The Competition Authority of Kenya (CAK) has issued a stern directive to property developers, estate managers, and Internet Service Providers (ISPs), demanding an immediate end to exclusive contracts that unlawfully lock out rival ISPs from residential estates.
The Authority condemned these arrangements as unconstitutional and damaging to consumer rights, adding that they limit access to fair pricing, improved quality, and innovative solutions.
According to the Authority, its decision follows extensive market surveillance and a growing number of complaints from consumers across the country.
The regulator revealed that it had uncovered a pattern of behaviour where developers and estate managers are working with select ISPs to block out competition.
“Property developers and estate managers are signing exclusive contracts with specific Internet Service Providers (ISPs) and restricting competing firms from offering alternative services,” the Authority said.
Read More
The Authority went further to remind all involved parties that such practices are in direct violation of the Competition Act.
It outlined the legal foundation that prohibits anti-competitive behaviour aimed at distorting or restricting fair trade.
“Section 21(1) of the Act prohibits undertakings from engaging in conduct that has the intention or effect of preventing, distorting or lessening competition in the trade of goods or services in Kenya. This includes parties in a vertical relationship like an undertaking and its suppliers and/or customers,” the Authority stated.
In addition, the Authority highlighted specific sections of the law that speak directly to the control of market access and discriminatory practices that place competitors at a disadvantage.
It explained that these provisions are meant to ensure an open and fair marketplace. “Section 21(3)(e) of the Act makes it illegal for undertakings to limit or control market access, technical development or investments,” the Authority said.
“Section 21 (3)(f) of the Act prohibits undertakings from applying dissimilar conditions to equivalent transactions with trading parties, thereby placing them at a competitive disadvantage,” the Authority added.
The Authority expressed concern that these exclusive arrangements not only breach the law, but also deny consumers their constitutional right to choose services that best suit their needs. It warned that the agreements are harming the public by eroding the benefits that come with healthy market competition. “Exclusive dealings, including those entered into by certain ISPs and real estate developers/estate managers, deny Kenyan consumers choice of services that meet their specific needs, contrary to the Constitution of Kenya and the Act,” the Authority said.
Furthermore, the Authority cautioned that these actions are creating conditions that could lead to monopolistic control in affected estates, with serious consequences for pricing and service standards.
“This conduct by ISPs denies consumers the benefits of competition which include fair pricing, enhanced service quality, and innovative solutions. Further, foreclosing competitor ISPs from accessing certain markets risks creating monopoly-like enterprises in the affected estates,” CAK said.
On the matter of enforcement, the Authority warned that any firms found violating the law will face stiff penalties. It made clear that the consequences could include significant financial sanctions as well as possible jail time for offenders.
“Undertakings that infringe the Act risk being penalized up to 10 per cent of their preceding year's gross annual turnover in Kenya. For criminal prosecutions, they face fines of up to Sh10 Million and imprisonment for a maximum of five (5) years, or both,” the Authority said.
In light of these findings, the Authority issued direct orders aimed at restoring fair competition in the affected estates. It instructed all concerned parties to end the exclusive arrangements and ensure that rival ISPs can access their developments without obstruction.
“Property developers, real estate managers and ISPs engaging in exclusive internet service provision agreements that have anti-competitive effects are hereby directed to: cease engaging in this exclusive conduct and prevent its recurrence; and facilitate entry of competitor ISPs in their developments,” CAK ordered.
The Authority also called on the public to play a role in safeguarding fair competition by reporting any further cases of non-compliance. It provided details on how consumers can submit complaints
“Consumers are invited to report any cases of non-compliance to the Authority through [email protected] or our E-Filing Portal which is accessible via https://competition.cak.go.ke:444/,” the Authority said.
This decisive intervention underscores the regulator’s commitment to defending consumer rights and ensuring that Kenya’s internet services sector remains open, competitive, and fair.
