The High Court has upheld a decision finding Majid Al Futtaim Hypermarkets Limited, operating as Carrefour, guilty of abusing buyer power against Orchards Ltd., a yoghurt producer that has since ceased operations.
Justice Anne Ong’ijo ruled that Carrefour’s conduct against Orchards Ltd. was a clear abuse of buyer power. Orchards Ltd. accused Carrefour of demanding exorbitant listing fees and multiple rebates that were way beyond the agreed price list margins.
They claimed that in January 2019, Carrefour abruptly terminated their contract while they were still negotiating.
The court sided with Orchards and upheld the Competition Authority Tribunal’s decision. The court ordered Carrefour to refund Ksh 289,482 in rebates deducted from Orchards’ invoices and imposed a Ksh 124,768 penalty.
Even before the law’s amendment in December 2019, Justice Ong’ijo made it clear that the Competition Authority of Kenya (CAK) had the authority to investigate abuse of buyer power as of April 2019.
Orchards and Carrefour had been in a business relationship from 2015 to 2018, supplying Cool Fresh Yoghurt. Carrefour’s demands included a Ksh 50,000 listing fee, 10% on every second delivery, and 1.25% on all annual sales.
Carrefour also introduced progressive rebates, demanded free merchandise, which they later sold, and required orchards to deploy their staff to manage the shelves.
Back in February 2020, the Competition Authority found Carrefour guilty of abusing its power over Orchards and 699 other suppliers. The tribunal upheld this in 2021, but Carrefour refused to accept it and appealed to the High Court.
While the court upheld most of the tribunal’s decision, it overturned the order to amend contracts with the 699 suppliers because they were not part of the case.