The Carrefour SA hypermarket chain is under investigation after 11 trade associations filed a complaint accusing the retailer of passing the cost of stores it acquired in a merger last year on to its suppliers through “additional fees.”
The Fair Trade Commission (FTC) on Friday received a letter of complaint from 11 trade associations against Carrefour for demanding “additional fees” from suppliers, FTC Vice Chairman Andy Chen (陳志民) said yesterday.
A probe has been launched to see if there has been any misconduct, he said.
Photo courtesy of Carrefour Taiwan
“Additional fees are negotiable, but the rate should not be unreasonable or disproportionate,” Chen said.
It is not unprecedented for retailers to charge suppliers additional fees, but it is forbidden for them to charge disproportionate fees based on their advantage in the market, he said.
If found guilty of “obviously unfair conduct” as stipulated in Article 25 of the Fair Trade Act (公平交易法), Carrefour would face a fine of up to NT$25 million (US$875,595), the commission said.
The commission approved Carrefour’s merger application in December last year, allowing it to acquire 199 Wellcome Taiwan Co (惠康百貨) supermarkets and 25 Jasons Market Place premises across the country from Hong Kong-based Dairy Farm International Holdings (牛奶國際控股).
At the time, Carrefour said that the merger would benefit procurements, as it would be the owner of 353 outlets across Taiwan.
It began converting its 196 new stores in February with the aim of completing them in August.
Suppliers have accused the retailer of asking them to cover the store conversion costs by charging them “additional fees,” the Chinese-language Liberty Times (the Taipei Times’ sister newspaper) reported.
If Carrefour charged each of its approximately 3,000 suppliers NT$50,000 per store, it could obtain about NT$29.4 billion to convert the 196 new stores, it reported.
Carrefour has rejected the report, responding in a statement yesterday that it is “definitely impossible” for it to charge the suppliers such large fees.
The company said that it considers all of its suppliers to be important partners, and hopes to create more business opportunities for them by opening the new stores.
Carrefour said that it is still negotiating with suppliers about this year’s contracts.
If suppliers have concerns about their contracts, they should discuss them directly with the company, it said.
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