Mobile companies in Albania and the monopoly of offers in the market

It does not matter if you are a subscriber of Vodafone, ALBtelecom or ONE – again every month you have to pay at least 1 thousand ALL, to have internet on your mobile phone and to continue the communication via SMS and minutes.

The three mobile companies operating in the Albanian market, which are supposed to be in competition with each other, seem to agree on when it comes to increasing the communication fees.

An evaluation of the markec conducted by the ACQJ shows that the prices of mobile companies increased in early February 2020 by ALL 200, according to the dates, on January 30th for Albtelecom, February 5th  for Telekom and February 11th  for Vodafone.

The increase of the price of monthly packages by the three mobile operators by ALL 200, and the increase of the recharge cost from 100 to ALL 200 brought the reaction of consumers and the media and then the intervention of the Competition Authority which took the decision to force the companies to return to the original service fees.

In February 2020, the Competition Commission at the Competition Authority decided to immediately terminate the application of the new standard 30-day prepaid packages for Vodafone Albania, Telekom Albania and Albtelecom.

According to INSTAT, the average salary in Albania is 400 euros, the lowest of all countries in the region. The highest is in Montenegro (765 euros), Serbia (644 euros), Northern Macedonia (591) and the penultimate Kosovo (528 euros). These figures reinforce the International Monetary Fund calculations that rank Albania as the country with the lowest average monthly wage level in the Balkan Region. However, if we compare the service tariffs with the countries of the region, it turns out that: the citizens of Kosovo spend on average 5 euros per month, the citizens of Northern Macedonia 7 euros, Montenegro 6 euros and the citizens of Serbia about 10 euros.

As mobile offers are a constant expense, which worries citizens, ACQJ has made a survey on the offers of three mobile companies operating in the Albanian market, ALBtelecom, ONE and Vodafone. The survey was conducted in the early months of 2020, until mid-summer.

In all three companies the standard daily packages costs 150 ALL, while the standard weekly packages cost 500 ALL. Four standard monthly packages at Albtelecom cost 900, 1300, 1500 and 2100 ALL. Four standard packages at ONE cost 1000, 1400, 1600 and 2200 ALL. Standard monthly packages at Vodafone cost 1000, 1400, 1700 and 2200 ALL.

The survey shows that all three mobile companies operate in the market with almost the same price brackets with small variations of just 100 ALL.

Is this an indication that ALBtelecom, Telekom (ONE) and Vodafone have formed an oligopoly in the market of mobile companies and are engaged in anti-competitive practices?

We asked the Competition Authority if there were any complaints about these practices. According to the CA, anti-competitive behaviors have focused on the violation of articles 4 (Tacit Collusion) and 9 (Abuse of dominant position in the market) of law no. 9121, dated 28.07.2003 “On Protection of Competition”, as amended.

Given that the offers and prices offered by the three mobile companies are almost the same, they contradict what Margrethe Vestager, Commissioner for Competition says “I think fair competition is not only one of the foundations of the European Union, but also of free trade”.

Based on the guidelines of the European Commission on Sensitive Market Power (May 2018) it results that the mobile retail market has competition problems where Vodafone Albania has a market share of over 50% for a number of indicators, and in the market is observed the application of tariffs, which affect negatively on the sustainability of competition between operators.

Plus Communication’s exit from the market of service providers changed the market structure from January 1, 2018, from 4 (four) to 3 (three) operators following the upward trend of the market concentration index, and moreover, the two companies with the largest market share, have significantly increased their competitive capacitates through the acquisition of 50 to 50% share of the rights to use the frequencies Plus owned and used, deepening the comparative advantage of the first market entrants, and raising higher barriers of entry.

According to an analysis conducted by AKEP, in addition to financial, technical and legal-procedural barriers to market entry, the exit from the market of the last market entrant, Plus Communication, (which offered lower tariffs than the other 3 operators) is a significant barrier for any new entrant to the market. In these conditions, it is difficult for new entries to occur, without regulatory intervention as for about nine years, Plus Communication was the last entry in the market, and already after the transfer of frequencies to the two companies Vodafone and Telekom Albania, the last market entrant has left the market, and its structure has changed towards an increase in the concentration and dominance of the market leaders / the two companies with the largest market share.

This is another indication that the 3 mobile companies are dominating the free market and other competitors are finding it difficult to penetrate and survive in the same market.