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Carrefour ordered to pay Orchards Limited to terminate the contract – KBC

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The Competition Court has ordered Majid Al Futtaim Hypermarkets Limited, owner of Carrefour Kenya, to pay Orchards Limited a total of Kshs. 545,106 for termination of contract to supply the company with probiotic yogurt.

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The court also ordered the seller to amend all current supply agreements relating to supermarkets in Kenya within the next 30 days by 20.th April 2021 to repeal all provisions of error, in particular the provisions that provide, cause or facilitate the abuse of buyer’s power, including the use of lists, the use of discounts, the transfer of commercial risks to sellers and the direct removal of sellers.

Orchards Limited had filed a complaint against Carrefour for unilaterally terminating its commercial contract by removing it and blocking its number of sellers without notice at the end of January 2019.

Gardeners were supplying Carrefour with probiotic yogurt between 2015 and 2018 before the abrupt termination of the contract which left it with a large stake that was purchased specifically from the seller.

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The court further found that gardeners were not provided with accurate details of payment invoices for the development payments brought by Carrefour in 2018 which will be calculated from the seller’s annual sales.

Under a trade agreement, Carrefour required retailers to pay the benefits through a list of fees up to Kshs. 50,000 per product list.

An additional payment of 7% to 8% will also result from which the seller never respects. Gardeners also had to pay a further 10% discount on the second submission to the new branch.

Although gardeners paid discounts on approved margins which is 1.25% of total annual sales, Carrefour refused to receive new price list from retailer as well as additional equipment in other branches and prompted the Competition Authority to launch an investigation into the deal. through the 24th Inquiry Reportth May 2019.

The court in its decision dismissed the claim that the CAK did not have the authority to investigate it.

Al Futtaim has also been ordered to return Orchards Kshs. 289,482 discount deducted from invoices for the years 2017,2018 and 2019 within the next 30 days.

The seller will also be required to pay 10% of all sales for the sale of Cool Fresh yogurt sold in its stores in 2018 as a penalty that must be paid within the next 30 days.

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