The Kenyan Government has fined the country’s Carrefour franchise holder Majid al Futtaim the sum of 1 billion Kenyan shillings ($7 million) for abusing buyers’ power after it forced suppliers to take lower prices.
The country’s regulator, the Competition Authority of Kenya (CAK), said Majid al Futtaim had abused “its superior bargaining position” over two suppliers.
The fine is the highest ever imposed by the CAK.
Majid al Futtaim, which is one of the largest retail companies in Kenya, has not yet replied to the fine.
In addition to the fines, CAK has also asked Majid al Futtaim to reimburse the two concerned companies, Woodlands, which processes honey, and Pwani Oil, which manufactures it, $112,000.
According to CAK, Majid al Futtaim used a rebate mechanism, which reduces final payments by as much as 12%, to compel suppliers to accept cheaper rates.
“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 disclosed in a statement shared on X (formerly known as Twitter) on Tuesday.
“These practices amount to transfer of the retailer’s costs to suppliers, which is prohibited by the Competition Act.”
Majid al Futtaim has subsequently been ordered to “amend all its supplier contracts and expunge clauses that facilitate abuse of buyer power”.
Kenya’s Competition Tribunal (CT) found the Carrefour franchise holder guilty in 2021 after a complaint was filed by another Kenyan company for its supplier practices, ruling that it was guilty of pushing suppliers to accept lower pricing by charging them high listing fees and rebate rates.
Majid al Futtaim is yet to respond to the fine, but had stated after the 2021 investigation, that it “remains committed to working with its suppliers through mutually beneficial relationships”.
There are 21 Carrefour stores across Kenya mostly located in the country’s mega cities.
