Carrefour fined for exploiting suppliers
Competition Authority of Kenya (CAK) has fined Carrefour Ksh124,767 (Shs 4 million) for exploiting Orchards Limited and ordered it to review all its supply agreements with other suppliers within 60 days overexploitation of suppliers.
The retailer owned by Majid al Futtaim’s (MAF) was found to exploit suppliers through six clauses in its contracts that ensured it got cheaper prices as compared to other market players.
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“All current supply agreements of Majid Al Futtaim Limited relating to its Carrefour Hypermarkets in Kenya be amended forthwith and in any event within 60 days of service of this order to expunge all offending provisions,” CAK Director-General Wang’ombe Kariuki ordered.
Carrefour was also accused of forcing suppliers to post their own staff at its outlets at their expense, and at times rejecting goods already delivered.
Every supplier is required to deploy a merchandising attendant for each of their stores to man particular goods for two hours every day for six days.
The franchise will be fined 10 percent of its gross sales, which stood at Ksh14 billion in 2018.
Carrefour will also be barred from delisting suppliers unilaterally without notice for failure to meet its stringent supply contract.
The retailer which launched in Kenya in 2016 is said to have abused buyer power hence getting supplies cheaply, the reason behind their relatively cheaper prices compared to their competitors.
Carrefour also forced local retailers to discount their supplies at 12 percent for whatever amount of sales with a maximum of 13 percent for turnovers of Ksh26 million.
Retailers are also required to pay a Ksh10,000 for every new item they launch in the market, for every store that the goods are stocked.
In its contracts, Carrefour stipulated that it should have the freedom to exchange any item that remained unsold for 45 days with another item of the same value of their (Carrefour) choice.
Suppliers are also required to pay upfront supply fees commonly known as pay-to-stay or listing fees as a form of subscription.
Agencies
