The Competition Authority of Kenya (CAK) has fined French retail giant Carrefour for abusing its buyer power, following an extensive investigation.
The authority imposed a significant fine of Sh1,108,327,873.60 on Carrefour, citing the abuse of its superior bargaining position with two suppliers, Pwani Oil Products Limited and Woodlands Company Limited.
Pwani Oil is responsible for processing and supplying consumer goods, including edible oils, fats, skin care products, and laundry soap items. On the other hand, Woodlands processes and supplies refined natural bee honey from Kitui County to retail outlets across the nation.
The CAK found Carrefour in violation of fair business practices and ordered the retail chain to amend supplier contracts, removing clauses facilitating the abuse of buyer power.
Carrefour is obligated to pay a fine and reimburse the two suppliers. The CAK directed the retail giant to reimburse a total of Sh16,757,899 in rebates deducted from supplier invoices and an additional Sh500,000 charged as marketing support (store opening/listing fees).
Buyer power, as defined by the CAK, refers to a powerful buyer’s ability to obtain supply conditions outside the scope of normal business practices, which can be disproportionate, unfair, and detrimental to a supplier. This includes obtaining more favorable supply terms than the supplier’s normal contractual terms.
This is not the first time Carrefour has faced scrutiny over its supplier relations.
In April 2021, the Competition Tribunal upheld the CAK’s order for Carrefour to revise agreements with approximately 700 suppliers within a month, citing exploitation of traders. The retail giant had previously been ordered in 2020 to remove clauses from its contracts that allowed ultra-competitive pricing and compelled suppliers to pay non-refundable fees.
Carrefour was found in breach of the law for forcing suppliers to station their staff at its outlets at the expense of the traders. The retail giant had also faced accusations of rejecting delivered goods and was fined for exploiting a yogurt supplier, Orchards Limited.
