Kenya’s competition watchdog has imposed a staggering $7.1 million fine on Majid al Futtaim, the local franchise holder of Carrefour, citing allegations of pressuring suppliers into accepting reduced prices.
The Competition Authority of Kenya (CAK) accused the retail giant of leveraging its dominant negotiating position to coerce two suppliers, Woodlands (a honey processor) and Pwani Oil (a manufacturer), to agree to lower prices.
The fine represents the largest-ever penalty issued by Kenya’s competition regulatory body.
CAK disclosed that Majid al Futtaim utilized a rebate system, slashing final payments by up to 12%, thus compelling suppliers to accept reduced prices.
Additionally, the regulator accused Carrefour of improperly shifting its expenses onto suppliers, a practice prohibited under the Competition Act.
The competition authority’s investigation unveiled practices where Carrefour’s suppliers were obligated to provide complimentary products, pay listing fees for new branch openings, and station employees at the supermarket’s outlets.
Consequently, CAK mandated the Carrefour franchise holder to reimburse Woodlands and Pwani Oil a sum of $112,000.
Furthermore, the regulatory body has instructed the supermarket chain to revise all supplier contracts, eliminating clauses that facilitate the abuse of its dominant buying power.
This recent penalty follows a previous 2021 ruling by Kenya’s Competition Tribunal (CT), which found Carrefour guilty of exploiting suppliers through high listing fees and rebate rates, based on a complaint from a Kenyan company.
Despite the fine, Majid al Futtaim has not yet responded. However, following the 2021 investigation, the company expressed a commitment to fostering mutually beneficial relationships with its suppliers.
With 21 Carrefour outlets scattered across Kenya’s major cities, the franchise remains a significant player in the country’s retail landscape.
