Time to pay up! Carrefour fined to pay suppliers

Supermarket chain Carrefour has been ordered to revise all its agreements with some 700 suppliers within a month after a tribunal found it has been exploiting traders.

Carrefour, Kenya’s second largest retail chain, will need to expunge up to six items from its supplier contracts said to give the store the power to offer ultra-competitive pricing to boost sales and increase market share.

This comes barely a month after the retailer was fined 1.75 million euros (Sh222.5 million) by the Paris Commerce Court over unfair practices, a trend that is now reported in Kenya.

The clauses include forcing suppliers to pay a non-refundable fee to do business with it and compelling merchants offering the retail chain goods to provide extra rebates or discounts.

The order by the Competition Tribunal, which largely affirmed earlier decisions taken by the Competition Authority of Kenya (CAK), sets a major precedent in the retail sector and could be relied on to remove similar trade practices among other players.

“There was no provision in the contract allowing for this kind of returns and neither had the supplier been pre-warned about such action,” the Tribunal noted in its ruling.

Carrefour has also been asked to pay a financial penalty of 10 percent of the supplier’s gross annual turnover in Kenya from its franchise from the sale of Cool Fresh yoghurts for the year 2018, in the sum of Sh124,768, within 30 days.

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