases by income level classification in Africa classification in Africa High- income Upper- Lower- 3% middle middle income income 33% 38% Upper- Lower- middle middle income income 59% 67% Source: WBG Competition policy team. African competition authorities’ activities in the d igital economy are most often merger reviews and frequently address sectors most relevant to African economies – digital platforms and mobile money. Based on the WBG desk research on antitrust enforcement and competition advocacy initiatives for 2008- 2021, the most common form of engagement by African competition authorities remains merger review (42.5 percent of cases), followed by investigations of abuse of dominance cases (30 percent of cases) and competition advocacy (17 percent of cases, see Figure 18 below). In terms of market segments, activities of competition authorities in African jurisdictions tend to focus on digital platforms (37 percent of cases), followed by digital financial services (21 percent) and software and data services (14 percent) (See Figure 19 below). Furthermore, the prevalence of digital financial services in Africa is likely to give rise to potentiate vertical integration in the continent’s digital economy. As argued in Nyman and Barajas, both the prevalence of merger and abuse of dominance cases and the sectoral distribution of cases might be explained by the structure of the economies affected as well as the capacity of authorities. 87 87Nyman & Barajas, Antitrust and Digital Platforms: An analysis of global patterns and approaches by competition authorities. EFI Insight-Trade, Investment and Competitiveness (2021). 32 Technical Background Paper: Competition Policy in Digital Markets in Africa Figure 18: Types of case of antitrust Figure 19: Number of antitrust cases and advocacy cases and advocacy (% of total) initiatives related to the digital economy by segment Abuse of dominance Anticompetitive agreement Merger Advocacy Abuse of 2 dominance, 10 Merger, 16 8 2 2 Advocacy, 6 4 3 2 5 1 2 2 1 1 Digital platforms Digital financial Software & data Other Anticompetitive agreement, 3 services services Note: ‘Other’ includes cases that relate to all segments of the digital economy, digital advertising and wearables. Source: WBG Competition policy team 3.2.1 Anticompetitive Practices Enforcement of abuse of dominance rules is of particular importance in digital markets, since these are often pursued by a small number of vertically integrated firms that control access to the digital ecosystem. First of all, digital platforms have a greater tendency to tip towards dominance given the prevalence of network effects and strong economies of scale and scope that arise with high fixed costs/low variable cost structures and the reliance on data and data-intensive technologies to gain a competitive advantage. Given their multisided nature, dominance on one side of the platform can influence anticompetitive behavior on another side of the platform. Digital operators also have the incentive to abuse their market power, especially those that are vertically integrated into product lines where they compete with third parties who sell on their platforms and may engage in self preferencing including through algorithms that are biased towards the platform. Digital platforms that have a presence in adjacent markets (as is relatively common given the economies of scope present), can also abuse their dominance in the form of forced tying or bundling of products. Furthermore, where a platform controls technology or assets that are essential to compete, there may be an exclusive abuse through refusal to deal or through exclusivity. 88 Among the anticompetitive practices that authorities have investigated in digital markets, exclusionary conduct89 against rival firms is most common in Africa (6 of 12 cases, see Figure 20 below). Most abuse 88 Nyman & Barajas, Antitrust and Digital Platforms: An analysis of global patterns and approaches by competition authorities. EFI Insight-Trade, Investment and Competitiveness (2021). 89 Standard abuse of dominance analysis focuses on pricing and non-pricing exploitative and exclusionary conduct by firms with market power. Exploitative abuses refer to practices whereby the dominant firm takes advantage of its market power to extract rents from consumers in a way that could not have been obtained by a non-dominant firm (e.g. excessive prices or imposition of unfair terms and conditions). Examples of exploitative abuses of 33 Technical Background Paper: Competition Policy in Digital Markets in Africa of dominant cases were brought against digital platforms, both domestic and international (Facebook, Mediatiz, Bluespec, Computicket, Uber – see Figure 21 below), and, to a smaller extent, against foreign tech conglomerates (Microsoft, Google – see Figure 21 below). Figure 20: Types of abuse of dominance cases Figure 21: Types of firms involved in abuse of dominance cases Violation of obligations of firm with SMP, 1 Collusion, 2 Tech conglomerate Refusal Digital platform (foreign), 2 to deal, (domestic), 3 2 Price gouging, 1 Exclusionary Digital conduct, 5 platform Incumbent (foreign), Predatory telecom provider 3 pricing, 2 (domestic), 2 Source: WBG Competition policy team Exclusivity agreements by digital platforms and mobile money operators – that result in the anticompetitive foreclosure of competitors – represent the core of abuse of dominance cases investigated by competition agencies in Africa.90 In fact, the issue of supplier protection can be especially relevant in Africa, due to the prevalence of SMEs across the value chain, which possibly explains the high dominance include excessive pricing and/or imposing unfair prices, terms or conditions to consumers or business partners. Exclusionary abuses, on the other hand, concerns practices directed against rivals that indirectly cause a loss to consumer welfare by limiting the rivals’ ability to compete. Examples of exclusionary abuses of dominance include: (i) single branding (i.e., requiring the buyer on a particular market to concentrate its purchases to a large extent with one supplier) and rebates (conditional rebates that differentiate the purchase price for each customer depending on its behavior), (ii) tying (i.e. making the sale of one product conditional upon the purchase of another distinct product) and bundling (i.e. offering a package of two or more goods either without possibility of buying them separately – pure bundle – or without benefiting from the discount at which the bundle of products is sold – mixed bundling), (iii) refusal to supply (i.e. denying a buyer access to an input in order to exclude that buyer from participating in an economic activity, and (iv) predatory pricing (i.e. lowering the price, in a way that makes the company incurs losses or forego profits in the short run so as to enable it to deter entry or exclude competitors from the market. 90 Exclusivity agreements generally do not give rise to competition concerns, unless they lead to or contribute to a (cumulative) foreclosure effect on the relevant market where the contract goods or services are sold or purchased. For instance, in the EU, exclusive distribution is exempted by the Block Exemption Regulation from the prohibition of anticompetitive agreements set forth in Article 101(1) of the Treaty on the Functioning of the European Union (TFEU) where both the supplier's and buyer's market share each do not exceed 30 %. Even when that market share threshold is exceeded, an exclusive agreement can still be deemed to comply with the competition rules, as long as its procompetitive effects outweigh the restrictions to competition. As the European Commission states “Exclusi ve distribution may lead to efficiencies, especially where investments by the distributors are required to protect or build up the brand image. In general, the case for efficiencies is strongest for new products, complex products, and products whose qualities are difficult to judge before consumption (so-called experience products) or whose qualities are difficult to judge even after consumption (so-called credence products). In addition, exclusive distribution may lead to savings in logistic costs due to economies of scale in transport and distribution” (Guidelines on Vertical Restraints, JO C 130 de 19.5.2010, p. 1—46 para. 164). 