High Court upholds CAK decision that found Carrefour guilty of abusing buyer power

The High Court has upheld a decision by the Competition Authority of Kenya (CAK) that found French retailer Carrefour supermarket guilty of abusing buyer power.

Judge Anne Ong'ijo ruled that the conduct of Carrefour, operated by Dubai-based Majid Al Futtaim Hypermarkets Limited, amounted to abuse of buyer power (ABP).

"In conclusion, the court upholds the decision of the tribunal. The conduct by the appellant amounted to abuse of buyer power. The tribunal was correct in declining to set aside the Authority decision on the appellant's abuse of buyer power," Ongijo decreed.

In the case, Orchards Limited moved to CAK decrying Carrefour's abuse of power on grounds that the supermarket had unilaterally delisted it by blocking its supplier code without notice thereby leaving them with dead stock.

Ong’injo further ordered Carrefour to refund Orchards Limited Ksh.289,482 in rebates which were deducted from its invoices and pay Ksh.124,768 to the Authority as a penalty for engaging in ABP.

Carrefour had contracted Orchards Limited, which has since closed shop, to supply probiotic yoghurt under the brand name Cool Fresh to its outlets between January 2015 and December 2018.

While seeking to have the Authority's decision thrown out, Carrefour argued that it was not accorded a fair hearing and neither was it furnished with various evidentiary information relied on in the decision-making.

CAK, after the ruling, emphasised that it respects the legal requirement to accord accused parties a fair hearing while ensuring that investigations strictly adhere to laid down processes and procedures.

"The professionalism and objectivity by our staff members during the investigations has occasioned the positive outcome in this case,” said CAK board chair Shaka Kariuki.

Kariuki noted that the five-year legal dispute has enabled two judicial offices in the country to independently review and make pronouncements on the centrality of the Authority’s functions as well as its thorough investigation processes.

In the case that began in April 2019, Orchards accused Carrefour of terminating their contract mid-negotiation in January 2019 and imposing excessive listing fees and rebates.

They also alleged Carrefour refused full delivery, returned goods nearing expiry, demanded free merchandise, and required Orchards to provide shelf staff.

The Authority found Carrefour guilty of abusing its bargaining power in February 2020.

Carrefour subsequently challenged the Authority's ruling at the Competition Tribunal, which largely upheld the Authority's decision in April 2021.

Carrefour further appealed the Tribunal's ruling at the High Court, which upheld one of seven prayers it listed, acknowledging ABP clauses in the Orchard-Carrefour contract but rescinding the order to amend contracts with other suppliers.