Top brass gives Pioneer Foods' penalty the nod

Thursday, November 11, 2010

Pretoria - Cabinet has welcomed the multi-million rand landmark penalty agreed on by Pioneer Foods and the Competition Commission for collusion in the bread manufacturing industry.

"This settlement sends a clear signal to all companies that such behaviour will not be tolerated," government spokesperson Themba Maseko said on Thursday.

In terms of the settlement, Pioneer Foods will, among others, reduce the sale price of bread and flour products by a total of R160 million.

The Competition Commission reached a settlement with Pioneer Foods last week relating to anti-competitive behaviour in the bread-related maize, wheat milling, eggs and poultry markets.

Pioneer will pay a further sum of R250 million towards a special agro-processing competitiveness fund that will be established and managed by the Industrial Development Corporation (IDC).

This is to promote competition in the food value chain by supporting the entry and expansion of small and medium enterprises.

Pioneer will not be able to access any of the money in the fund for its own operations.

The settlement will see consumers paying less for bread and flour in the coming weeks. Maseko said it was still not clear when consumers will see the actual price drop.

For years, South Africans have paid artificially high prices for bread and flour because of price-fixing and collusion by big companies.

Maseko said Cabinet commends the Competition Commission for the innovative settlement that included forcing the company to reinvest in activities that would bring new entrants into the industry through a competitive fund and the establishment of a special fund to bring food prices down.

"These innovative measures address uncompetitive behaviour but most importantly, will benefit consumers, especially the poor, by reducing the price of basic food products such as bread," Maseko told the media briefing.

Pioneer Foods is one of South Africa's largest food-processing companies, owning Sasko, Bokomo, Ceres and Heinz, among others.

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