34 Technical Background Paper: Competition Policy in Digital Markets in Africa number of exclusivity cases. Several cases investigated by African competition authorities concern the imposition of exclusivity obligations by dominant firms on their business partners, including real estate agents that are barred from advertising in rival real estate platform (L'Express Property, Mauritius in Box 4 below); or money transfer services (Safaricom, Kenya), as well as blocking the entertainment industry from using the ticketing services of competitors of the dominant firm to competitors of the dominant firm ( Computicket, South Africa in Box 4 below). All these cases reveal that digital market incumbents often limited the commercial freedom of their business partners to engage in commercial relations with their competitors, thus raising barriers to entry or expansion in digital markets (see Box 4 below). Aside from investigating exclusivity obligations, competition agencies have also investigated self-preferencing by vertically integrated digital platforms through the use of algorithms that are biased towards the dominant platform (see case Bluespec, South Africa in Box 4 below). Box 4: Exclusivity in vertical agreements91 Kenya The case of the Competition Authority of Kenya (CAK) vs Safaricom (M-Pesa), from 2014, concerned an alleged abuse of dominance of Safaricom through exclusivity contracts that excluded rival money transfer providers from M-PESA’s mobile agents’ services. Typically, exclusivity agreements tend to be implemented when the main digital market operator relies on smaller businesses as distributors of its products or services. Because of the exclusivity imposed, around 85,000 agents were barred from engaging in business with other mobile operators. An investigation led CAK to determine the abuse of dominance of Safaricom through exclusivity CAK ordered Safaricom to share its mobile money transfer agents with other telecommunication firms. The package of remedies was designed in close collaboration between the competition agency and telecoms regulator in designing the remedies to open up the main bottlenecks of Safaricom’s mobile money transfer service (M-Pesa). One of the remedies designed consisted of eliminating anticompetitive exclusivity clauses, which prevented Safaricom’s competitors from accessing M-Pesa’s network of agents network. In addition, other remedies part of the package went beyond the prohibition on exclusivity agreements and formed part of broader efforts to increase competition in the sector by addressing other related issues around interoperability and consumer ability to switch. These included nudging M-Pesa, through its advocacy efforts, to cut USSD prices charged to other operators to a cost-based level and to make these costs transparent; and developing, with the Communications Authority and the main mobile financial services providers, a joint work on interoperability between different mobile financial services. South Africa In South Africa, the issue of exclusivity was analyzed by the South African Competition Commission in Competitors complaints vs Computicket, from 2019. This case relates to a series of complaints alleging that Computicket, the leading company in ticket booking systems in South Africa, had entered into a series of exclusive agreements with inventory providers for the provision of outsourced ticket distribution services for the entertainment industry 91Vertical agreements take place between companies operating at different levels of the production or distribution chain, and often restrict the conditions under which the parties may purchase, sell or resell certain goods or services. Restrictions to competition included in vertical agreements typically include: resale price maintenance (i.e., restricting the buyer's ability to determine its own sale price), exclusive dealing and exclusive territory allocation or geographic market restrictions upon the distributor. In the absence of market power of the parties to the agreements, vertical agreements are normally considered to be pro-competitive. Notwithstanding, certain types of vertical restrictions to competition have been deemed to be always illegal regardless of the market power of the parties to the agreement. This is generally the case for the prohibition of resale price maintenance or of actively approaching individual customers: Commission Regulation (EU) No 330/2010 of 20 April 2010 on the application of Article 101(3) of the Treaty on the Functioning of the European Union to categories of vertical agreements and concerted practices, OJ L 102, 23.4.2010, p. 1–7. 35 Technical Background Paper: Competition Policy in Digital Markets in Africa which covers events such as sports, cinemas, theatres, festivals and live events. This type of exclusivity arrangement is usually adopted when the main digital platform operator is not vertically integrated and therefore needs to rely on multiple venues to present sports or other entertainment events. The Competition Tribunal found that the exclusivity agreements in place had anticompetitive effects consisting, namely, of the following: (i) practice of supra-competitive prices (fees were increased between 11% and 52% annually); limited market entry by virtue of the two-sided nature of the market; (iii) limited technological innovation; (iv) impossibility of multihoming due to the exclusivity; and (v) an overall lack of choice for end consumers. Through its web of exclusivity agreements, Computicket was found to have raised barriers to entry and expansion and managed to further consolidate its market power. In its decision, the Tribunal found Computicket to have abused its dominant position between 2005 and 2010 and fined it in R20 Million Rand. In 2017, an anonymous complaint before the South African Competition Commission alleged that Bluespec, the largest independent automotive body repair group, through its Dreamtech App, was able to influence the decision on who tows the motor vehicle from the accident scene. The investigation looked at the use of algorithms to facilitate exclusionary conduct by a vertically integrated industry player. The case was, however, closed due to lack of evidence of exclusionary conduct. Mauritius In 2020, the Mauritius Competition Commission recently analyzed the potentially anticompetitive outcomes stemming from the requirement of exclusivity imposed upon real estate agents by an online real estate portal. Lamudi Mauritius, a real estate digital platform, filed a complaint with the Mauritius Competition Commission claiming that Mediatiz, a digital marketplace platform, could be restricting competition by coercing real estate agents into exclusivity arrangements for listing properties on its online portal - L'Express Property. The adoption of exclusivity agreements is typical in online real estate markets since the main digital platform operator relies on a myriad of real estate agents to feed the real estate offers it then presents to final users online. This concerned so-called 'special offers' to agents, which were conditional upon the latter signing exclusivity contracts with Mediatiz Ltd for listing their properties on their portal. The Competition Commission investigated whether Mediatiz conduct may have foreclosed access of actual and potential competing property portals to real estate agents, thus harming competition in the property portal market. During the investigation, Mediatiz, without admitting to any breach of the Competition Act, voluntarily offered undertakings concerning its commercial practices in view of allaying the competition concerns identified during the investigation. It proposed measures, including not entering into an exclusivity agreement with any real estate agent in Mauritius where the aim of such an agreement is directly to provide it with an exclusivity for online advertising of the real estate agent's portfolio and not to incentivize or otherwise entice or coerce any real estate agent to enter into exclusivity agreements. Source: https://www.mobileworldlive.com/money/news-money/kenyas-competition-authority-settles- safaricom-m-pesa-case / https://www.comptrib.co.za/case-detail/5455 / https://competitioncommission.mu/wp-content/uploads/2020/06/DS-0039-INV040.pdf The investigation of potentially anticompetitive agreements by African competition agencies has been far rarer thus far, potentially due to the difficulties in proving the existence of collusion in algorithm- driven markets. Collusion scenarios are particularly common in digital markets when the pricing is set by the digital platform through algorithms. An exception to this trend concerned the acquisition of a minority shareholding in a dominant firm in Egypt with the aim of eliminating competition in the market (see case Glovo/Delivery Hero, Egypt, in Box 5 below). This case shows how digital platforms can engage in traditional forms of collusion such as the acquisition of minority shareholdings to access commercially sensitive information of a competitor and of influencing its business behavior (see Box 5 below). 36 Technical Background Paper: Competition Policy in Digital Markets in Africa Box 5: Anticompetitive horizontal agreements Egypt In 2018, the Egyptian Competition Authority (ECA) accused Glovo and Delivery Hero – two food delivery digital platforms – of agreeing on Glovo’s exit from the Egyptian market to cease competition with Delivery Hero’s own brands, thus eliminating any competition between the two companies. After Glovo entered the Egyptian market in 2018, its competitor, Delivery Hero, acquired 16% of Glovo’s shares in the same year. The Shareholders’ Agreement between the parties confers Delivery Hero with certain corporate rights that allow Delivery Hero to access commercially sensitive information about its competitor operations in the Egyptian market and to influence Glovo’s strategic business decisions. Hence, the acquisition of a minority shareholding was used as an instrument to collude with Glovo and reach an agreement on the latter’s exit from the market. The ECA issued a cease-and-desist order demanding Glovo to immediately resume its operations in Egypt. Notwithstanding this intervention, in 2018, Delivery Hero acquired 16 percent of Glovo’s shares and ended up influencing the strategic decision which led to the latter’s market exit. Source: http://www.eca.org.eg/ECA/upload/News/Attachment_E/8285/Glovo%e2%80%99s%20exit%20from%20the%20Egyptian%20market.pdf The issue of essential facilities92 is key in antitrust cases in digital markets, especially in the African context, as lack of access to essential facilities may prevent smaller firms from competing in downstream markets. Access to USSD is a key piece of infrastructure used to provide mobile financial services on nearly any phone, at low cost, and without requiring