CAK Orders End to Exclusive Internet Service Deals in Residential Estates

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The Competition Authority of Kenya (CAK) has directed property developers, estate managers, and internet service providers (ISPs) to cease entering into exclusive agreements that restrict competition in the provision of internet services in residential estates.

This follows numerous consumer complaints and findings from CAK’s market surveillance, which revealed that certain developers and estate managers have been signing exclusive contracts with specific ISPs, effectively locking out competing internet providers from offering services within those estates.

The Authority, established under the Competition Act CAP 504, stated that such conduct violates multiple provisions of the law. Under Section 21(1) of the Act, undertakings are prohibited from engaging in practices that prevent, distort, or lessen competition in the trade of goods or services.

Additionally, Section 21(3)(e) makes it illegal to limit or control market access, technical development, or investments, while Section 21(3)(f) prohibits the use of dissimilar conditions in equivalent transactions that result in competitive disadvantages.

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According to CAK, exclusive ISP agreements deny consumers access to alternative providers, limiting choice and reducing the benefits of competition such as better pricing, improved service quality, and innovation.

The Authority warned that such practices can lead to the creation of monopoly-like conditions within estates, restricting consumer welfare and stifling investment in Kenya’s telecommunications sector.

The Authority noted that property developers and estate managers who restrict access to competing ISPs violate both the Constitution and the Competition Act.

All parties engaging in exclusive internet supply arrangements must immediately stop such practices and allow other licensed providers to offer services within their developments.

Non-compliant entities risk penalties of up to 10% of their gross annual turnover in Kenya. In addition, criminal charges may attract fines of up to Ksh10 million or imprisonment for up to five years, or both.

Consumers affected by anti-competitive ISP restrictions are encouraged to file complaints through the Authority’s email at complain@cak.go.ke or via its E-Filing Portal.

Jefferson Wachira is a writer at Africa Digest News, specializing in banking and finance trends, and their impact on African economies.