Carrefour says it has been shocked by the Ksh.1.1 billion fine imposed by the Competition Authority of Kenya (CAK) for alleged abuse of buyer power privileges.
In a statement to newsrooms on Wednesday, the French retailer owned by the UAE-based entity Majid Al Futtaim, said the imposed fine was unexpected.
Carrefour noted that this occurred despite the withdrawal of the complaint and the renewal of partnership agreements with Woodlands Company Limited and Pwani Oils Limited, the two suppliers it is alleged to have infringed upon.
“We take pride in working collaboratively with all our suppliers to create a more sustainable and equitable business environment through ongoing engagement and transparent communication.”
Carrefour added: “As a leading regional retailer, Majid At Futtaim is committed to upholding the highest standards of global best practice, including antitrust and competition laws to encourage fair competition in all aspects of its businesses.”
Despite the hefty fine, the retailer affirmed its commitment to working for the benefit of its customers, partners, and stakeholders.
Highest-ever Fine Imposed by CAK
Kenya’s competition regulator imposed the fine of $7.1 million (£5.6 million), accusing Carrefour of forcing suppliers to accept lower prices.
This marked the highest-ever fine imposed by CAK.
In addition to the fine, the Competition Authority of Kenya (CAK) has directed the Carrefour franchise holder to reimburse the two involved companies, honey processor Woodlands and manufacturer Pwani Oil, with $112,000(Ksh17,400,000).
CAK alleges that Majid Al Futtaim compelled suppliers to accept lower prices through a system of discounts known as rebates, which reduces final payments by up to 12%.
The regulator has also accused the supermarket chain of unlawfully transferring its costs to suppliers.
“Investigations also determined that Carrefour’s suppliers are required to provide free products and pay listing fees for every new branch opened as well as post employees to the supermarket’s branches,” CAK said in a statement on Tuesday.
“These practices amount to transfer of the retailer’s costs to suppliers, which is prohibited by the Competition Act.”
The regulator has subsequently instructed the supermarket chain to amend all its supplier contracts and remove clauses that facilitate the abuse of buyer power.
Carrefour operates 21 outlets in Kenya, spanning across the country’s major cities.