access to the user’s SIM card. Essential facilities cases may concern refusal to grant unstructured supplementary service data (USSD) interoperability (see case Bankers Association, Zimbabwe in Box 6 below)93. USSD technology is currently the best available option to serve low-income customers, as it consists of a communications service controlled by MNOs; hence, it is critical to provide mobile money on most phones, at low cost, and without requiring access to the user’s SIM card. A digital platform can also be considered to be an essential facility from the perspective of the final user who is blocked from using the dominant platform (see case GovChat, South Africa in Box 6 below). Box 6: Essential facilities in digital markets Zimbabwe In 2014, the Bankers’ Association of Zimbabwe filed a complaint before the Zimbabwe Competition and Tariff Commission (ZCTC) against Econet – the largest mobile telecommunications, technology and digital solutions company in Zimbabwe – in relation to Econet’s mobile money platform (EcoCash). Among the competition concerns raised by the complaint are those relating to the provision of USSD services whereby Econet allowed banks to use the USSD service for the provision of other mobile banking services (balance checks, bill payment, bank account to bank account transactions, etc.) to banked clients, but not for P2P transactions requiring a link between mobile wallets and bank accounts. The ZCTC did not publish a decision on the matter, but publicly available information in the media from 2014 states that the Zimbabwe Competition and 92 An essential facility can consist of an asset, infrastructure, data or technology to which a third party needs to gain access in order to compete on a downstream market. A facility is essential if there are no reasonable alternatives are available and duplication of the facility is not feasible due to legal, economic or technical obstacles. 93 USSD enables customers to send instructions to the mobile money provider along with their personal identification number (PIN) for authentication, while enabling the mobile money provider to send responses to clients and confirm transactions. 37 Technical Background Paper: Competition Policy in Digital Markets in Africa Tariff Commission, the Reserve Bank of Zimbabwe RBZ and the Postal and Telecommunications Regulatory Authority of Zimbabwe (POTRAZ) have cooperated in an attempt to propose regulatory solutions that can overcome the competitive concerns identified. South Africa In 2020, GovChat – a citizen engagement platform that allows citizens to connect with government – filed a complaint before the South African Competition Tribunal claiming that Facebook’s decision to “off -board” it from WhatsApp’s messaging platform was in breach of the obligation to give access to an essenti al facility. In the absence of access to WhatsApp’s application program interface (API), GovChat was unable to “on-board” onto its messaging network and offer downstream services to WhatsApp users. However, Facebook argued that GovChat was using its commercially-focused brand (#LetsTalk), to avoid complying with WhatsApp’s terms of service. Over several months, it repeatedly threatened to ban GovChat from WhatsApp for operating on the platform as a government entity without a business account. In March 2021, the Competition Tribunal ruled that Facebook, WhatsApp, and Facebook South Africa may not remove GovChat on an interim basis pending further investigation. According to the Tribunal, GovChat established a prima facie case of prohibited conduct on the part of Facebook in that the respondents’ selective application of its rules against the applicants amounts to an effective refusal to deal. On the other hand, Facebook has not provided any evidence of pro-competitive gains to offset the prima facie anticompetitive effects. Source: https://www.techzim.co.zw/2014/06/econet-investigated-anti-competitive-behaviour-mobile-money- business/ https://globalcompetitionreview.com/digital-markets/facebook-accused-of-illegally-banning- coronavirus-messaging-service-whatsapp / https://techcentral.co.za/facebook-interdicted-in-fight-with-south- africas-govchat/106003/ Even though most abuses of dominance focused on exclusionary conduct, some competition agencies have been active in tackling online exploitative conduct, such as price gouging, during the COVID-19 pandemic. In Nigeria, for instance, Jumia had to delist multiple protective and hygiene products, including hand sanitizers, where prices had been raised during the pandemic.94 3.2.2 Merger Control African competition agencies have assessed the potentially anticompetitive effects of multiple mergers in digital markets and designed procompetitive remedies to offset the competition issues identified.95 Through merger review, African competition agencies have addressed the challenges posed by: (i) product market definition in digital markets, in particular, the integration of offline and online businesses in the same relevant market (see Box 5 below on the MIH eCommerce/Takealot merger, South Africa); (ii) the role of data and algorithms as a barrier to market entry, which can hinder third-parties’ ability to compete downstream (see Box 5 below on the Uber/Careem merger, Egypt and Google/Fitbit merger, South Africa); (iii) the importance of protecting users’ privacy in a digital context , namely through the protection of 94 Emejo (2020). 94 https://www.fccpc.gov.ng/news-events/releases/2020/03/13/jumia-delists-390-products-on-account-of-fccpc-warning-over- hike-in-prices-of-protective-and-hygiene-products-assures-commission-of-cooperation/. 95 Merger control relates to the procedure of reviewing a transaction that result in a durable combination of previously independent units and have a reasonable likelihood of generating significant harmful impact on the level of market competition. A merger or concentration is typically notifiable to a competition authority ex ante whenever certain thresholds pertaining to the turnover or assets of the parties to the merger are met. In terms of administrative procedure, best practice suggests merger review should include a fast-track procedure or a two-phase procedure with different information requirements. Mergers should be blocked – unless the merging parties submit remedies capable of removing the competition concerns – whenever they result in a substantial lessening of competition in the market that is not offset by efficiency gains that can be passed to consumers. 38 Technical Background Paper: Competition Policy in Digital Markets in Africa users’ consent and by enforcing forms of data separation within the merging firm (see Box 7 below on the Google/Fitbit merger, South Africa); and the risk of self-preferencing by vertically-integrated digital platforms operating in two-sided markets (see Box 7 below on the Naspers/We Buy Cars merger, South Africa). Box 7: Merger control in African digital markets South Africa Market definition The issue of competition between online and offline businesses was analyzed by South Africa’s Competition Tribunal in the MIH eCommerce (global Internet group)/Takealot (online retailer) merger (2017). The merger was unconditionally approved in 2017 on the grounds that eCommerce sites compete with brick-and-mortar, which considerably reduced the merged entity's market share and led to a finding of no -dominance following the merger. Given the low market share of the merging firm (less than 1 percent), the Tribunal considered that the merged entity would not have incentives to engage in input foreclosure. Data privacy The issue of data privacy was analyzed in South Africa, in the context of the Google (big tech international conglomerate active in the online search and advertising markets) /Fitbit (manufacturer of wrist-worn wireless-enabled wearable technology devices that measure fitness) merger. The South African Competition Commission considered the transaction was likely to substantially lessen competition in the market, namely by restricting access to health data collected by Fitbit (Google could have the incentive to limit Fitbit’s interoperability with other operating systems). To alleviate the competition concerns identified by the Competition Commission, Google agreed to a set of commitments for a period of ten years, which led to the approval of the merger in December 2020. The merger commitments included: (i) maintaining data separation between Fitbit data and Google’s existing data; (ii) not using any Fitbit body, health, or fitness activity location data in or for Google Ads; and (iii) allowing third-party access to Fitbit data through the Fitbit Web API, without charging and subject t o the users’ consent. Self-preferencing The risk of self-preferencing by vertically-integrated digital platforms was implicitly raised by South Africa’s Competition Commission’s referral of the Naspers’s OLX (online advertising platform) /We Buy Cars (used car dealer) merger (2019). The South African Competition Commission recommended that the proposed transaction should be prohibited as it was likely to substantially prevent or lessen competition on two grounds: (i) absent the proposed transaction, Frontier Car Group Inc (FCG), an online used car buying and selling platform in which the Naspers Group had recently acquired shares, would have entered the South African market in close competition with We Buy Cars and would have appreciably enhanced the level of competition faced by WBC in South Africa; (ii) the proposed transaction would have entrenched We Buy Cars, which would benefit from