Carrefour Supermarkets has been cleared of accusations that it engaged in abuse of buyer power against Orchards Limited-a a limited liability firm primarily involved in the dairy processing business.
This is according to a ruling by the Competition Tribunal delivered on April 20th, 2021 in Nairobi in an appeal against a ruling by the Competition Authority concerning its dispute with Orchards Limited.
Orchards processes and sells probiotic yoghurts under the brand name ‘ cool fresh’
This exclusive retail chain was launched in the region in 1995 by UAE-based Majid Al Futtaim, which is the exclusive franchisee to operate Carrefour in over 30 countries across the Middle East, Africa, and Asia, and wholly owns the operations in the region.
Carrefour deal with Orchards
The retailer and Orchards Limited were in a buyer/supplier relationship whereby Orchards supplied the retailer with probiotic yoghurt to be sold at its stores.
In a complaint dated 26th April 2019, Orchards accused Carrefour of unilaterally terminated its supply contract while both parties were negotiating a new one for that year.
As a result, Orchards was left with a big stock of packaging materials procured for exclusive use by Carrefour Supermarkets.
The Tribunal could not find provisions within the law to accuse the supermarket chain of abusing its buyer power.
In an appeal filed by Majid Al Futtaim Hypermarket Limited-owners of the Carrefour supermarket brand in Kenya against Competition Authority and Orchards Limited, the Tribunal set aside prayers that Carrefour pays Orchards Limited a sum of KSh 130,856 for loss arising from unilateral termination of the supply agreement for the year 2019, being the cost of procurement of material for exclusive use.
The Tribunal, however, upheld the order for a refund of rebates deducted from invoices of Orchard Limited between 2017 and 2019, amounting to KSh 289,482.00.
Owners of this retail chain have also been ordered to pay 10% of its gross annual turnover in Kenya Shillings from its franchise from the sale of Cool Fresh Yorghurts for the year 2018 in the sum of KSh 124,768.00.
The retail outfit was also given 30 days to amend all current supply agreements relating to its hypermarkets in Kenya. These include deleting all offending provisions, specifically clauses that lead to or otherwise facilitate abuse of buyer power.
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