Carrefour Supermarket Ordered To Amend All Current Supply Agreements

The Competition Tribunal has ordered Carrefour Supermarket to amend all current supply agreements within the next 30 to 40 days or face action.

The Tribunal wants the retailer to amend requirements in its contracts that require supply to pay listing fee, unfair delisting of suppliers, and rebates to the retailer.

At the same time, Carrefour has been ordered to pay 545,106 shillings to Orchards Limited for the termination of the contract to supply yoghurt.

Orchards Limited had moved to the Tribunal to complain after Carrefour Supermarket delisted it and blocked the supply code of its products without notice in 2019.

Orchards had been supplying probiotic yoghurt to Carrefour from 2015 before the contract was abruptly terminated leaving it with a “huge stock that had been procured specifically for the retailer.”

Under the commercial contract, Carrefour required suppliers to pay a rebate in form of listing fee amounting to 50,000 shillings for every listing of the products. This, according to the Tribunal is unfair.

An additional payment of 7 to 8 percent would also be due which the supplier never honoured. Orchards was also supposed to pay a further rebate of 10 percent on the second delivery in respect to new branches.

Though Orchards paid the rebate on top of agreed margins which is 1.25% of all annual sales, Carrefour refused to accept new price list from the supplier as well as additional supplies in some branches prompting the Competition Authority to commence investigations on the deal through a Notice of Investigations dated 24th May 2019.