Naspers’ digital platform portfolio. The transaction was eventually prohibited by the South African Competition Tribunal (Marc, 2021). Egypt The role of data and algorithms in two-sided markets In the Uber/Careem merger (2019), the Egyptian Competition Authority (ECA) assessed the potentially anticompetitive impact stemming from the control of data in the ride-hailing market, where both merging parties operate. According to the ECA, data and algorithms for ride-hailing – especially region-specific mapping data owned by Careem – may act as an entry barrier to new entrants that new market entrants in Egypt are unable to replicate or access. Control over Careem’s data would also further strengthen the network effects of the ride-hailing platform, the more data the platform can collect. The merger would also consolidate key algorithms in the hands of the merged entity, which new entrants may not be able to match. In addition, the merger would also limit the chances for ‘multi -homing’, with drivers having fewer ride-hailing platforms available to work for, leaving consumers with less options to change platform should prices increase, or quality reduce. Despite the competition risks identified, the ECA cleared Uber’s acquisition of rival ride-hailing app Careem, subject to a package of commitments, which included a commitment to grant future competitors access to Careem’s “static points of interest map data” on a one-time basis, as well as access to trip data, including rider and driver information, subject 39 Technical Background Paper: Competition Policy in Digital Markets in Africa to data protection law. Source: https://www.comptrib.co.za/case-detail/7584 / https://www.docdroid.net/GXSIQ7c/ecas-assessment-of-the- acquisition-of-careem-inc-by-uber-technologies-incnon-confidential1.pdf / http://www.compcom.co.za/wp- content/uploads/2020/12/Competition-Commission-conditionally-approves-the-Google-Fitbit-merger.pdf / http://www.compcom.co.za/wp-content/uploads/2020/03/COMPETITION-TRIBUNAL-CONFIRMS-THE-PROHIBITION- OF-NASPERS-PURCHASE-OF-WEBUYCARS.pdf 3.2.3 Cross-cutting enforcement issues An analysis of the patterns of ex post competition law enforcement in Africa shows a preference for the imposition of behavioral remedies over fines. Most enforcement cases that resulted in a final decision by a competition authority in Africa ended with the imposition of behavioral remedies, through a commitment decision, whereas fines represented a mere 8 percent of all decisions analyzed. This can be explained by the fact that most cases concern exclusionary conduct in the context of exclusivity agreements, which is an area where the imposition of behavioral remedies such as a duty to deal can address the competition concern without the need for complex monitoring of compliance (see Figure 22 below). Most mergers scrutinized by African competition authorities were unconditionally approved, followed by the adoption of behavioral remedies as a pre-condition for their approval. 80 percent of the mergers reviewed by African competition authorities resulted in the approval of the notified transaction, without the finding of a substantial lessening of competition in the respective jurisdictions. Furthermore, even when the transactions notified with the African competition authorities were found to raise competition concerns, there has been a preference for the adoption of behavioral remedies (18 percent of decisions) over the outright prohibition of the transaction (9 percent of the cases) (see Figure 23 below). Figure 22: Enforcement cases by type of decision Figure 23: Merger cases by type of decision in in Africa Africa Cease Fines Prohibition and 8% 9% desist Behavioral 8% remedies Rejection of 18% complaint 46% Behavioral Approval remedies 73% 38% Source: WBG Competition policy team. 3.3 Competition Advocacy in Digital Economy Various competition advocacy initiatives undertaken by African competition agencies show that competition issues in the digital economy are on the radar of African authorities – even where actual 40 Technical Background Paper: Competition Policy in Digital Markets in Africa enforcement may be lacking. Competition advocacy refers to activities that promote a competitive environment through non-enforcement mechanisms, such as building relationships with government entities, increasing public awareness of competition’s benefits, and identifying and removing anticompetitive policies and regulations.96 Three African competition authorities have engaged in a total of six advocacy initiatives related to the digital economy,97 according to recent data covering from 2008- 2021. Of these, two initiatives each target digital platforms, mobile money services, and broader aspects of the digital economy (see Figure 24 below).98 Three initiatives are market inquiries, a strategy often used to better understand competition-related dynamics and potential issues in a given sector or market.99 In Africa, market studies have explored the markets for digital platforms (South Africa), e-commerce (Algeria), or digital financial services (Kenya) (see Figure 25 below for an analysis of the advocacy strategies used). Figure 24: Advocacy initiatives in the digital Figure 25: Advocacy strategy per type economy, by country Review of Awareness South Africa 1 1 market raising, definition, 16.7% 16.7% Kenya 1 2 Multiple, 16.7% Market Algeria 1 inquiry, 50.0% All Digital financial services Digital platforms Notes: ‘All’ indicates cases that relate to the digital economy broadly, including all segments. ‘Multiple’ refers to an initiative involving several activities, including consumer surveys focusing on price awareness, introduction of mandatory requirements for service providers and advocacy with these groups to implement the requirements, and market monitoring. Source: WBG Competition policy team Advocacy initiatives in African digital markets have focused on issues of consumer protection, which 96 Advocacy activities and tools typically fall into four major categories: (i) provision of regulatory advice and opinions (regarding current or draft laws and regulations); (ii) preparation of market studies/inquiries; (iii) collaboration with sector regulators, often through memoranda of understanding (MoUs); and (iv) general awareness raising activities and capacity building to promote compliance and buy-in. See: International Competition Network, Advocacy and Competition Policy. A Report Prepared by the Advocacy Working Group. Presented at the ICN Annual Conference, Naples, Italy, 2002. Available: http://www.internationalcompetitionnetwork.org/uploads/library/doc358.pdf 97 Excluding advocacy initiatives related to telecommunications services. 98 For example, Kenya’s CAK revised its market definition considering in the digital economy and the South African Competition Commission looked at the impact of the overall digital economy on South African markets, however focusing on e-Commerce business models. 99 Both the definition and the goal(s) of market studies may differ between competition authorities and cases. For a discussion of the use of market studies by competition authorities globally, see OECD (2016) The Role of Market Studies as a Tool to Promote Competition. Available at https://one.oecd.org/document/DAF/COMP/GF(2016)4/en/pdf. 41 Technical Background Paper: Competition Policy in Digital Markets in Africa often go beyond the competition agencies’ competition law mandate.100 As previously discussed, digital markets present certain characteristics such as high network effects and scale economies that often grant platform operators the power to behave to an appreciable extent independently of their competitors, their customers, and ultimately the consumers. 101 This power to behave unilaterally vis-à-vis the consumers by dictating terms and extracting concessions is further accentuated by the information asymmetry between sellers and consumers that characterizes e-commerce and the Web more generally, with consumers being constantly presented with complex contractual terms and conditions. This information asymmetry within a context of already existing market power makes consumers particularly vulnerable to all sorts of misleading, aggressive, or purposefully deceptive commercial conduct.102 It is in this context that competition advocacy initiatives assume a key role in re-balancing the position of consumers in relation to online sellers. This can be achieved by identifying the causes of potentially abusive behavior and by proposing remedies that can mitigate the exercise of market power by digital operators. One particular area of concern is that of mobile money, including mobile lending, where, in addition to dealing online, consumers also face high information asymmetry in relation to financial firms, which leaves them especially unprotected. African competition authorities can make use of advocacy initiatives competition where they allow for switching and greater demand elasticity. In addition to bridging information asymmetry between digital platforms and consumers, consumer protection initiatives can be embedded with a competition angle and result in the adoption of pro-competition recommendations. Competition can be weak when customers find it hard to switch providers due to lack of information or behavioral biases. Competition authorities can propose Informational remedies to make it easier for customers to find out about products or services in the market and to facilitate comparisons. They can also address barriers to switching, such as consumer inertia or lack of familiarity with the switching process and encourage upfront disclosure of ‘hidden’ charges (see Market studies on digital lending and transparency in digital financial services, Kenya in Box 8 below). Box 8: Competition advocacy for protecting consumers in digital markets Kenya The Competition Authority of Kenya’s (CAK) study on the digital lending markets in Kenya, aimed at ensuring digital lenders increase transparency of the products they offer to consumers (2019). In the long run, CAK hopes to develop policies that will ensure digital loanees are protected across regulated and unregulated lenders. CAK has also developed an advocacy program to encourage disclosure and transparency in digital financial services, through the engagement of mobile phone operators, banking institutions, and micro-finance institutions (2018). Furthermore, it carried out an end-line survey on the price awareness levels of consumers of digital financial services. Source: WBG Advocacy contest submission (2018) / https://www.the-star.co.ke/business/kenya/2020-02-24- competition-authority-of-kenya-seeks-to-regulate-vast-digital-lending-sector/ 100 Consumer protection seeks to protect consumers within the context of individual business to consumer (B2C) transactions, and its rules are applicable to all firms regardless of the existence of market power. Competition law focuses on the protection of the competitive market process, and protects consumers only indirectly. 