The Competition Authority of Kenya (CAK) has fined Carrefour KShs. 1.1bn for separately abusing its superior bargaining power over two of its suppliers.
After conducting an investigation, the Authority fined Carrefour Sh1,108,327,873.60 for using its superior bargaining power over Pwani Oil Products Limited and Woodlands Company Limited, two of its suppliers, in separate instances.
While Pwani Oil processes and supplies consumer goods like edible oils and fats, skin care products, and laundry soap products, Woodlands processes and supplies refined natural bee honey from Kitui County to retail locations across the nation.
- Buyer Power is the ability of a powerful buyer to obtain terms of supply outside the scope of normal business practices.
- Rebates are a refund of a percentage of sale offered by a supplier to its customer. Carrefour “charges its suppliers at least three types of non-negotiable rebates that are as high as 12%,” the regulator said.
- The French retail giant has already been fined Sh124,767 for exploiting yoghurt supplier, Orchards Limited, and the fine is equivalent to 10 percent of the sales generated from the dairy products supplied by the firm in 2018.
The French retail giant was also fined Sh124,767 for exploiting yoghurt supplier, Orchards Limited, and the fine is equivalent to 10 percent of the sales generated from the dairy products supplied by the firm in 2018.
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.
Carrefour often offers shoppers refunds if they can find cheaper equivalent items in stores run by Tuskys and Naivas, its local competitors who are respectively first and second in the retail rankings.
The chain has denied abuse of buyer power accusations, saying the contents in its supplier contracts were normal practices in the retail sector
