The Competition Authority of Kenya – CAK has penalized Carrefour Supermarket Ksh. 1.1 billion for abusing its buyer power over its suppliers who include Pwani oils limited.
According to the Competition Authority of Kenya, the popular supermarket is accused of unfairly exploiting small and Medium sized enterprises (SMEs).
In a statement on Tuesday, December 19, CAK noted the constant exploitation of the supermarket chain to its suppliers.
“The Authority as pursuant to investigation penalize Majid AI futammi which trades in Kenya under the brand name Carrefour a total of 1,108,327,873.60 for separately abusing its superior bargaining position over two \of its suppliers,” read the statement.
Carrefour Accused of Exploitation
Likewise, the retailer was ordered to refund Ksh.16.7 million in irregular rebates and expunge all clauses in its contracts that facilitate abuse of buyer power.
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Notably according to the authority rebates are a refund of a percentage of sales offered by a supplier to its customer.
The investigations into the alleged abuse of buyer power (ABP) were lodged separately by Woodland and Pwani Oil.
Woodlands presented a complaint to the Authority in December 2022 alleging that between 2021 and late 2022, the retailer engaged in ABP contrary to section 24A(1) of the Competition Act and that the conduct unfairly reduced its returns and profitability thereby affecting its ability to remain competitive in the market.
At the time, Woodlands specifically alleged that Carrefour deducted various rebates and other fees from its invoices for products supplied, including fixed rebates of 11.5 per cent in the year 2021 and 12 per cent in 2022.
The company further alleged it was required to post its employees’ work at Carrefour premises, including conducting all-night stocktaking.
“The complainant provided various evidentiary information to support its allegations. including annual supply agreements, invoices, records of rebates deducted, and records of supplies to other leading retailers,” said CAK.
Response to Accusation
However, according to CAK, the supermarket in response, denied exerting buyer power against Woodlands or treating them unfairly.
The state agency further claimed the retailer admitted to issuing standard-term supply contracts with clauses facilitating the deduction of rebates and deducting the same.
“Carrefour argued that the rebates were agreed upon by the parties and are a global industry practice,” sated the CAK report.
Worth noting, the buyer power refers to the ability of a powerful buyer to obtain terms of supply outside the scope of normal business practices or that are disproportionate, unfair and detrimental to a supplier, or unrelated to the objective of a supply contract.
