Kenya fines Carrefour franchise Majid al Futtaim $7m

Customers walk inside the Carrefour hypermarket at the Two Rivers Shopping Mall in Nairobi, Kenya April 8, 2019. Picture taken April 8, 2019.
Image caption,The fine is the highest-ever issued by Kenya’s competition authority

Kenya’s competition regulator has fined the local Carrefour franchise holder, Majid al Futtaim, $7.1m (£5.6m) after accusing it of forcing suppliers to accept lower prices.

The regulator said it had abused “its superior bargaining position” over two suppliers.

The fine is the highest-ever issued by the competition authority.

Majid al Futtaim, which runs one of the biggest retail chains in Kenya, has not yet responded to the fine.

In addition to the fine, the Competition Authority of Kenya (CAK), has ordered the Carrefour franchise holder to refund the two companies involved – honey processor Woodlands and manufacturer Pwani Oil – $112,000.

CAK has said that Majid al Futtaim forced suppliers to accept lower prices through a system of discounts known as rebates, which cuts final payments by up to 12%.

The regulator also accused the supermarket chain of illegally transferring its costs to suppliers.

“Investigations also determined that Carrefour’s suppliers are required to provide free products and pay listing fees for every new branch opened as well as post employees to the supermarket’s branches,” CAK said in a statement shared on X on Tuesday.

“These practices amount to transfer of the retailer’s costs to suppliers, which is prohibited by the Competition Act.”

The supermarket chain has subsequently been ordered to “amend all its supplier contracts and expunge clauses that facilitate abuse of buyer power”.

In 2021, Kenya’s Competition Tribunal (CT) found the franchise guilty of exploiting suppliers by forcing them to accept lower prices through charging them high listing fees and rebate rates, after another Kenyan company filed a complaint against its supplier practices.

The company is yet to respond to the penalty, but after the 2021 investigation, it said that it “remains committed to working with its suppliers through mutually beneficial relationships”.

There are 21 Carrefour outlets in Kenya across many of the country’s major cities.

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