The Competition Authority of Kenya (CAK) has fined Carrefour Kes 1.1 billion for abusing buyer power over suppliers.
In a statement, CAK said Carrefour, operated by UAE-based Majid al-Futtaim, separately abused its ability to set terms for two suppliers: Pwani Oil Products Limited and Woodlands Company Limited.
CAK said its investigations had established that Carrefour charges its suppliers at least three non-negotiable rebates as high as 12 percent.
“The rebates are deductible annually and monthly and have been increasing on an annual basis, thereby significantly reducing the final pay-out to suppliers. Investigations also determined that Carrefour's suppliers are required to provide free products and pay listing fees for every new branch opened as well as post employees to the supermarket's branches.”
“These practices amount to transfer of the retailer's costs to suppliers, which is prohibited by the Competition Act,” Carrefour said.
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The regulator fined Carrefour Kes 108,327,873.60 and ordered the supermarket chain to amend all its supplier contracts and expunge clauses “that facilitate abuse of buyer power, including but not limited to the application of listing fees, collection of rebates, and unilateral delisting of suppliers.”
“The Authority has also ordered Carrefour to refund the Woodlands and Pwani Oil a total of Kes 16,757,899 in rebates deducted from their invoices as well as Kes 500,000 that was billed as marketing support (store opening/listing fees),” CAK said.
The penalty is the biggest ever handed out by CAK, it added.