101 This amounts to the definition of a dominant position in the European Union; see the European Court of Justice ruling in Hoffman La Roche (85/76) E.C.R 461 (1979). 102 This refers to the ability to by an operator with market power to dictate terms and extract concessions that no one would reasonably consent to in a competitive market: see Subcommittee on Antitrust, Commercial and Administrative Law of the Committee on the Judiciary, Investigation of Competition in Digital Markets, Majority Staff Report and Recommendations (2020). 42 Technical Background Paper: Competition Policy in Digital Markets in Africa Other initiatives sought to raise awareness and increase transparency on the economic characteristics of digital markets and emerging technologies, and how they might impact the application of competition law. These initiatives aimed to upgrade the methodology applicable to (i) market definition in two-sided and free markets, in order to capture dominance in such markets and design a theory of harm that takes into consideration the non-price dimensions of competition (see Guidelines on Market Definition in Box 9 below), (ii) online intermediation platforms, bearing in mind the market features of digital platforms (see Online Intermediation Platforms Market Inquiry, South Africa, in Box 9 below), or (iii) the overall approach by the competition agency to the enforcement of competition and consumer rules in the digital economy (see report on Competition in the Digital Economy, South Africa in Box 9 below). These initiatives clearly show the importance of tailoring the enforcement of the competition rules to the digital economy without having necessarily to amend the existing regulatory framework, and to convey the agency’s approach to the business community. Box 9: Competition advocacy that contributed to streamlining the application of competition law to digital markets Kenya In 2019, CAK reviewed its Market Definition Guidelines in order to better deal with complex markets like digital or multi-sided platforms. In particular, CAK took into consideration the substitutability of the products being offered by digital markets and identified existing constraints with offline markets. Given that digital markets are typically multi-sided, market definition and market power analyses that focus on a single side will lead to analytical errors. Market definition is based on the SSNIP Test103 or Hypothetical Monopolist Test. However, in these instances, the conducting of the SSNIP test may not be entirely suitable. Furthermore, digital markets often consist of at least one free platform, at least in the short run; therefore, non-price dimensions must be factored in when developing a theory of harm. South Africa The South African Competition Commission announced in 2020 that it will conduct a market inquiry into online intermediation platform services (the “Online Intermediation Platforms Market Inquiry” or OIPMI) . The market inquiry is driven by the existence of market features of online intermediation platforms such as first-mover advantages, network effects of two-sided markets, and product development advantages from data accumulation, In addition, firm behavior, such as most-favored nation pricing rules104, acquire competitive threats (so-called ‘killer acquisitions 105) and leverage dominance in some areas to exclude or limit rivals in others (such as self-preferencing of data and platform access). These market features require competition law to be streamlined in order to consider new theories of harm and to act against entrenchment strategies to ensure concentration does not impair market contestability. The South African Competition Commission elaborated a report on “Competition in the Digital Economy”, providing a review of the emerging competition issues in e-commerce, consumer empowerment, and guiding businesses on the approach adopted by the Commission. The Report analyzes how South Africa’s competition 103 The SSNIP test is a tool for market definition test that seeks to identify smallest market within which a hypothetical monopolist could impose a Small Significant Non-transitory Increase in Price (usually defined as a price increase of 5 percent for at least 12 months). 104 MFN consists are vertical restraints where the terms and condition of supply are set by reference to the terms and conditions applicable to other supply relationships. ‘Wide’ MFN requires retailers to publish on a price comparison tool or online marketplace the same or better price and conditions as those published on any other sales channel. ‘Narrow’ MFN, on the other hand, require retailers to publish on a price comparison or online marketplace the same or better price and conditions as those published on its own platform. 105 Shutting down competition even before there is a marketable product. 43 Technical Background Paper: Competition Policy in Digital Markets in Africa laws can be implemented to achieve equitable outcomes in the digital economy and our intentions in this regard. It also takes a closer look at the leading digital disrupters and their impact on established industries. The publishing of the report was accompanied by a virtual dissemination event in November 2020. Source: https://www.cak.go.ke/sites/default/files/Guidelines%20on%20Relevant%20Market%20Definition%20(1).pdf / http://www.compcom.co.za/online-intermediation-platforms-market-inquiry/ / http://www.compcom.co.za/wp-content/uploads/2020/11/COMPETITION-COMMISSIONER-TO-LAUNCH-THE- COMMISSION%E2%80%99S-COMPETITIVE-STRATEGY-IN-SOUTH-AFRICA%E2%80%99S-DIGITAL-ECONOMY.pdf Regulatory initiatives with competition implications can emerge as a follow-up from enforcement or advocacy by the competition agencies, even though it is important to assess the pros and cons of Government interventions in the market and their effects. Even in the absence of a decision finding an infringement of the competition rules, Governments have intervened to attempt to create a level playing field in the digital market (see case Metered Taxi Industry, South Africa, in Box 10 below). However, such regulatory interventions should be carefully designed to avoid reinforcing barriers to market entry, which can limit innovation and lead to higher prices for consumers. Box 10: Regulatory measures triggered by competition agencies enforcement cases South Africa Ride hailing regulation In 2006, the South African Metered Taxi Industry brought a complaint before the Competition Commission, alleging Uber abused its dominant position by engaging in predatory pricing practices. The South African Competition Commission did not ascertain the existence of an abuse by Uber and decided not to prosecute it. Meanwhile, South Africa created an independent body to regulate the electronic ride hailing sector in South Africa. Source: http://www.compcom.co.za/wp-content/uploads/2016/01/Commission-Statement-20-October-2016- Final.pdf / https://www.parliament.gov.za/bill/2290468 / 44 Technical Background Paper: Competition Policy in Digital Markets in Africa 4 Conclusions Competition in digital markets depends not only on a strong enforcement framework, but also on other pro-competitive policy levers, in particular: (i) an effective ex ante regulation in digital infrastructure, specifically of operators with market power, while incentivizing an efficient and pro-competitive use of radio spectrum and promoting an effective sharing of infrastructure; (ii) data protection regulations that facilitate data flows, and (ii) and consumer protection rules against misleading commercial practices in digital markets. A more effective enforcement of competition rules can play a fundamental role in improving market outcomes in downstream digital markets. This can be attained through a more systematic sanctioning of firms that breach competition rules, which increases deterrence and avoids the unnecessary and costly use of behavioral remedies which can be difficult to design and monitor. In tandem with the enforcement of competition rules, African competition authorities should continue with their advocacy efforts. For this purpose, they should also rely on consumer protection initiatives embedded with a pro-competition angle, that can preserve market contestability. The promotion of competition in digital markets is developing, not only in the sample of African countries studied for the purposes of this paper but also in more developed jurisdictions. This paper shows that enforcement of competition rules in African digital markets is still scant and essentially undertaken by African upper-middle-income countries. Notwithstanding, lower-middle-income African countries have compensated for limited enforcement with the adoption of a series of competition advocacy aimed at further instilling competition in digital markets. Given that digital markets pose similar challenges to competition authorities worldwide, it is important that the African authorities can learn from and collaborate with other jurisdictions that may have gathered more experience in this field. At the same time, African competition authorities can make an invaluable contribution to other competition agencies by sharing their cases and practices, both in regional and international forums. 