Resort to The Law Courts and Sue NCA If You Believe That Your Low Data Pricing are Competitive and Not Predatory – Dr Tampuri

Telecom giant MTN Ghana has faced criticism over the suspension of its data plan called MTN Zone, with some experts questioning the legality of the move if imposed by the regulator.

Dr Mark Yama Tampuri, a finance and antitrust specialist, argues that pricing below the cost of competitors is not necessarily illegal, but it would be if it were to be part of a strategy to eliminate rivals and create a monopoly. In such cases, it would be a violation of antitrust laws. However, vigorous competition generally benefits consumers.

According to him, “the practice of wanting to offer lower prices is a common occurrence in many competitive markets and does not generally violate antitrust laws though there are certain exceptions to this rule”. Dr Tampuri was reacting to the suspension of the Data Zone bundle by MTN Ghana

Dr Tampuri believes telcos in the interest of fair regulatory practices by public agencies, firms should challenge some of the directives imposed by its regulators through the courts especially when the basis is not well put across.  He said “pricing below your competitor’s or even your costs may not necessarily be illegal, but it could be part of a larger strategy to eliminate competitors and create a monopoly for the discounting firm. This then could allow them to raise prices far into the future and recoup their losses”

…In such a scenario, it would be a violation of antitrust laws and these are case by case basis. “While predatory pricing exists, regulators like NCA will have to be innovative in their analysis of pricing, however, they can’t just give a blanket order or directive as a regulator to a Significant Market Power (SMP) which goes to implies that all the prices of that SMP should be above that of their competitors”.

It would be recalled that MTN Ghana suspended its MTN Zone services and on Wednesday, April 12, through a press release apologizing the telco apologized to its customers for limiting its communication on the matter to service activation channels only. MTN Ghana also reassured customers that it is still in talks with the regulator, National Communications Authority (NCA), to realign and reinstate the MTN Data Zone bundle innovation as soon as possible.  MTN Ghana stated that “the suspension of the innovative Data Zone bundle is due to a review of the bundle offer in line with the Significant Market Power (SMP) directives applied to MTN Ghana in June 2020”, which stipulates that it cannot be the lowest priced on any offer in the industry.

Dr. Tampuri however put forth that “although instances of a large firm using low prices to drive smaller competitors out of the market in hopes of raising prices after they leave are rare, such strategies can be successful if the short-term losses from pricing below cost are compensated by much higher prices over an extended period. He argues that it is unlikely that MTN could price below cost long enough to drive out a significant number of rivals and attain a dominant position through its MTN Zone bundle. He asserts that “low prices generally benefit consumers, and they are only harmed if below-cost pricing allows a dominant competitor to knock out its rivals from the market and then raise prices to above-market levels for a considerable period”.

Dr Tampuri’s views emphasize that the legality of pricing below the cost of competitors depends on the circumstances and that vigorous competition is generally beneficial for consumers. He has therefore advised MTN Ghana to seek clarity from the law courts of Ghana.

The specialist again observed that antitrust issues like these are the reason he constantly has added his voice that Ghana Needs Competition Law and Policy without Delay.

“You see, in some of these antithrust issues in this day and era of evolving digital economy, you cannot leave sector regulators to be in charge of antitrust issues…We may have Public Utilities Regulatory Commission Act,1997 (Act 538) and the Protection against Unfair Competition Act, 2000 (Act 589) but these are limited in their application because both do not address the full dimension of restrictive trade practices….”

…The market needs rather a Competition law that will as well establish a “Competition Authority” without any further delay with expertise to determine such issues. We don’t have a comprehensive antitrust law and so businesses are competing without laws to guide them, which could lead to these pricing dynamics with the faith of stakeholders left to sector authorities but it takes a resourced and well-capable competition regulator to address these, he added.

Dr Tampuri further called on the legislature and executive arms of government  to without delay, finalize the Competition Bill into an Act

By David Annan ([email protected])