The Lower Eastern Times Opening The Third Eye
Related Articles
The Competition Authority of Kenya (CAK) has imposed a Ksh.1.1 billion fine on the French retail chain Carrefour for the misuse of its buyer power in relation to suppliers. In a statement released on Tuesday, CAK revealed that the supermarket chain, operated by UAE-based Majid al-Futtaim, was found to have abused its influence in setting terms for two suppliers, namely Pwani Oil Products Limited and Woodlands Company Limited.
CAK’s investigations revealed that Carrefour imposed non-negotiable rebates on its suppliers, amounting to at least three types with rates as high as 12 percent. These rebates, which are deducted annually and monthly, have been progressively increasing, significantly reducing the final payments to suppliers. The supermarket’s suppliers were also obligated to provide complimentary products, pay listing fees for each new branch opened, and station employees at the supermarket’s branches.
According to CAK, these practices constitute the transfer of the retailer’s costs to suppliers, a violation of the Competition Act. Carrefour has been fined Ksh.1,108,327,873.60, and the regulatory body has directed the supermarket chain to revise all its supplier contracts, eliminating clauses that enable the abuse of buyer power, including listing fees, rebate collection, and unilateral delisting of suppliers.
Furthermore, Carrefour has been instructed to reimburse Woodlands and Pwani Oil a total of Ksh. 16,757,899 for rebates deducted from their invoices and Ksh.500,000 billed as marketing support (store opening/listing fees). This penalty marks the largest ever imposed by CAK. Majid al-Futtaim, which established its first Kenyan outlet in 2016, has since grown to become one of the largest retailers in the country.
