Title: "Kenya's Retail Landscape Shaken: Carrefour Hit with Historic $7.1 Million Fine"
In a groundbreaking move, Kenya's competition watchdog has wielded its authority, slapping a staggering $7.1 million fine on Majid al Futtaim, the local Carrefour franchise holder. The allegations paint a picture of supplier coercion, with the retail giant accused of flexing its dominance to enforce reduced prices.
At the heart of the matter are claims that Majid al Futtaim leveraged its negotiating prowess against two suppliers, leading to the highest penalty ever imposed by the Competition Authority of Kenya (CAK). The giant retailer, operating one of Kenya's largest chains, is yet to break its silence in response to this unprecedented fine.
Beyond the financial blow, CAK has mandated restitution, compelling Majid al Futtaim to reimburse two affected companies – Woodlands, a honey processor, and Pwani Oil, a manufacturer – with a sum of $112,000.
CAK's investigation reveals a web of coercive practices, alleging that Majid al Futtaim employed a rebate system, slashing final payments to suppliers by up to 12%.
The regulator further contends that the supermarket chain unlawfully offloaded its expenses onto suppliers, demanding complimentary products, listing fees for new branches, and even assigning staff to its outlets.
Describing these practices as a violation of the Competition Act, CAK issued a stern statement on Tuesday, asserting that such actions constitute an impermissible transfer of the retailer's costs onto suppliers.
In response to these damning findings, CAK has ordered a comprehensive overhaul of all supplier contracts, insisting on the removal of clauses that enable the abuse of buyer power.
This development is not without precedent. In 2021, Kenya's Competition Tribunal (CT) had already found the Carrefour franchise guilty of exploiting suppliers through exorbitant listing fees and rebate rates. Despite the subsequent silence from Majid al Futtaim, the company had previously pledged its dedication to fostering mutually beneficial relationships with suppliers after the 2021 investigation
The implications of this fine reverberate across Kenya, where 21 Carrefour outlets dot major cities, signaling a potential reshaping of the retail landscape in the country.