45 Technical Background Paper: Competition Policy in Digital Markets in Africa 5 Bibliography ACF-World Bank II. 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Stigler Committee on Digital Platforms (2019). 50 Technical Background Paper: Competition Policy in Digital Markets in Africa Subcommittee on Antitrust, Commercial and Administrative Law of the Committee on the Judiciary. 2020. “Investigation of Competition in Digital Markets, Majority Staff Report and Recommendations ”. UNCTAD. 2017. “Consumer protection in electronic commerce, Note by the UNCTAD secretariat (July 2017).” World Bank Group. 2016. “Breaking Down Barriers: Unlocking Africa's Potential through Vigorous Competition Policy. ” Washington, DC: World Bank Group. ” World Bank Group. 2017. “The Global Findex Database 2017: Measuring Financial Inclusion and the Fintech Revolution.” Washington, DC: World Bank Group. ” World Bank Group. 2021. “World Development Report 2021: Data for Better Lives. Washington, DC: World Bank.” World Bank Group. 2021. “Global Digital Antitrust Database of the World Bank’s Markets Competition and Technology Unit” https://tab.worldbank.org/t/WBG/views/Global-Digital-Antitrust- Database/Overview?:isGuestRedirectFromVizportal=y&:embed=y World Economic Forum, Klaus Schwab (Eds). 2019. “The Global Competitiveness Report” 51 Technical Background Paper: Competition Policy in Digital Markets in Africa ANNEX I: GCI Changes in Regional Performance by Pillar, Percentage changes 2018-2019 Figure 26: GCI Changes in Regional Performance by Pillar, Percentage changes 2018-2019 Source: World Economic Forum, GCI 2019 52 Technical Background Paper: Competition Policy in Digital Markets in Africa ANNEX II: Mobile cellular subscriptions, African countries, 2019 and Compound Annual Average Growth Rate (CAGR) (%), 2015-2019 Figure 27: Mobile cellular subscriptions, African countries, 2019 and Compound Annual Average Growth Rate (CAGR) (%), 2015-2019 Source: ITU WTI Database, December 2020 edition 53 Technical Background Paper: Competition Policy in Digital Markets in Africa ANNEX III: Active mobile broadband subscriptions per 100 inhabitants, 42 African countries, 2019 Figure 28: Active mobile broadband subscriptions per 100 inhabitants, 42 African countries, 2019 Source: ITU WTI Database, December 2020 edition 54 Technical Background Paper: Competition Policy in Digital Markets in Africa ANNEX IV: Fixed broadband subscriptions per 100 inhabitants, Africa region, 2019 Figure 29: Fixed broadband subscriptions per 100 inhabitants, Africa region, 2019 Source: ITU WTI Database, December 2020 edition 55 Technical Background Paper: Competition Policy in Digital Markets in Africa ANNEX V: Affordability of an entry-level Internet-enabled phone in Low- and Middle-Income Countries, by region, 2016-2019 Figure 30: Affordability of an entry-level Internet-enabled phone in Low- and Middle-Income Countries, by region, 2016-2019 Source: GSMA, The State of Mobile Internet Connectivity (2020) 56 Technical Background Paper: Competition Policy in Digital Markets in Africa ANNEX VI: South Africa’s Competition Commission 2019 Data Services Market Inquiry Box 11: South Africa’s Competition Commission 2019 Data Services Market Inquiry South Africa South Africa’s Competition Commission 2019 Data Services Market Inquiry was initiated as a response to persistent concerns about the high level of data prices and the importance of data affordability for the South African economy and consumers. In fact, ITU data shows that South Africa ranks poorly in terms of affordability, even when compared to other African countries as a group. Among the causes identified for South Africa’s poor performance, the Competition Commissions points out the following: i) Insufficient release of low frequency spectrum, which unnecessarily raises roll-out costs; ii) High spectrum assignment prices; iii) Lack of pro-competitive spectrum assignment; iv) Design of the wholesale open access network needs to have a pro-competitive design, ensuring vertical separation and cost-orientated wholesale pricing; v) High costs incurred with passive infrastructure (e.g. base stations, high sites, ducts and poles for fiber backhaul); vi) Lack of regulated access to passive infrastructure when the owner refuses to grant access on fair commercial terms; vii) Ineffective regulated access to facilities controlled by incumbents, in particular, lack of mechanisms that can overcome incumbents’ strategic anticompetitive behavior; viii) Regulatory framework does not encourage or mandate MVNOs hosting by MNOs; ix) Persistent fix line supply gap for alternative data services. The Final Report of the Data Services Market Inquiry, which was published in December 2019, put forward a series of remedies to improve mobile price competition and introduce greater alternatives for consumers over the medium term, which included: An Immediate relief on data pricing, in order to attain price reductions of around 30-50 percent. This commitment involves: i) Vodacom and MTN reaching an agreement on a reduction in the headline prices of all sub-500MB 30-day prepaid data bundles to reflect the same cost per MB as the 500MB 30- day bundle; 57 Technical Background Paper: Competition Policy in Digital Markets in Africa ii) Vodacom and MTN commit to cease ongoing partitioning and price discrimination strategies that may facilitate greater exploitation of market power and anti-poor pricing; iii) All mobile operators must reach agreement to offer all prepaid subscribers a lifeline package of daily free data to ensure all citizens have data access on a continual basis, regardless of income levels; iv) All mobile operators must reach on a consistent industry-wide approach to the zero- rating of content from public benefit organizations and educational institutions to ensure broad application; v) All mobile operators must reach a to inform each subscriber, on a monthly basis, of the effective price for all data consumed by the customer; vi) Telkom Openserve must reach agreement on substantial reductions in the price of IP Connect to remove excessive pricing concerns. Intermediate program to enhance price-based mobile competition, urging the following: i) Legislative changes must be made to facilitate cost-based access to facilities; ii) Vodacom and MTN must reach agreement to ensure that their national roaming agreements with other networks are priced, at a minimum, at wholesale rates which reflect a reasonable discount on their own effective retail rates ; iii) With respect to MVNOs, all mobile operators must reach agreement to ensure that the wholesale rate reflects a discount on the prevailing effective retail rate; iv) Vodacom and MTN must reach agreement to institute accounting separation for their wholesale network infrastructure, including the radio access network (RAN) and core network within the next year. Development of alternative data service infrastructure, recommending the following: i) That national government consider providing investment incentives to FTTH providers for network rollout in low-income areas; ii) That government at all levels actively promote the development of free public Wi-Fi in low-income areas, including government buildings, commuter points (e.g. train stations, taxi ranks) and public spaces (e.g. parks, shopping areas, government service offices) as well as the creation and entry of community networks; iii) That ICASA consider models and regulatory changes to allow at least non-profit community networks, and possibly small commercial enterprises to access licensed spectrum not used by mobile operators in rural areas in a similar manner to television white space; iv) That a single government department or agency be designated as responsible for driving these initiatives across the different departments and levels of government. Source: http://www.compcom.co.za/wp-content/uploads/2019/12/DSMI-Non-Confidential-Report-002.pdf ANNEX VII: Ex ante and ex post regulation and competition enforcement Table 2: Ex ante and ex post regulation and competition enforcement 58 Technical Background Paper: Competition Policy in Digital Markets in Africa Ex post Competition Ex ante Competition law Ex ante sector Ex post sector Market investigation law (prohibition of (merger control; regulation (asymmetric regulation (hybrid between anticompetitive exemption of agreements regulation of operators (symmetric and competition law and agreements and abuse with anticompetitive with SMP) asymmetric regulation) of