The High Court of Kenya has rejected Carrefour Kenya’s appeal against a ruling that found the retailer abused its buyer power in its dealings with a supplier.
This upholds a 2020 decision by the Competition Authority of Kenya (CAK).
The case originated in 2019 when Orchards Limited, a yoghurt producer, filed a complaint with CAK. Orchards accused Carrefour of unfair practices, including:
- Unilateral contract termination during negotiations (January 2019)
- Demanding excessive fees: listing fees, rebates beyond agreed margins
- Rejecting full deliveries or returning near-expiry items without justification
- Demanding free merchandise for sale
- Forcing Orchards to staff Carrefour shelves
The high court agreed with CAK and the Competition Tribunal, finding Carrefour’s actions constituted abuse of buyer power.
As a result, the court upheld the requirement for Carrefour to refund Orchard deducted rebates amounting to Ksh 289,482
In addition, it upheld the penalty imposed by CAK of Ksh 124,768 and further, overturned the order to amend all supplier contracts, citing a lack of involvement from other suppliers in the case.
“This court is led to conclude that the conduct by the appellant amounted to abuse of buyer power. The court therefore finds that the tribunal was correct in declining to set aside Competition Authority of Kenya’s decision on Carrefour’s abuse of power,” said Lady Justice Anne Colleta Apondi Adwera–Ong’injo.
“In conclusion, this court upholds the decision of the tribunal save that the decision to amend all supplier agreements between Carrefour and its other suppliers is set aside as there were no parties to the cause and there were no pleadings affecting them before the competition authority of Kenya to warrant a decision being made in relation to their contracts,” she said.
Carrefour’s Clarification
In response to the high court’s ruling, Carrefour (operated by Majid Al Futtaim in Kenya) welcomed the court’s recognition of their right to fair legal proceedings.
They believe the court’s decision to overturn the amendment of all supplier agreements essentially upholds the validity of their existing contracts.
“We remain committed to conducting our business with fairness and integrity, working collaboratively with our partners to ensure a sustainable, equitable, and mutually beneficial business environment and in accordance with Kenya’s Code of Retail, in which we were honoured to play a founding role,” Majid Al Futtaim Hypermarkets Ltd, which operates the Carrefour brand in Kenya, said in a statement on Friday.
The CAK views this ruling as important for protecting smaller suppliers (SMEs) from unfair practices by larger retailers. CAK cited potential consequences like supplier exits from the market and reduced consumer choice.
“Our message to businesses is that they should play by the rules, irrespective of status. By ensuring that our markets work efficiently and within a level playing field, the country shall attract more investments and grant consumers a wider variety of goods and services at competitive prices,” said Shaka Kariuki, the Authority’s Board chairman.
