Majid Al Futtaim (Carrefour) has been ordered by the Competition Tribunal to review all supplier contracts within 30 days after it was found to be exploiting sellers.
In a statement, the Competition Authority of Kenya (CAK) said that the ruling correctly addressed the persistent problem of abuse of buyer power in the retail sector, which has 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.
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.
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“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.
Carrefour has also been ordered to refund all listing fees received from Orchards Ltd, as well as payment for business lost after Carrefour delisted Orchards in 2019 without notice.
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