The best of journalistic pieces are the ones that take the complex constructs and break them down into brief, precise, simple and clear language for the average reader to understand. That is what yours truly has done for several years – breaking down the particularly complex technical language about everything in the tech industry for the benefit of average readers.
This time round, it bears stating the laws and national policy on the subject of significant market power (SMP) as is, so that the average reader can situate the issue within the confines of the law and appreciate it better. The other reason this writer thinks it is best to state the laws and policy as is, is because MTN has taken the matter to court, so risking an explanation and or commentary could lead to contempt of court.
With that caveat, let’s get into it.
In June 2020, telecoms market leader, MTN Ghana was declared a significant market power. Per international best practices, sanctioned by the International Telecommunications Union (ITU), there are a number of factors and reasons why an operator would be declared as an SMP. The reasons may differ from country to country.
In Ghana, the NATIONAL TELECOMMUNICATIUONS POLICY (NTP), 2004 has a one pager on SIGNIFICANT MARKET POWER (SMP). It starts from half way page 19 and ends half way on page 20.
Below is the full SMP policy in the NTP, 2004. Take note of paragraph three, highlighted.
Operations with SMP shall be subject to competition regulation, as defined in this policy, due to their potential ability to adversely influence market competition.
Market definition is a pre-requisite for assessing competition in a market. The NCA will have the authority to establish criteria to define markets and market segments, including what product the services are relevant and their geographic dimension.
The NCA will define regulations to establish what constitutes Significant Market Power constitutes, but in general SMP will be determined to exist for an organization providing telecommunications services that controls at least 40% of a relevant market segment, absent an NCA determination of a different standard in specific cases. The NCA will determine the methodology to determine SMP which may include analysis of market shares, control of infrastructure, technological advantages, absence of competition, privileged access to financial resources, bundling of services/products, economies of scale, scope, vertical and /or horizonal integration, distribution network (s), links with other markets and collusion issues.
The NCA will have the authority to determine the process, decision-making procedures and methodology for adoption or final decisions and for management of appeals related to the application of SMP regulation. The NCA will have jurisdiction and authority to investigate abiding by the principles of transparent regulation and public consultation stipulated in section 4.1., and to seek cooperation with other agencies or organization. NCA shall have full authority to solicit and obtain from all licensed operators, in a complete and timely manner, the market information that requires to evaluate market conditions and the relative position of each operator.
The NCA will have authority and jurisdiction over decisions and/or remedies, which man include structural and accounting separation of operators and organizations in cases where SMP is deemed to infringe on effective competition.
Specifically, Ghana Telecom shall be considered, a priori, to have SMP in the market for basic telephone services, and accordingly NCA shall initiate a proceeding to effect structural separation of GT’s Internet and mobile telephone operations by the end of 2005.
NCA decision will regard to the determination of SMP can be appealed. Final decisions by the NCA with regard to SMP are binding.
So obviously, prior to June 2020, Ghana Telecom (Vodafone) was declared SMP in the fixed line service sector way back in 2005, based on this very policy. It is very important to take note of that. Secondly, it is very clear from the policy that once an operator hits or crosses 40% market share across all services, it is time to declare an SMP. MTN crossed that threshold years back, and no one knows why this declaration is coming only now.
The next important issue to look at is when a company is declared an SMP, what needs to be done to correct the imbalance? All that, or at least the shepherding guidelines for that are contained in the ELECTRONIC COMMUNICATIONS ACT, ACT 775, 2008. The particular portions to look at are Sections 20(8 – 13), under Interconnection; and Section 25(2), under Tariffs. Again, we state the law as is:
- (8) A network operator or service provider who has significant market power shall
(a) disaggregate its network or its service or its network and service and on a cost-oriented basis specified by the Authority establish prices for its individual elements and offer the elements at the established prices to other operators and service providers,
(b) publish, in the manner specified by the Authority the prices, technical, commercial and other terms and conditions pertaining to its offer for elements of interconnection, and
(c) permit other network operators and service providers to have equal access to directory listing, operator services, directory assistance and directory listing without unreasonable delay, in accordance with requirements specified by the Authority.
(9) Where a network operator or service provider who has significant market power fails to comply with its obligations, the Authority may notify the network operator of a deadline within which it has to Electronic Communications Act, 2008 ACT 775 27 comply and if the operator fails to comply within the deadline given, the Authority may apply to the High Court for an order to compel it to comply.
(10) The Authority may classify a network operator or service provider as dominant if individually or jointly with others, that network operator or service provider enjoys a position of economic strength that enables it to behave to an appreciable extent ‘independently of competitors and users.
(11) In making the classification under subsection (10), the Authority shall take into consideration
(a) the relevant market (policy says 40%),
(b) technology and market trend,
(c) the market share of the operator or service provider,
(d) the power of the operator or service provider to introduce and sustain a material price increase independently of competitors,
(e) the degree of differentiation among networks and services in the market, and
(f) any other matter that the Authority considers relevant.
(12) Where an operator or service provider which is classified as dominant by the Authority considers that it has lost its dominance with respect to a network or service, it may apply to the Authority to be classified as non-dominant and if the Authority grants the application, the applicable licence shall be amended to reflect the classification,
(l3) The Authority may only classify or declassify a network operator or service provider as dominant, if it first publishes the intention to do so in the Gazette and on its website.
