French retailer, Carrefour has been accused of exploiting its suppliers so as to boost its sales and increase its market share in the retail business in Kenya.
As reported by Business Daily, the Competition Authority of Kenya (CAK) has fined Carrefour and ordered the retailer to review all its supply agreements within 60 days.
CAK has said that Carrefour has been abusing its power as a retailer and risks a fine of up to 1.4 billion shillings if it fails to review the supplier agreements.
Carrefour is said to have some of the toughest terms in its contracts with its suppliers that give the store the power to offer ultra-competitive pricing to boost sales and increase market share.
Some of the terms in the contracts with its suppliers include forcing the suppliers to give the retailer extra discounts and, in some cases, asking the suppliers to pay a non-refundable fee to do business with it.
The CAK has found the French retailer to be in breach of the regulation that prevents retailers from forcing suppliers to post their own staff at the retailer’s outlets at the expense of the suppliers.
Carrefour is also accused of rejecting goods from suppliers that have already been delivered.
CAK has already fined Carrefour 124, 767 shillings for exploiting yogurt supplier, Orchards Limited, which is equivalent to 10 percent of the sales generated from the dairy products supplied by the firm in 2018.
Reports indicate that Carrefour has been going as far as requiring suppliers of water, juices and carbonated soft drinks to part with 50,000 shillings every month to have their products refrigerated in each of their stores.
Carrefour also demanded that suppliers exchange any item that had remained unsold for 45 days with another item of the same value that the retailer would choose.