KENYA – Kenya’s High Court has upheld a decision that found Carrefour’s Kenyan operator, Majid Al Futtaim, guilty of abuse of buyer power against Orchards Limited, a former supplier.
In the ruling, the court described the retail chain’s conduct against Orchards Limited as exploitative.
Orchards Limited filed a complaint with the Competition Authority of Kenya (CAK), accusing the retail chain of demanding payments for listings and rebates in exchange for product placement on shelves from 2015 to 2018.
According to the complaint, Carrefour terminated the company’s contract as they negotiated over the rebates and listing fees in 2019.
Evidence submitted to the court showed the retail chain demanded Ksh 50,000 (US$383) as listing fees, 10% rebates on every second delivery to new Carrefour locations, and 1.25% of all yearly sales.
The CAK reached a decision in favor of Orchard Limited in 2020, which was upheld in 2021 by a tribunal appointed by the competition authority, prompting the retailer to file the appeal.
However, the ruling faulted the tribunal for ordering Carrefour to amend contracts with 699 other suppliers without making them part of the case.
Carrefour has been at the center of accusations of abusing buyer power against its suppliers for several years.
Late last year, the competition authority ordered Carrefour to pay Ksh 1.1 billion (US$8.4m) following complaints filed by two of its largest suppliers, Pwani Oil Products Limited and Woodland Company Limited.
According to the CAK, the retail chain discounted suppliers’ invoices and required rebates, passed on to customers as discounted offers.
According to eCommerce insights, these activities resulted in unfair pricing between brands and suppliers, especially in the grocery market, where the retailer enjoys more than 30% of eCommerce net sales.
The retailer was also accused of returning products from suppliers that refused to cooperate when their expiration dates approached, resulting in supplier losses.
Carrefour reiterated its commitment to fair competition practices despite these accusations and complaints.
“We remain committed to conducting our business with fairness and integrity, working collaboratively with our partners to ensure a sustainable, equitable, and mutually beneficial business environment and by Kenya’s Code of Retail, in which we are honored to play a founding role,” the retailer said in a statement following the ruling.
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