dominance) effects) regulation) Goal - Maintain - Maintain - Mimic/Instill/incre - Mimic/Instill - Mimic/Instill/ competition competition ase competition in /increase increase - Short-term - Short-term consumer the market competition competition in consumer welfare welfare - Long-term total in the market the market welfare - Long-term - Long-term - Balancing total welfare consumer between - Balancing welfare competition and between investment competition and investment Assumption - Market structure - Market structure is - Market structure - Market - Market is generally generally satisfactory is generally not structure is structure might satisfactory satisfactory/does generally not not be not tend towards satisfactory/ satisfactory effective does not competition tend towards - Sunset regulation effective as markets competition become competitive Trigger - Market definition - Merger thresholds - Market definition - Breach of - Evidence of - Identification of - Market definition - Identification of obligations suboptimal anticompetitive - Economic test for markets with set in the market conduct prohibiting merger in bottlenecks that law, license, outcomes in an the absence of do not tend authorizatio economic conduct (e.g. creation towards effective n, technical sector or reinforcement of competition (e.g., standards dominance; that meet the substantial lessening three criteria test) of competition) - Establishment of operators with significant market power (SMP (in the absence of conduct) Remedies - Fines - Mostly structural - Mostly behavioral - Fines - Mostly - Civil liability - Behavioral structural - Adjudicating Competiti Sector Competition Sector Sector No ex Sector Regulator Competition Agency institution on Agency Regulator Agency Regulator Regulator ante regulation Concurrent powers Concurrent powers - Substantive - Substantive concurrency concurrency - Informal - Informal concurrency concurrency Consultation Obligation MoU Obligation to MoU Obligation MoU Obligation MoU mechanism to consult consult to consult to consult Source: Authors’ elaboration 59 Technical Background Paper: Competition Policy in Digital Markets in Africa ANNEX VIII: The General Data Protection Regulation: An Overview Box 12: The General Data Protection Regulation: An Overview The GDPR only applies to the processing of personal data relating to data subjects. Personal data is defined as “any information relating to an identified or identifiable natural person (‘data subject’); an identifiable natural person is one who can be identified, directly or indirectly, in particular by reference to an identifier such as a name, an identification number, location data, an online identifier or to one or more factors specific to the physical, physiological, genetic, mental, economic, cultural or social identity of that natural person” (Article 4(1) GDPR). When the GDPR applies, data controllers are responsible for ensuring compliance with the GDPR and the rights afforded to the data subjects (Article 4(7) GDPR). In particular, companies processing data are subject to the following principles (Article 5 GDPR): i. Lawfulness, fairness and transparency in processing data. ii. Purpose limitation: data must be processed for the legitimate purposes specified explicitly to the data subject when the data was collected. iii. Data minimization: data collection and processing should be limited to the absolutely necessary for the purposes specified. iv. Accuracy: personal data should be accurate and up to date. v. Storage limitation: data can only be stored for as long as necessary for the specified purpose. vi. Integrity and confidentiality: Processing must be done in such a way as to ensure appropriate security, integrity, and confidentiality (e.g. by using encryption). vii. Accountability: data controller is responsible for being able to demonstrate GDPR compliance with all of these principles. The general principle under the GDPR is that the processing of personal data is prohibited in the absence of a legal basis, such as: (i) contractual necessity, (ii) legitimate interests pursued by the data controller, and especially (iii) consent given by the data subject (Art. 6(1) GDPR). According to the GDPR: i. Consent must be freely given, specific, informed and unambiguous. ii. Requests for consent must be clearly distinguishable from the other matters and presented in clear and plain language. iii. Data subjects can withdraw previously given consent whenever they want, and data controllers must honor their decision. iv. Children under 13 can only give consent with permission from their parents. v. Data controllers must keep documentary evidence of consent. The GDPR sets forth various privacy rights for data subjects, in order to give individuals more control over the data they loan to organizations. These include: i. The right to be informed ii. The right of access iii. The right to rectification iv. The right to erasure v. The right to restrict processing vi. The right to data portability vii. The right to object viii. Rights in relation to automated decision making and profiling. 60 Technical Background Paper: Competition Policy in Digital Markets in Africa Source: Regulation (EU) 2016/679 of the European Parliament and of the Council of 27 April 2016 on the protection of natural persons with regard to the processing of personal data and on the free movement of such data, and repealing Directive 95/46/EC (General Data Protection Regulation), O.J. L 119/1. 61 Technical Background Paper: Competition Policy in Digital Markets in Africa ANNEX IX: Typology of competition risks in digital platforms Table 3: Typology of competition risks in digital platforms Type of case Behavior Specificities in digital platforms Examples Anticompetitive Collusion: • Data and algorithms can improve pricing, • Algorithms in e-commerce agreements Agreement between customization and market trends prediction which can be trained to competitors on generates efficiencies, but they could also facilitate independently collude (e.g. by market parameters collusive agreements without human interaction.106 following the behavior of a such as price, • Hub and spoke cartels. When firms outsource pricing price leader) which increases quantities, market algorithms to the same third party this might create the risk of collusion. segmentation, etc. coordination as competitors would be using the same “hub” for developing their pricing algorithms and strategies. • Algorithms could lead to tacit collusion. In most cases this is not prohibited by competition laws but its outcomes could lead firms to suppress output and increase prices in the same ways as explicit collusion. 107 Vertical restraints: • Resale price maintenance (RPM). An upstream supplier • Tourism and travel digital Agreement between controls or restricts the retail price of its products or platforms imposing MFNs on firms in different services downstream by specifying a retail price. An hotels not allowing them to levels of a value incumbent may use RPM to protect its market position sell their rooms at lower prices chain that reduce the from competition by, for example, placing restrictions on than the price on the tourism ability of low cost online retailers’ ability to introduce price platform (even in offline (downstream) firms discounts. This might facilitate exclusion of lower cost channels). to compete distribution methods, like direct online sales to consumers and can facilitate collusion between downstream retailers. 108 • Most favored nation clauses (MFN). Restrictions imposed by platforms that require that a seller on the platform will not sell the product at a lower price through another platform. MFNs tend to raise prices charged by sellers and fees charged by platforms, discourage entry, and distort innovation. 109 Abuse of dominance Abusing a dominant • Digital platforms have a greater tendency to tip Dominance in search markets position by towards dominance given the prevalence of network can manifest in abuse in the excluding rivals (e.g. effects and strong economies of scale and scope that shopping market through refusal to arise with high fixed costs/low variable cost structures • A platform refuses access to deal, discrimination, and the reliance on data and data-intensive technologies information that would allow tying, predatory to gain a competitive advantage. a third part to interoperate pricing, exclusivity • Given their multisided nature, dominance on one side with it and restricting of the platform can influence anticompetitive behavior • A platform may rank its own access to essential on another side. products higher when inputs) or by • Where a platform controls technology or assets that returning a response to a exploiting are essential to compete, there may be an exclusive consumer’s search consumers abuse through refusal to deal or through exclusivity • Supplier of OS obliges device • Digital platforms that are vertically integrated into manufacturer to install product lines where they compete with third parties who supplier’s suite of apps as a sell on their platforms, may engage in self preferencing condition to licensing the OS. 106 OECD (2017). “Algorithms and Collusion: Competition Policy in the Digital Age.” Available at: http://www.oecd.org/daf/competition/Algorithms-and-colllusion-competition-policy-in-the-digital-age.pdf 107 Kovacic, W., Marshall, R., Marx, L. and H. White (2011). “Plus Factors and Agreement in Antitrust Law”, Michigan Law Review 110(3), 393—436. Available at: https://repository.law.umich.edu/cgi/viewcontent.cgi?article=1118&context=mlr 108 ICN (2015). “Online Vertical Restraints Special Project Report.” Available at: https://www.internationalcompetitionnetwork.org/wp-content/uploads/2019/11/SP_OnlineVR2015.pdf 109 Boik, Andre & Corts, Kenneth. (2016). “The Effects of Platform MFNs on Competition and Entry.” Journal of Law and Economics. 