Cak Flags Exclusive Deals With Internet Service Providers (isps) In Real Estate

On 24th June 2025, the Competition Authority of Kenya (CAK) issued a public notice addressing the increasing prevalence of exclusive agreements between property developers, residential estate managers and certain Internet Service Providers (ISPs). These agreements, CAK warns, not only limit consumer choice but also contravene Kenya’s competition law and constitutional protections for fair market access. The notice reflects a broader regulatory push to address anti-competitive conduct in the digital infrastructure space particularly where such conduct affects access to essential services like internet connectivity.  

The practice under scrutiny 

At the heart of the CAK’s concern is the foreclosure of competition, a situation where access to a market is unfairly restricted. In many residential and commercial estates across Kenya, developers and estate managers have entered into exclusive contracts with specific Internet Service Providers (ISPs). These agreements effectively block other ISPs from operating within those estates, depriving residents of the ability to choose among competing service providers based on factors such as pricing, service quality and technological innovation. 

Following extensive market surveillance and a significant number of consumer complaints, the CAK found that such arrangements have become widespread and are detrimental both to the competitive structure of the telecommunications sector and to consumer welfare more broadly. 

The legal basis for the CAK’s position 

The CAK's position is grounded in Section 21 of the Competition Act, Cap 504(the Competition Act), which prohibits restrictive trade practices that hinder competition. Specifically:  

• 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 anti-competitive conduct between parties in a vertical relationship, such as between estate developers and their contracted ISPs. 
• Section 21(3)(e) of the Competition Act makes it unlawful to limit or control market access, technical development or investment opportunities. 
• Section 21(3)(f) of the Competition Act further prohibits the application of dissimilar conditions to equivalent transactions, which may place some ISPs at a competitive disadvantage based solely on exclusivity rather than merit. 

According to the CAK, exclusive arrangements between real estate managers and ISPs clearly fall within the scope of these prohibited practices. By restricting access to alternative providers, such arrangements not only deny consumers meaningful choice but also distort the competitive landscape, in violation of both the Competition Act and the broader principles of fair market access enshrined in the Constitution of Kenya, 2010. 

The consequences for non-compliance 

Parties found to have engaged in restrictive trade practices may face sanctions, including a fine not exceeding KES 10 million, imprisonment for a term not exceeding five years, or both, upon conviction. In addition, the Competition Act provides that undertakings in breach may be liable to administrative penalties of up to 10% of their gross annual turnover in Kenya for the preceding financial year. 

Steps required for compliance 

CAK has issued two key directives to curb anti-competitive practices in internet service provision within real estate developments. All property developers, estate managers and ISPs must: 

• Cease and desist from exclusive internet service agreements that limit or distort competition; and 
• Facilitate access for other ISPs to promote consumer choice and fair market access. 

 These obligations apply to both future and existing agreements where exclusivity is in force. Compliance is mandatory and failure to comply may attract significant penalties as provided under the Competition Act.  

Conclusion 

The directive issued by CAK represents a significant step toward reinstating fair competition in the provision of internet services within real estate developments. By addressing exclusive agreements that restrict consumer choice and limit market access, CAK reaffirms its commitment to the principles of open markets and consumer protection. Accordingly, all relevant stakeholders are expected to align their practices with the applicable legal requirements in support of a more open and competitive digital infrastructure environment.  

At CM Advocates LLP, our Technology, Media & Telecommunications (TMT) Practice offers comprehensive legal advisory services across digital infrastructure regulation, telecoms licensing, competition compliance and consumer protection. For advice or support on the implications of this directive or related matters, please reach out to the contributor via the email below or contact our commercial team at commercial@cmadvocates.com.    

Contributor 

Mercy Chore, Associate  

mchore@cmadvocates.com