Majid al Futtaim operates 21 Carrefour outlets in Kenya. Credit: Jerry Michalski/ Flickr (Creative Commons).

The Competition Authority of Kenya (CAK) has penalised Majid al Futtaim, the local Carrefour franchise holder, for abusing buyer power over suppliers.

According to a statement released on social media platform X, formerly Twitter, the United Arab Emirates-based Majid al Futtaim was fined a total of Ks1.1bn ($7.15m) for abusing its power over suppliers Pwani Oil and Woodlands.

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Woodlands processes and supplies refined bee honey to retailers. Pwani Oil processes and sells fast-moving consumer goods.

According to CAK, Majid al Futtaim forced suppliers to accept lower prices through a system of discounts known as rebates.

The supermarket chain also allegedly transferred its costs to suppliers.

In addition to the fine, CAK ordered the Carrefour franchise holder to pay the two companies Ks16.7m in rebates and repay Ks500,000 which had been billed as marketing support.

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This is the highest fine ever issued by the competition authority.

CAK acting director-general Dr Adano Wario stated: “At the core of the authority’s mandate execution is promotion of inclusive economic development. Abuse of buyer power defeats this aspiration of crippling suppliers, who are mostly SMEs [small and medium-sized enterprises], whose contribution to our economy cannot be overstated.

While appearing to enable the offender to offer lower prices to consumers, this apparent benefit is short-term and unjustifiable when placed against the long-term damage caused to the upstream supplier market, including forced exits, especially by SMEs in the manufacturing sector.” 

Majid al Futtaim operates a network of 21 Carrefour outlets across major cities in Kenya, according to a BBC report.

The retailer is yet to respond to the issuing of the fine.