The Retail Trade Association of Kenya (Retrak) has protested the Ksh 1.1 billion fine imposed on the Carrefour chain of supermarkets in the country.
In a statement, the retailers’ body has 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.”
It continued to say,
“We are troubled by the prospect of very punitive penalties being imposed on one of the retailers. Such measures can have far-reaching consequences not only for the affected retailer but also for the industry as a whole. We encourage a thoughtful review of the potential impact of these sanctions on the retail ecosystem.”
Carrefour’s troubles
The Competition Authority of Kenya (CAK) yesterday announced a Ksh 1.1 billion fine on Carrefour for abuse of buyer power against Pwani Oil Limited and Woodlands companies.
CAK also directed Carrefour to refund Pwani Oil and Woodlands over Ksh 16 million (Ksh 16, 757,899) in rebates deducted from their invoices along with Ksh.500,000 that was billed as marketing support (store opening/listing fees),
The association of retailers stated that it recognizes the critical role that suppliers play in the business sector but ‘any regulatory decisions should take into account the careful balance achieved through contracts to ensure an environment where businesses can thrive’.
On his part, CAK Acting Director General Adano Wario in a statement 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.”
On the other hand, CAK Board Chairman Shaka Kariuki added,
“The penalty the authority has issued serves as a stern reminder and deterrent to business not to engage in any conduct that infringes on the competition act.”
Investigations into abuse of buyer power involving Carrefour were lodged separately by Woodland and Pwani Oil companies.
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