- Carrefour fined Ksh.1.1 billion by CAK for buyer power abuse with suppliers
- Non-negotiable rebates, increasing annually, led to the record penalty
- CAK orders contract revisions, refunds, marking its largest-ever fine
In a significant development, the Competition Authority of Kenya (CAK) announced on Tuesday that it has fined French retail giant Carrefour a staggering Ksh.1.1 billion for alleged abuse of its buyer power in dealings with suppliers.
CAK’s spokesperson stated, “Carrefour, managed by Majid al-Futtaim from the UAE, is accused of separately exploiting its influence over two suppliers, Pwani Oil Products Limited and Woodlands Company Limited.”
The regulatory body’s investigation unveiled that Carrefour imposes non-negotiable rebates on suppliers, with some reaching as high as 12 percent.
The spokesperson explained, “These rebates, both annually and monthly deductible, have shown a yearly increase, significantly impacting the final payouts to suppliers.”
Additionally, CAK alleged that Carrefour compels suppliers to provide complimentary products, pay listing fees for new branches, and assign employees to the supermarket’s branches.
CAK contends that such practices violate the Competition Act by transferring the retailer’s costs to suppliers.
Consequently, Carrefour is now facing a substantial fine of Ksh.1,108,327,873.60. The spokesperson emphasized, “We have mandated the supermarket chain to revise all its supplier contracts, eliminating clauses facilitating the abuse of buyer power.”
In response to the penalty, CAK has directed Carrefour to refund Woodlands and Pwani Oil a total of Ksh.16,757,899 in rebates deducted from their invoices, along with Ksh.500,000 billed as marketing support for store opening/listing fees.
Notably, this penalty stands as the largest ever imposed by CAK.
Majid al-Futtaim, the entity behind Carrefour, made its debut in the Kenyan market in 2016 and has since emerged as one of the country’s leading retailers.