- (2) The Authority may establish price regulation regimes, which may include the setting, review and approval of prices by Regulation, where
(a) there is only one network operator or service provider or one network operator or service provider that has significant market power,
(b) a sole network operator or service provider or a network operator or service provider with significant market power and cross-subsidises another electronic communications network or service, and
(c) the Authority detects anti-competitive pricing or acts of unfair competition.
It is important to note, from the onset, that in MTN’s suit against NCA at the High Court, they (MTN) never questioned the conclusion that they are indeed an SMP. They only sought to prevent the NCA from implementing the corrective measures, alleging that NCA did not give them a hearing before the declaration and implementation of corrective measure.
Here are the exact accusations MTN brought against NCA, as contained in the High Court’s judgment.
Accusation Against NCA
- That NCA failed or refused to give MTN fair hearing before it was declared SMP, which is against the rules of natural justice, which requires that MTN be given hearing before any decision is taken against it.
- NCA failed to grant MTN a hearing before declaring them an SMP, which is in breach of Section 25 of Act 769, which requires that MTN should be given hearing before any decision is made against it by NCA
- NCA’s failure to grant MTN hearing before declaring it SMP renders the declaration null and void.
- NCA’s failure to grant MTN hearing before declaring it SMP makes the implement of the corrective measures of the imbalance in the telecoms market unlawful.
Nowhere did MTN say that it is not a dominant player or a significant market power (SMP) per the national policy.
MTN’s accusation against NCA was mainly based on Section 25 of the NCA Act, Act 769, 2008, which is captioned “Procedure for decision-making by the Authority”. So, what exactly is written there?
Procedure for decision-making by the Authority
- (1) In the exercise of its function under this Act and the Electronic Communications Act, 2008 (Act 775) the Board shall
(a) observe reasonable standards of procedural fairness,
(b) act timeously, and
(c) observe the rules of natural justice. when making decisions that affect a person.
(2) Without limiting subsection (1), the Board shall
(a) publish a matter for decision in the Gazette as considered necessary or as required by the Electronic Communications Act, 2008 (Act 775) prior to making a decision;
(b) grant a person who is or is likely to be affected by a decision of the Board, an opportunity; (i) to make a submission to the Board, (ii) to be heard by the Board, or (iii) to consult with the Board in good faith, ‘and
(c) have regard to evidence adduced and matters contained in a submission made or received in the course of any consultation.
(3) Where the Board makes a decision, it shall
(a) state in writing the reasons for the decision; and
(b) provide in accordance with its procedure; notification of the decision to the relevant persons.
(4) The Board may, on application or on its own motion, review, rescind or vary a decision made by it or hear a matter again before rendering a decision.
So, the law clearly indicates that indeed MTN and any operator, for that matter, who is deemed to be an SM must be given fair hearing. On the basis of that law, therefore, MTN sought two reliefs from the court.
Two reliefs MTN sought in court:
- An order of certiorari directed at the Respondent (NCA) to bring up to this Honorable Court for the purpose of being quashed Respondent’s letter dated the 9th of June 2020, referenced NCA/SCANCOM.VOL21/12 entitled “Implementation of Policy Initiatives to Correct Telecommunications Market Imbalance” which contains the decisions of Respondent declaring Applicant a Significant Market Power
- And order of prohibitory injunction restraining Respondent (NCA) from circulating the letter of 9th June 2020 and or acting in any way, form or shape whatsoever and or howsoever on the said letter.
Hearing o no hearing?
It also emerged in court that, just as yours truly reported last year, NCA actually hired an industry consultant in 2015 (Analysis Mason) to conduct a study in which all telcos (including MTN) participated, and in the end, it emerged way back in 2016 that MTN is indeed an SMP. The NCA claimed it also conducted further studies of market shares and concluded in May 2020 that MTN is indeed an SMP; and a month later, in June 2020, the declaration came.
The NCA’s point is that, through its consultant, Analysis Mason, MTN and all telcos were given fair hearing before the declaration came. The High Court therefore made a determination that indeed NCA fulfilled the provisions of the law as stated in Section 25 of the NCA Act.
Here is the exact ruling the High Court gave on page 33 of the judgement:
Thus, unless the Applicant (MTN) proves that the Respondent (NCA) is discharging its functions in a manner not sanctioned by law, it will not be proper for a restraint order to be issued against the Respondent. For these reasons, the court is firmly of the view that the Applicant has not made out a case for the issuance of a prohibitory injunction against the Respondent “from circulating the letter of the 9th June 2020 and or acting in any way, form or shape whatsoever and or howsoever on the said letter.”
In conclusion and for all the reasons given hereinbefore this court proceeds to dismiss the application for judicial review in its entirety and in particular, the application for certiorari and prohibitory injunction is hereby dismissed.
It is now for the Supreme Court to also determine, whether or not, the study carried out by the consultant prior to the NCA’s decision, constituted a fair hearing, or the NCA board should have given MTN audience when it finally decided to name it SMP. That was what MTN went to the High Court to fight and they lost, so, let the apex court bring finality.