Home Business Carrefour to pay Ksh 414,250 for abusing its buyer power

Carrefour to pay Ksh 414,250 for abusing its buyer power

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Majid Al Futtaim Hypermarkets Limited which owns Carrefour has been directed by Nairobi High Court to pay a total of Ksh 414,250 for abusing its buyer power.

The court upheld the decision by the Competition Authority of Kenya (CAK) which had imposed a fine of Ksh 124,768 on the retailer for abusing its buyer power as well as Ksh 289,482 in deducted rebates on Orchards Limited which is now defunct for contract to supply probiotic yoghurt between January 2015 and December 2018 under the brand name Cool Fresh.

According to filings by Orchards Limited, Carrefour delisted its goods without notice and demanded various rebates including a Ksh 50,000 listing fee, 10pc on every second delivery and 1.25pc on all annual sales.

The retailer also refused to accept delivery of items ordered without justifiable reasons like inferior quality prompting the supplier to lodge a complaint with CAK.

“Commercially oppressive contracts ultimately force suppliers, most of who are SMEs, to exit the market due to unfair business practices, thereby denying thousands of Kenyans their livelihoods and leaving consumers with a limited choice of goods and services,” said Adano Wario, CAK Acting Director-General.

Following investigations by CAK, the retailer was directed to pay the fines but having dissatisfied with the CAK’s first ruling on Abuse of Buyer Power, Carrefour appealed the decision with the Competition Tribunal which upheld the fines in April 2021.

Carrefour then moved to the high court in April 2021 to appeal the tribunal’s ruling even after the tribunal set aside a Ksh 130,856 it was directed to pay Orchards for unilateral termination of supply agreement for 2019.

“From my reading of the provisions, this court is led to conclude that the conduct by the Appellant amounted to abuse of buyer power. The court therefore finds that the tribunal was correct in declining to set aside the authority’s decision on the Appellant’s abuse of buyer power,” said Lady Justice Anne Ong’injo in her ruling on Thursday.

CAK Chairman Shaka Kariuki  said the outcome of the second and final appeal is an acknowledgement of the regulator’s critical role in the Kenyan economy including facilitating a harmonious co-existence between buyers and suppliers in various sectors.

“Our message to businesses is that they should play by the rules, irrespective of status. By ensuring that our markets work efficiently, and within a level playing field, the country shall attract more investments and grant consumers a wider variety of goods and services at competitive prices,” added Kariuki.

The retailer however found reprieve as the court rejected CAK’s orders to amend all contracts Carrefour had with its more than 700 suppliers on the basis that there was no case lodged before it.

“Following the High Court of Kenya’s ruling yesterday that upheld Majid Al Futtaim right to fair administration and overturned the earlier decision ordering Majid Al Futtaim to amend its supplier agreements, we thank the High Court and consider that this essentially upholds the validity of Majid Al Futtaim’s existing suppliers’ agreements,” said Majid Al Futtaim.

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