The Competition Authority of Kenya (CAK) has penalized Carrefour Ksh 1.1 billion for abusing its buyer power over its suppliers following investigations.
The retailer has also been ordered to refund Ksh 16.7 million in irregular rebates and remove all clauses in its contracts that facilitate abuse of buyer power.
In a statement, CAK’s Acting Director General Dr. Adano Wario has 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 are Pwani Oil Products Limited and Woodlands Company Limited. CAK says Carrefour abused its superior bargaining position over these two companies.
Woodlands processes and supplies retail stores across the country with refined natural bee honey from Kitui County, while Pwani Oil processes and supplies fast-moving consumer goods, including edible oil, skincare products, and washing soap products.
How Carrefour abused buyer power
CAK has directed Carrefour to amend all supplier contracts and expunge causes that facilitate abuse of power such as application of listing fees, collection of rebates, and unilateral delisting of suppliers.
The authority’s investigations determined that Carrefour suppliers are required to provide free products and pay listing fees for every new branch opened and post employees to the supermarket’s branches. These practices transfer the retailer’s cost to suppliers which is prohibited by the Competition Act.
Wario added,
“While appearing to enable an offender to offer lower prices to consumers, this apparent benefit is short-term and unjustifiable when placed against the long term damage caused to the upstream supplier market, including forced exits, especially by SMEs in the manufacturing sector.”
Carrefour has branches all over the country, employing hundreds of Kenyans. The chain is also popular among shoppers for offering frequent discounts.
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