Background

On 30th November 2021, The Uganda Communications Commission (UCC) received a complaint (‘the complaint’) from Ubuntu Towers Uganda Limited alleging breach of rules of fair competition by both American Tower Corporation (ATC) as successor to Eaton Towers Uganda Limited's contracts in Uganda, and Airtel Uganda Limited. Ubuntu alleged that clauses 2.4.2 and 2.4.3 of the Master Tower Sharing Agreement (MTSA) “the agreement” which was signed between Eaton and Airtel on the 5th of September 2014 bestowed upon ATC a right of First Refusal, contrary to the various provisions of the Uganda Communications Act, 2014 (the ‘Act’) and the Competition Regulations, 2019 insofar as they materially distorted and potentially hamstrung competition in the communications sector.


Decision of the Commission

In addressing the questions put before it, the Commission found that;

The clauses in question:

  • were unfair and contrary to the law insofar as they restricted the rights of other licensed tower operators from freely negotiating and engaging with Airtel for possible business in building new sites, except with ATC's blessing.
  • were null and void as they had the effect to appreciably prevent, restrict and distort competition in the communication sector.
  • significantly undermined the contestability of the tower market contrary to the spirit of the fair competition as captured in the part IV of the Act and Competition regulations and therefore null and void.
  • Its legal and regulatory mandate cannot be fettered because of its earlier approval of the agreement in question.
  • There is no restriction to a market correcting intervention based on new information and /or complaints brought before the commission.

It further:

  • Directed that the said clauses be removed from “the agreement”
  • Warned both Airtel and ATC are against engaging in any retributive or otherwise retaliatory act or omission against the complaint for presenting the complaint to the commission.
  • Directed both ATC and Airtel to cease and desist from engaging in anti-competitive practices.


Likely Implications of the decision:

  • UCC clarified that all licensed bodies should only contract within the set laws and not attempt to smuggle anti-competitive clauses in agreements.
  • UCC reiterated its mandate to revisit arrangements that it has previously approved and make pronouncements on new information that arises affecting the licensee’s dealings.
  • UCC sent a strong message and showed its commitment in preventing market distortion caused by anti-competitive practices .


Disclaimer

No information contained in this alert should be construed as legal advice nor is it intended to be a substitute for legal counsel on any subject matter.