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Supermarket chain Carrefour Kenya has been told to revise all its agreements with some 700 suppliers of Kenyan traders by a competition tribunal.
The second largest retail chain in Kenya, Carrefour has been told to drop six items from its supplier contracts that are said to give the store the power to offer ultra-competitive pricing to boost sales and increase market share
Carrefour has been the most aggressive in offering discounts to shoppers on a wide range of goods, suggesting that it could be tapping its rebates reserves to grow sales
Supermarket chain Carrefour Kenya has been told to revise all its agreements with some 700 suppliers of Kenyan traders by a competition tribunal. The second largest retail chain in Kenya, Carrefour has been told to drop six items from its supplier contracts that are said to give the store the power to offer ultra-competitive pricing to boost sales and increase market share.
The retail chain, the tribunal found, has forced merchants to offer extra rebates or discounts. It was also found to be in breach of the law for forcing suppliers to post their own staff at its outlets at the expense of the traders. The retail giant was also accused of rejecting goods already delivered.
The order by the Competition Tribunal sets a major precedent in the retail sector. This may be applicable to other retail players also, who can rely on the order to remove similar trade practices among other players. Earlier, the Competition Authority of Kenya (CAK) also passed these orders against for the retail giant to follow.
Carrefour has been the most aggressive in offering discounts to shoppers on a wide range of goods, suggesting that it could be tapping its rebates reserves to grow sales. The rebate is going from the pockets of suppliers. Elimination of the rebates could, therefore, see the retailer scale down its price cuts and bring its pricing closer to most of its competitors. The retail giant becomes the second major retailer to be investigated for abuse of buyer power after Tuskys. The latter was found to be withholding supplier payments beyond their due date.
