Kenya fines Carrefour franchise $7.2m for abusing market power
What you need to know:
- The $7.2 million fine is the biggest penalty ever issued by CAK, the regulator said.
Kenya's competition watchdog imposed a $7.2 million fine on the local Carrefour franchise holder for abusing its power to negotiate lower prices with suppliers.
The Competition Authority of Kenya (CAK) said Majid Al Futtaim Hypermarkets Limited had exploited "its superior bargaining position" over a supplier of edible oils and a honey retailer.
The $7.2 million fine is the biggest penalty ever issued by CAK, the regulator said.
"Carrefour charges its suppliers at least three types of non-negotiable rebates that are as high as 12 percent," CAK said in a statement.
"The rebates are deductible annually and monthly and have been increasing on an annual basis, thereby significantly reducing the final pay-out to suppliers."
According to the antitrust regulator, the franchise require suppliers to give free products and pay listing fees for every new branch opened as well as post employees.
"These practices amount to transfer of the retailer's costs to suppliers, which is prohibited by the Competition Act," it said.
Majid Al Futtaim has been ordered to amend all its supplier contracts "and expunge clauses that facilitate abuse of buyer power," CAK said.
It also ordered the franchise to refund $112,000 to the two suppliers.
The franchise has not yet respond to the fine.
Carrefour opened its first outlet in Kenya in May 2016 and has grown to become one of the biggest retailers in the East African country with more than 20 branches.
