The competition authority has ordered retail chain Carrefour to stop deducting rebates from the invoices for Pwani Oil items.
The Competition Authority of Kenya (CAK) has instructed Carrefour to cease requiring Pwani Oil to provide additional discounts for its products through its franchise holder Majid al Futtaim’s (MAF), until an investigation into claims that the retailer abused its position is completed.
“The Competition Authority issues a cease and desist order against Majid Al Futtaim Hypermarkets Limited directing it to, with immediate effect, cease and desist from charging rebates on Pwani Oil Products Limited invoices until the ongoing investigations on alleged abuse of buyer power by Majid Al Futtaim Hypermarkets Limited are completed,” said CAK acting Director-General Adano Wario.
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In 2021, the competition authority ordered Carrefour to review all supplier contracts after it was found to be exploiting sellers.
Then, CAK said that the ruling correctly addressed the persistent problem of abuse of buyer power in the retail sector, which left suppliers unpaid in case a chain retailer collapses.
“The Authority is of the opinion that this Ruling will go further to provide suppliers in this sector with a credible position to negotiate for better terms with buyers, thereby ensuring continued supply of goods and services to the ultimate benefit of consumers,” said CAK.
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The case had been initially filed by Orchards Ltd, complaining of being forced to pay a rebate in the form of a listing fee (support fee) amounting to Ksh50,000 for every listing of its products. An additional payment of 7% to 8% would be due where the suppliers failed to pay.
“The Appellant shall amend all current supply agreements relating to its Carrefour Hypermarkets in Kenya within the next thirty (30) days hereof with a view to expunging all offending provisions, specifically clauses that provide for, lead to or otherwise facilitate abuse of buyer power, including but not limited to the application of listing fees, application of rebates, transfer of commercial risk to the supplier, and unilateral delisting of suppliers,” ruled the tribunal.
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