- Competition Tribunal found the retailer to have been forcing suppliers to pay product listing fees and rebates.
Carrefour, the French supermarket franchise owned by Majid Al Futtaim Hypermarkets Limited, has been ordered to amend hundreds of contracts with suppliers to delete requirements that they pay product listing fees and rebates to the retailer.
The order was issued by the Competition Tribunal on April 20. The tribunal largely upheld earlier orders by the Competition Authority of Kenya (CAK) which came in the wake of complaints filed by Orchards Limited, a yoghurt processor which supplied Carrefour from 2015 to 2018.
“The appellant shall amend all current supply agreements relating to its Carrefour Hypermarkets in Kenya within the next 30 days hereof with a view to expunging all offending provisions, specifically clauses that provide for, lead to or otherwise facilitate abuse of buyer power,” the tribunal ordered.
Buyer power means the ability of a purchaser to extract more favourable terms from a supplier on whom it can also impose significant opportunity costs by, for example, delaying payments.
Carrefour becomes the second major retailer to be investigated for abuse of buyer power after Tuskys which was found to be withholding supplier payments beyond their due date.
Suppliers say Carrefour has used the supplier contract to depress their earnings and gain market advantage through competitive pricing.
Since launching its Kenya operations in 2016, the franchise has grown far faster than expected, attracting a strong client base among the country’s expanding middle class even as locally grown competitors like Nakumatt and Uchumi faced strong headwinds, leading to their collapse.
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