Pretoria - In the latest incident of price collusion among South African companies, Foodcorp (Pty) Ltd have reached an agreement with the Competition Commission to pay a penalty of R45.4 million.
The Competition Commission found that Foodcorp had engaged in anti-competitive behaviour including participation in a bread cartel.
"In terms of the consent agreement, Foodcorp admits that Sunbake Bakeries, operated by Foodcorp, was engaged in fixing the price of bread sold to consumers.
"Foodcorp has agreed to pay an administrative penalty of R45 406 359.82, representing 6.7 percent of Foodcorp's turnover from all its baking operations for the 2006 financial year," reported the Competition Commission, Monday.
Furthermore, the company has agreed to cooperate with the Commission in the prosecution of any other cartel members and to develop and implement a compliance programme to ensure that the company does not engage in anti-competitive behaviour again.
According to the Commission, various complaints were received in December 2006 regarding price fixing and market allocation by Premier Foods, Tiger Brands and Pioneer Foods.
The Commission initiated an investigation and shortly thereafter Premier Foods applied for leniency from prosecution under the Commission's Corporate Leniency Programme (CLP) in exchange for assisting the Commission in its investigation.
The investigation was subsequently expanded to include allegations of price fixing and market allocation throughout South Africa and to include Foodcorp as a respondent.
Premier Foods was granted conditional immunity for its participation in cartel activities in both the milling and bread industries.
It was found that between 1995 and 2006, the four major food producers were involved in fixing the price of bread and simultaneously raising the price on an agreed date.
"The Commission found that they held telephonic discussions and meetings where they directly fixed the selling price of bread.
"... [also they] directly fixed the dates when such agreed price increases would be effective, and divided markets by allocating territories where each firm would be the only one operating a bakery in a particular territory," the Commission reported.
Tiger Brands in 2008 also concluded a settlement agreement with the Commission which included the imposition of an administrative penalty of R98.7 million.
As Premier Foods had done, Tiger Brands also agreed to assist the Commission in prosecuting the remaining cartel members who had not cooperated with the Commission.
Competition Commission spokesperson Nandi Mokoena told BuaNews on Tuesday that the Competition Commission, which is an investigative body within the organisation, has completed its investigations and the case is therefore going before the Competition Tribunal.
The Competition Tribunal, Ms Mokoena said, is a legislative body which will either accept or deny the findings and agreed settlements of the Commission, and will follow normal court procedures.
Ms Mokoena confirmed that Pioneer Foods (Pty) Ltd, trading as Sasko and Duens bakeries, remains the only company which has not reached an agreement with the Commission and a court date has been set for some time in June 2009 for the case to be heard.
The Competition Tribunal is meeting on Tuesday to discuss the settlement agreement reached with Foodcorp, she said.