59. Available at: https://www.researchgate.net/publication/305220937_The_Effects_of_Platform_MFNs_on_Competition_and_Ent ry 62 Technical Background Paper: Competition Policy in Digital Markets in Africa including through algorithms that are biased • Ride hailing apps accused of (intentionally or not) towards the platform predatory pricing to drive taxis • Digital platforms that have presence in adjacent out of the market. markets (as is relatively common given the economies of • There has been debate over scope present), can also abuse their dominance in the whether excessive collection form of forced tying or bundling of products. of personal data on users • Predatory pricing can be part of the business strategy could be considered an of platforms seeking to quickly leverage network effects exploitative abuse. to dominate the market. Mergers Mergers and • Identifying anticompetitive mergers in digital markets • Social media site acquires a acquisitions are not is more challenging since these mergers are less likely to messaging service and other an anticompetitive meet the turnover or asset thresholds typically social media sites and merges practice like the established in competition legal frameworks that signify data sets to acquire a broader other categories when a merger must be notified to a competition set of data above but they may authority. This is because digital firms, by their nature, • Platform with a map service be prohibited by a are less likely to hold tangible assets and may not acquires a smaller maps app competition generate significant revenues especially in their start up partially to eliminate an authority if they phases. independent source of appear likely to • “Small” mergers or vertical mergers that are typically mapping software reduce competition not considered to pose a risk to competition may in fact by strengthening be damaging to competitive dynamics of digital markets market power of the where the target firm holds data or intellectual property merged entity or by that may provide a competitive advantage to the creating conditions acquiror. under which • Emergence of killer or zombie acquisitions as a coordination potential theory of harm where (typically cash rich) between firms digital platforms acquire smaller firms and put their become easier. innovations on hold before they can become a competitive threat. Source: Antitrust and Digital Platforms: An analysis of global patterns and approaches by competition authorities. EFI Insight- Trade, Investment and Competitiveness. Washington, DC: World Bank. 63 Technical Background Paper: Competition Policy in Digital Markets in Africa ANNEX X: Enforcement of Competition Law in the Telecoms Sectors in Africa Table 4: Enforcers of competition rules in the telecommunications sector in Africa Countries Telecommunications regulator Unit within a Ministry Powers to enforce competition rules in the (Y/N) telecoms sector Autorité de régulation de la poste et des Algeria communications électroniques (ARPCE) N Conseil de la Concurrence Instituto Angolano das Comunicações Angola (INACOM) Y Competition authority Benin ARCEP N Only enforces unfair competition rules Communications Authority reports breach of Botswana Communications Regulatory Authority N competition rules to Attorney General Autorité de regulation des communications electroniques et des Telecom regulator + Competition Burkina Faso postes N Commission Agence de Régulation et de Contrôle Burundi des Telecommunications (ARCT) Y NA Regulatory Agency for Multiple Sectors Cabo Verde of the Economy (ARME) N Telecoms regulator Agence de Régulacion des Telecoms regulator + Competition Cameroon Télecommunications Y Commission Autorité de Régulation des Central African Communications Electroniques et de la Republic Poste ( ARCEP) Y Telecoms regulator Autorité de Régulation des Communications Électroniques et des. Chad Postes (ARCEP) Y Telecoms regulator Autorité Nationale de Régulation des Comoros TIC Y NA Autorité de Régulation de la Poste et Congo, Dem. Rep. des Télécommunications du Congo N Telecoms regulator Agence de Régulation des Postes et des Congo, Rep. Communications Éléctroniques N Telecoms regulator ARTCI / Autorité de Régulation des Télécommunications/TIC de Côte Competition Commission + Telecoms Côte d'Ivoire d’Ivoire N regulator Ministère de la Communication chargé Competition Directorate + Ministry of Djibouti des Postes et des Télécommunications Y communications National Telecom Regulatory Authority + Egypt National Telecom Regulatory Authority N Competition Authority Órgano Regulador de las Equatorial Guinea Telecomunicaciones (ORTEL) Y NA Ministry of Transport and Eritrea Communications Y NA Telecoms regulator + Competition Commission MoU between Competition and Communications Commissions: http://compco.co.sz/online/wp- content/uploads/2019/10/SIGNED-MOU- Eswatini Communications Commission Y BETWEEN-COMMISSION-AND-ESCOM.pdf Ethiopia Communications Authority N Telecoms regulator + competition authority Autorité de Régulation des Communications électroniques et des Telecoms Rregulator + Directorate General Gabon Postes ( ARCEP) N of Competition Public Utility Regulatory Authority Gambia, The (PURA) N Competition Commission Ghana National Communications Authority N NA Autorité de Régulation des Postes et Guinea Télécommunications (ARPT N Telecoms regulator 64 Technical Background Paper: Competition Policy in Digital Markets in Africa Autoridade Reguladora Nacional das Tecnologias de Informação e Guinea-Bissau Comunicação N NA Communications Authority + Competition Kenya Communications Authority N Authority Lesotho Lesotho Communications Authority N NA Liberia Liberia Telecommunications Authority N Telecom regulator General Authority of Communications Libya and Informatics Y NA Autorité de Régulation des Madagascar Technologies de Communication Y Telecom regulator + Competition Council Telecoms regulator + Competition Malawi Communications Regulatory Authority N Commission Autorité Malienne de Régulation des Télécommunications/ TIC et des Postes Mali (AMRTP) N Telecom regulator Mauritania Autorité de Régulation Multi Sectorielle N Telecom regulator + Competition Directorate Telecoms regulator + Competition Commission MoU: Information and Communication https://www.icta.mu/docs/laws/mou_ccm. Mauritius Technologies Authority Y pdf Agence Nationale de Réglementation Morocco des Télécommunications (ANRT) Y Telecoms regulator INCM - Autoridade Reguladora das Mozambique Comunicações Y Telecoms regulator Communications Regulatory Authority + Competition Commission (Concurrency Guidelines: https://www.nacc.com.na/cms_documents/ Namibia Communications Regulatory Authority N ff1_cranmou.pdf Autorité de Regulation des communications electroniques et de la Niger poste (ARCEP) N Directorate General for Competition Nigeria Nigerian Communications Commission N Competition Commission Rwanda Rwanda Utilities Regulatory Authority N Telecoms regulator São Tomé and Principe Autoridade Geral de Regulação (AGER) Y Regulatory authority Autorité de Régulation des Télécommunications et des Postes Competition Commission + Telecoms Senegal (ARTP) N regulator Department of Information Communications Technology of the Department of Information Communications Seychelles Office of the President Y + Fair Trading Commission National Telecommunications Sierra Leone Commission N NA Somalia National Communications Authority N NA Independent Communications Telecoms regulator + Competition South Africa Authority of South Africa N Commission South Sudan National Communication Authority Y NA Telecommunications and Post Sudan Regulatory Authority Y Competition Council Telecoms regulator + Competition Tanzania Communications Regulatory Authority N Commission Autorité de Régulation des Communications Electroniques et des Togo Postes (ARCEP) N Competition Commission Instance Nationale des Telecoms regulator + Competition Tunisia Télecommunications N Commission National Information Technology Uganda Authority - Uganda (NITAU) NA Zambia Information and Zambia Communications Technology Authority Y Competition Commission 65 Technical Background Paper: Competition Policy in Digital Markets in Africa (ZICT) under the Ministry of Transport, Works, Supply and Communications Postal and Telecommunications Telecoms regulator + Competition Zimbabwe Regulatory Authority N commission Source: Authors’ elaboration 66 Technical Background Paper: Competition Policy in Digital Markets in Africa GOVERNANCE AND THE DIGITAL ECONOMY IN AFRICA MAIN REPORTS VOLUME 1 Digital for Governance: Reaching the Potential for the Digital Economy in Africa—Digital Tools for Better Governance VOLUME 2 Governance of Digital: Regulating the Digital Economy in Africa— Managing Old and New Risks TECHNICAL BACKGROUND PAPERS • ICT Procurement in Africa • Adoption of eGP in Africa • Vulnerabilities of ICT Procurement to Fraud and Corruption • Regulating Digital Data in Africa • Taxes and Parafiscal Fees on Digital Infrastructure Services in Africa • Corporate Governance and Transparency of State-Owned and State-Linked Digital Enterprises in Africa • State-Owned Enterprises in Digital Infrastructure and Downstream Digital Markets in Africa • Competition Advocacy for Digital Markets in Africa • Competition Policy in Digital Markets in Africa 67