Carrefour plans to appeal the decision by the Competition Authority of Kenya (CAK) that saw the supermarket chain business fined Ksh 1.1 billion for abuse of buyer power.
In a statement Majid Al Futtaim, the company that owns the Carrefour brand in Kenya, has stated it was surprised by the decision of CAK, saying,
“Majid Al Futtaim has full confidence in the fairness and integrity of our business practices and is appealing the Competition Authority’s decision.”
The company has said CAK’s decision came despite the withdrawal of the complaint and renewed partnership agreements that have been signed with Woodlands Company Limited and Pwani Oil Limited.
Carrefour’s Ksh 1.1 billion fine
Early this week, the Competition Authority of Kenya (CAK) penalized Carrefour Ksh 1.1 billion for abusing its buyer power over its suppliers following investigations.
The retailer was also ordered to refund Ksh 16.7 million in irregular rebates and remove all clauses in its contracts that facilitate abuse of buyer power.
CAK’s Acting Director General Dr. Adano Wario said,
“At the core of the authority’s mandate execution is promotion of inclusive economic development. Abuse of buyer power defeats this aspiration by crippling suppliers, who are mostly SMEs, and whose contribution to our economy cannot be overstated.”
The suppliers affected in the case were Pwani Oil Products Limited and Woodlands Company Limited. In a statement, CAK says Carrefour abused its superior bargaining position over these two companies.
Yesterday, the Retail Trade Association of Kenya (Retrak) protested the Ksh 1.1b fine imposed on Carrefour.
The retailers’ body said contracts between retailers and suppliers should be respected when resolving disputes, terming the fine imposed on Carrefour as very punitive and could have far-reaching consequences.
The statement in part read,
“In the majority of cases, the engagements between suppliers and retailers are governed by mutually negotiated and signed contracts between the two parties. We are concerned about the direction the authority has taken in overlooking these contracts. We urge for a comprehensive consideration of the dynamics involved including utilizing dispute resolution mechanisms embedded in the contracts.”
On his part, CAK Acting Director General Adano Wario earlier said,
“Whereas businesses have the freedom to enter into contracts with each other, these agreements should not unjustifiably disenfranchise the weaker party and must facilitate negotiations without reprisal.”
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