Kenya’s competition regulator has imposed a fine of $7.1 million on Majid al Futtaim, the local Carrefour franchise holder, accusing it of pressuring suppliers into accepting reduced prices.
The Competition Authority of Kenya (CAK) alleged that the franchise holder exploited its dominant bargaining position with two suppliers, resulting in the highest-ever fine issued by the authority.
The regulator stated that Majid al Futtaim, a prominent retail chain in Kenya, is yet to respond to the imposed fine and ordered reimbursement of $112,000 to the affected suppliers, Woodlands (a honey processor) and Pwani Oil (a manufacturer).
CAK’s investigation revealed that Carrefour imposed lower prices on suppliers through a rebate system, cutting final payments by as much as 12%.
Additionally, the regulator accused the supermarket chain of unlawfully shifting its expenses to suppliers by demanding free products, listing fees for new branches, and assigning employees to the supermarket’s outlets.
These practices were deemed as a violation of the Competition Act by CAK. The authority directed Carrefour to revise its supplier contracts, removing clauses that enable buyer power abuse.
Previously, in 2021, Kenya’s Competition Tribunal (CT) found the franchise guilty of exploiting suppliers by compelling them to accept reduced prices, high listing fees, and rebate rates after a complaint was filed against its supplier practices.
However, Majid al Futtaim is yet to respond to this penalty.
Despite the investigations, the franchise emphasized its commitment to fostering mutually beneficial relationships with suppliers.
Currently, there are 21 Carrefour outlets spread across several major cities in Kenya.
Source-BBC
