Carrefour's UAE-based operator to appeal Competition Authority's Sh1.1 billion penalty on franchise

A man walks past Carrefour's signage at the Junction Mall, Nairobi, on August 3, 2021. [Elvis Ogina, Standard]

Majid Al Futtaim, the UAE-based retail operator of Carrefour stores in Kenya, says it will appeal the Sh1.1 billion fine that the Competition Authority of Kenya (CAK) imposed on the franchise for abusing buyer power over two suppliers.

The CAK penalised the French retail chain on Tuesday for exploiting its influence over Pwani Oil Products Limited and Woodlands Company Limited.

The authority found that Carrefour imposed three non-negotiable rebates, reaching as high as 12 percent, reducing the final payout to suppliers.

The CAK also noted that Carrefour forced its suppliers to provide free products, pay listing fees for new branches, and station employees at the supermarket’s branches.

"These practices violated the Competition Act by shifting the retailer’s costs to suppliers, the CAK stated.

The regulator ordered Carrefour to revise all supplier contracts, removing clauses that enabled buyer power abuse, such as listing fees, rebate collections, and unilateral delisting of suppliers. Carrefour was also instructed to refund a total of Sh16.8 million in rebates and Sh500,000 billed as marketing support to Woodlands and Pwani Oil.

The fine is the largest ever imposed by the CAK.

In a statement dated December 19, Majid Al Futtaim expressed surprise at the CAK’s decision, given that the affected suppliers had withdrawn their complaints and renewed their partnership agreements with Carrefour.

“Majid Al Futtaim has full confidence in the fairness and integrity of our business practices and is appealing the Competition Authority’s decision,” the operator said.

Majid Al Futtaim emphasised its commitment to upholding global best practices, including antitrust and competition laws, to foster fair competition in all business aspects.

Carrefour has a network of over 700 supplier partners in Kenya, 300 of whom have been partners since it started operations in the country in 2016.

The operator pledged to continue contributing to Kenya’s development agenda through sustainable business operations and long-term social support initiatives in education, health, social inclusion, and poverty eradication.