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12 Nov 2007 16:30
Tiger Brands has been ordered to pay a R98,7-million penalty by the Competition Commission after admitting to participating in bread and milling cartels, the commission announced on Monday.
Tiger Brands also agreed to assist the commission in prosecuting remaining cartel members who have not cooperated with the commission.
It will implement a programme to eradicate anti-competitive practices in the company.
In December last year, Western Cape bread distributors complained about alleged bread and milling cartels.
An investigation that ensued found Tiger Brands to be involved in illegal price-fixing in the bread industry, along with, among others, Premier Foods and Pioneer Foods.
Tiger Brands also conducted its own investigations when it heard about the allegations.
“Furthermore, Tiger [Brands] brought to the commission’s attention additional information regarding collusive activities in the milling industry and was granted conditional leniency in respect of this aspect of its business.”
Premier Foods was also granted conditional leniency from prosecution in exchange for assisting the commission in its investigations.
The commission said the administrative penalty imposed on Tiger Brands amounts to 5,7% of its national turnover for bread operations for the 2006 financial year.
The company is expected to pay the R98-million as a one-off payment within 30 days of confirmation of the penalty by the Competition Tribunal.
Competition commissioner Shan Ramburuth said the commission will seek higher fines for other members of the cartel that have not cooperated. The highest penalty the Competition Tribunal can impose is an amount up to 10% of annual turnover.
The settlement with Tiger Brands has now been referred by the Competition Commission to the Competition Tribunal for confirmation.
On Monday, Tiger Brands CEO Nick Dennis said the company took the allegations against it extremely seriously. “They ran counter to the ethical standards for which we are known and respected.”
Dennis said forensic auditors and economic experts were immediately employed to conduct an independent investigation into the matter. This investigation found evidence of meetings between certain Tiger Brands employees and some competitors that amounted to anti-competitive activity.
However, the investigations did not find evidence of abnormal pricing for bread or maize meals or adverse effects to consumers.
Tiger Brands is taking “appropriate disciplinary action” against the employees involved. “We do not tolerate anti-competitive behaviour in any of our businesses. It is deeply regrettable that this has occurred,” said Dennis.—Sapa
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