The Competition Authority of Kenya (CAK) has warned real estate developers, residential estate management companies, and Internet Service Providers (ISPs) regarding anti-competitive practices that deny consumers choice on access for internet services.
CAK has apparently noted that property developers and estate managers are entering into exclusive contracts with specific ISPs, effectively shutting out competing providers and limiting residents’ options for internet services. This practice, according to the CAK, contravenes the Competition Act CAP 504 Laws of Kenya.
CAK has highlighted several sections of the Competition Act being infringed upon by these exclusive arrangements:
1. Section 21(1): This section prohibits undertakings from engaging in conduct that intends to or has the effect of preventing, distorting, or lessening competition in the trade of goods or services in Kenya. This includes vertical relationships between undertakings and their suppliers or customers.
2. Section 21(3)(e): This makes it illegal for undertakings to limit or control market access, technical development, or investments.
3. Section 21(3)(f): This prohibits applying dissimilar conditions to equivalent transactions with trading parties, thereby placing them at a competitive disadvantage.
According to CAK, such exclusive dealings directly undermine consumer choice, a fundamental right enshrined in the Constitution of Kenya. By foreclosing competitor ISPs, these practices risk creating monopolies and denying consumers the benefits of competition, such as competitive pricing, enhanced service quality, and innovative solutions.
Anyone who is in breach of the regulations as spelled out in the Act, faces significant penalties, including:
1. Fines of up to 10% of their preceding year’s gross annual turnover.
2. For criminal prosecutions, fines of up to Ksh 10 million and/or imprisonment for a maximum of five (5) years.
The CAK has encouraged consumers to report any cases of non-compliance through email complain@cak.go.ke or through their e-filing Portal competition.cak.go.ke:444.