French retailer Carrefour has been taken aback by the Competition Authority of Kenya's (CAK) Tuesday decision to slap it with a Ksh.1.1 billion fine for abusing buyer power privileges.

In a statement to newsrooms on Wednesday, the retailer, owned by UAE-based entity Majid At Futtaim, highlighted that the imposed fine came as a surprise since it was instituted despite the withdrawal of the complaint and renewed partnership agreements with Woodlands Company Limited and Pwani Oils Limited, the two suppliers it is alleged to have infringed upon.

"We take pride in working collaboratively with all our suppliers to create a more sustainable and equitable business environment through ongoing engagement and transparent communication," said Carrefour in the statement 

"As a leading regional retailer, Majid At Futtaim is committed to upholding the highest standards of global best practice, including antitrust and competition laws to encourage fair competition in all aspects of its businesses."

The retailer added that despite the fine, it will continue working to the benefit of its customers, partners and stakeholders to ensure meaningful contribution to Kenya's development agenda in creating a globally competitive and prosperous nation through sustainable business operations.

On Tuesday, CAK said that the supermarket chain separately abused its ability to set terms for its two aforementioned suppliers.

The authority said its investigations had established that Carrefour charges its suppliers at least three types of non-negotiable rebates that are as high as 12 per cent.

Rebates are a refund of a percentage of sales offered by a supplier to its customer in exchange for a benefit such as early payment by the retailer, as a reward for surpassing designated purchasing targets, or as an incentive for an increase in volumes ordered by the retailer.

“The rebates are deductible annually and monthly and have been increasing on an annual basis, thereby significantly reducing the final pay-out to suppliers. Investigations also determined that Carrefour's suppliers are required to provide free products and pay listing fees for every new branch opened as well as post employees to the supermarket's branches,” CAK said.

“These practices amount to transfer of the retailer's costs to suppliers, which is prohibited by the Competition Act.”