French supermarket chain Carrefour has been fined €1.75m by the Paris Commercial Court for forcing suppliers to provide unwarranted discounts to account for the group’s distribution costs.
The court ruled that by forcing suppliers to provide “an additional distribution discount” Carrefour Group was restricting competition.
France’s General Directorate for Competition Policy, Consumer Affairs and Fraud Control (DGCCRF) said in a statement investigation of the practices in 2016 had found the discount was “intended to finance the repositioning of the brand on the local distribution market”.
DGCCRF believed provision of this discount was a prerequisite for the opening of trade negotiations.
“In addition, Carrefour had forced its suppliers to accept this discount by means of retaliatory measures comprising a graduated scale of sanctions,” it said.
These included denying the suppliers’ sales team access to stores and obstructing the launch of new products.
“Finally, at no time had the Carrefour brand justified the logistics costs that it used as a pretext to set the amount of its discount,” DGCCRF added.
It said the discount the chain was seeking did not take into account the discounts which many suppliers had already granted to account for the actual costs of Carrefour’s logistics.
The court ordered Carrefour to halt the practices. Reuters reported the retailer had said it had put an end to them in February 2016 and would not appeal.
In July last year Carrefour entered into a long-term, strategic sourcing alliance with Tesco.
The alliance was due to have a three-year framework and covered strategic relationship with global suppliers and joint purchasing of own-brand products and goods not for resale.
The companies said in a statement the alliance would allow them to improve the quality and choice of products available to customers at lower prices and strengthen relationships with suppliers.
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