Nairobi — The Competition Authority of Kenya (CAK) has welcomed the High Court's ruling in a case against Majid Al Futtaim hypermarkets operating under the brand name Carrefour, where the supermarket chain was found guilty of abusing its buyer power against one of its former suppliers, Orchards Limited.
The judgment, delivered by Justice Anne Ong'injo, directs Carrefour to refund Sh289,482 in deducted rebates to Orchards Limited.
Likewise, the French retail chain has been ordered to pay Sh124,768 to the authority as a penalty for engaging in such unfair practices.
The case revolves around a contract between Carrefour and Orchards Limited, which supplied probiotic yogurt under the brand name Cool Fresh to Carrefour outlets from January 2015 to December 2018.
Orchards Limited, which has since ceased operations, accused Carrefour of several unfair practices that led to its financial difficulties and eventual shutdown.
The Court upheld the Competition Authority's determination that Carrefour possessed and abused its buyer power over Orchards Limited.
The court ruled that the hypermarket applied and collected various rebates, including listing fees, which are payments suppliers must make to have their products stocked in stores.
Similarly, Carrefour returned goods when their expiration date was approaching, causing significant losses for the supplier.
The high court has also agreed with the petitioner that Carrefour also refused to accept deliveries of items it had ordered without providing justifiable reasons, such as inferior quality.
These practices were deemed unfair and detrimental to the supplier, ultimately contributing to Orchards Limited's closure.
The developments come on the back of the hypermarket chain being fined a whopping Sh1.1 billion by CAK in a similar case.
CAK accused it of abusing its bargaining power in a case involving Pwani Oil Products Limited and Woodlands Company Limited.
"The Authority has also ordered Carrefour to refund the Woodlands and Pwani Oil a total of sh 16,757,899 in rebates deducted from their invoices as well as Ksh.500,000 that was billed as marketing support," CAK said in a statement earlier.
