The Competition Authority of Kenya has imposed a substantial penalty of KES 1,108,327,873.60 (USD7.2 million) on Majid Al Futtaim Hypermarkets Limited, trading as Carrefour in Kenya. This penalty comes following separate instances of the company abusing its dominant bargaining position with two suppliers, Pwani Oil Products Limited and Woodlands Company Limited.

As part of the ruling, Carrefour is directed to overhaul all its supplier contracts, removing clauses that facilitate the abuse of buyer power. This includes eliminating practices such as listing fees, rebate collection, and unilateral delisting of suppliers.

The Authority, authorized by the Competition Act, is committed to curbing abuse of buyer power (ABP), defined as powerful buyers securing supply terms that deviate unfavorably from standard business practices, impacting suppliers adversely.

Woodlands and Pwani Oil, both suppliers to retail stores in Kenya, faced challenges due to Carrefour’s practices. Woodlands supplies refined natural bee honey, while Pwani Oil provides Fast-Moving Consumer Goods (FMCGs) like edible oils, skincare, and washing soap products.

As part of the ruling, Carrefour must reimburse Woodlands and Pwani Oil a total of KES 16,757,899 (USD 108,000) in rebates deducted from their invoices. An additional KES 500,000 (USD 3,200) billed as marketing support (store opening and listing fees) also needs reimbursement.

An investigation revealed Carrefour’s imposition of non-negotiable rebates as high as 12%, deducted annually and monthly, reducing suppliers’ final payouts significantly. Furthermore, suppliers were obligated to offer free products and pay listing fees for each new branch, severely impacting their profitability.

Dr. Adano Wario, the Acting Director-General of the Authority, emphasized that such practices disproportionately affect small and medium-sized enterprises (SMEs), impacting their survival and economic contribution. The Authority remains dedicated to promoting inclusive economic development and preventing buyer power abuse, particularly concerning SMEs.

Shaka Kariuki, the Authority’s Board Chairman, highlighted that these regulatory interventions align with the government’s agenda to support SMEs and the manufacturing sector, aiming for positive impacts on Kenyan livelihoods.

According to The CEO, the authority’s decisive action serves as a strong warning to businesses against violating the Competition Act, striving to foster fair competition and create a conducive business environment for investment and consumer benefit.