The Retail Trade Association of Kenya (RETRAK) on Tuesday, disapproved the penalties issued to a popular supermarket chain by the Competition Authority of Kenya (CAK).
Retrak, the representative body for the retail sector in Kenya, warned that CAK's decision to fine the supermarket Ksh1 billion for abusing its buyer power and taking advantage of suppliers would strain relationships between suppliers and retailers.
Retrak further noted that the contracts are signed based on a mutual understanding from both parties; hence, they should be upheld.
According to the statement issued by the association, CAK should review the fines and engage the Retail Code of Conduct to resolve the dispute and promote stakeholder engagement.
“The engagements between suppliers and retailers are intricate, diverse and unique. In most cases, they are governed by mutually negotiated and signed Contracts between the Supplier and the Retailer. We must ensure that the Sanctity of contracts is upheld," stated Retrak.
In the defence of the supermarket chain, the traders emphasised that contracts are the backbone of the Kenyan trading industry, and any disruptions to such relations would lead to far-reaching consequences for the whole sector.
Further, RETRAK has noted that imposing such hefty fines on businesses in Kenya would lead to a hostile business environment.
“Any regulatory decisions should take into account the careful balance achieved through these contracts, fostering an environment where businesses can thrive and continue to contribute to the growth of the Kenyan economy,” Retrak emphasised.
CAK fined the supermarket chain Ksh1.1 billion after accusing it of usurping its bargaining power and issuing suppliers unfair contracts.
In the fines, the retailer was ordered to refund Ksh16.7 million in irregular rebates & expunge all clauses in its contracts that facilitated the abuse of buyer power.
The suppliers, namely, Pwani Oil Products Limited and Woodlands Company Limited, were required to pay listing fees, offer free products and pay rebates as high as 12 per cent.
CAK ascertained that such practices enabled the retailer to transfer costs to their suppliers, creating an unfair competitive advantage for the retailer
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