Kenya’s Competition Authority has imposed a fine amounting to sh.1.108bn on French retail chain Carrefour for abusing its buyer power over two of its suppliers. UAE-based Majid Al Futtaim, the franchise holder, has seen his retail chain business brought under the spotlight again by government agency CAK.
Buyer power, as defined by the CAK is the ability of a powerful buyer to obtain terms of supply outside the scope of normal business practices or that are disproportionate, unfair and detrimental to a supplier or unrelated to the objective of the of a supplier contract.
In a press release by the competition authority on 19th December, 2023 the authority pursuant to investigations penalized Majid Al Futtaim Hypermarkets limited which trades in Kenya under brand name Carrefour a total of Ksh. 1,108,327,873.60. The suppliers in complain are Pwani Oil Products and Woodland company limited. Pwani oil processes and supplies fast-moving consumer goods while Woodland processes and supplies natural bee honey from Kitui County.
According to the Authority, Carrefour charges three types of non-negotiable rebates that – fixed, royalty and progressive rebates. These rebates are as are as high as 12 per cent and are deductible monthly and annually and thereby suppressing the suppliers’ profitability and competitiveness.
It is a core mandate of the authority to promote inclusive economic development and to enhance the welfare of the Kenyans by protecting effective competition in the markets and this prompted the authority to act accordingly. The penalty is the biggest ever handed out by the regulator and aims to serve as a stern warning to the businesses not to engage in any conduct that infringes the Competition Act.
