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.

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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.