(Bloomberg) -- Kenya’s antitrust body fined Majid Al Futtaim Holding LLC, the operator of Carrefour SA stores in the East African nation, 1.1 billion shillings ($7.1 million) for abusing its buyer power, the biggest such penalty in the country to date. 

The Competition Authority of Kenya found that Carrefour abused its “superior bargaining position” over Pwani Oil Products Ltd., a supplier of fast-moving consumer goods, such as skin-care products and Woodlands Co. Ltd., a honey producer, it said in a statement. 

“This is the biggest fine we have ever issued,” antitrust Acting Director General Adano Wario told reporters Tuesday. “They are repeat offenders.”

Investigations 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,” the antitrust body said. “These practices amount to transfer of the retailer’s costs to suppliers, which is prohibited by the Competition Act.”

Store Openings

MAF operates more than 375 Carrefour stores in 15 countries. It entered Kenya in 2016 and has since grown the number of Carrefour stores to more than 20.

The authority said it acted as the promotion of inclusive economic development is core to executing its mandate. 

Abuse of buyer power, which is typically meted out on small and medium-sized enterprises, “defeats this aspiration by crippling suppliers, who are mostly SMEs, and whose contribution to our economy cannot be overstated,” Wario said.

SMEs account for 98% of all businesses in Kenya, contribute as much as 40% of gross domestic product and are the source of livelihood for millions of Kenyans, he said. William Ruto, who became president last year, vowed to make supporting SMEs a top priority of his administration. 

The retailer was also ordered to amend all its supplier contracts and remove clauses that facilitate abuse of buyer power, including the collection of rebates, and unilateral delisting of suppliers, the authority said.

It instructed Carrefour to refund Pwani Oil Products and Woodlands 16.8 million shillings in rebates deducted from their invoices and 500,000 shillings billed as marketing support.

(Updates to reflect fine is Kenya’s biggest to date in first paragraph.)

©2023 Bloomberg L.P.