By Enyichukwu Enemanna
Kenya’s competition regulator, Competition Authority of Kenya (CAK) has imposed a historical fine of $7.1m (£5.6m) on local Carrefour franchise holder, Majid al Futtaim, over alleged abuse of superior bargaining power.
The fine is the highest-ever issued by Kenya’s competition authority.
GAK had accused Majid al Futtaim of forcing its suppliers to accept lower prices.
It had abused “its superior bargaining position” over two suppliers — honey processor Woodlands and manufacturer Pwani Oil, the agency said.
CAK says Majid al Futtaim forced suppliers to accept lower prices through a system of discounts known as rebates, which cuts final payments by up to 12%.
In addition to the fine, CAK has ordered the Carrefour franchise holder to refund the two companies the sum of $112,000.
Majid al Futtaim runs one of the biggest retail chains in Kenya and has not responded to the fine.
The regulator also accused the supermarket chain of illegally transferring its costs 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,” CAK said in a statement shared on X on Tuesday.
“These practices amount to transfer of the retailer’s costs to suppliers, which is prohibited by the Competition Act.”
The supermarket chain has subsequently been ordered to “amend all its supplier contracts and expunge clauses that facilitate abuse of buyer power”.
In 2021, Kenya’s Competition Tribunal (CT) found the franchise guilty of exploiting suppliers by forcing them to accept lower prices through charging them high listing fees and rebate rates, after another Kenyan company filed a complaint against its supplier practices.
After the 2021 investigation, it said that it “remains committed to working with its suppliers through mutually beneficial relationships”.
There are 21 Carrefour outlets in Kenya across many of the country’s major cities.