CAK puts on notice Internet Service Providers blocking competition in estates
He says property developers and estate managers have been signing exclusive contracts with specific ISPs and restricting competing firms from offering alternative services
The Competition Authority of Kenya (CAK) has put on notice Internet Service Providers (ISPs) that they risk sanctions if they block competition by signing exclusive contracts with property developers and estate managers.
In a statement, CAK Director General David Kemei said it has come to its, through market surveillance and numerous consumer complaints, that property developers and estate managers are signing exclusive contracts with specific ISPs and restricting competing firms from offering alternative services.
He noted that Section 21(1) of the Competition 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.
Kemei added that Section 21(3)(e) of the Act makes it illegal for undertakings to limit or control market access, technical development or investments while Section 21(3)(f) prohibits undertakings from applying dissimilar conditions to equivalent transactions with trading parties, thereby placing them at a competitive disadvantage.
“Parties are cautioned that 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,” he said.
According to Kemei, this conduct by ISPs denies consumers the benefits of competition which include fair pricing, enhanced service quality, and innovative solutions, adding that foreclosing competitor ISPs from accessing certain markets risks creating monopoly-like enterprises in the affected estates.
“Undertakings that infringe the Act risk being penalised up to 10% of their preceding year’s gross annual turnover in Kenya. For criminal prosecutions, they face fines of up to Ksh10 million and imprisonment for a maximum of five (5) years, or both.”
He directed property developers, real estate managers and ISPs to cease engaging in this exclusive conduct and prevent its recurrence and facilitate entry of competitor ISPs in their developments.
Kemei invited 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/.
Provision of Wi-Fi services in the estates has become a lucrative venture in urban areas such as Nairobi with ISPs riding on Kenya Power’s infrastructure to expand their reach.
