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09 May 2008 15:42
Tiger Brands is starting a company-wide review to ensure there is no more anti-competitive behaviour after cartels in the healthcare and bread and milling sectors were recently exposed, CEO Peter Matlare said on Friday.
“We are cleaning house. We are going door-to-door and cupboard-to-cupboard.
We will not accept this kind of behaviour in a company such as Tiger,” Matlare told reporters in Johannesburg.
“We will be a decent corporate citizen.”
The announcement came as the Competition Commission slapped Adcock Ingram Critical Care, owned by Tiger Brands, with a R53-million fine for collusive tendering.
“[Law firm] Edward Nathan Sonnenbergs has been commissioned to review all of the businesses in the greater Tiger group in order to ensure that all operations are in compliance with the Competition Act, or to identify any non-compliant activity,” said Matlare.
Non-executive chairperson Lex van Vught said the company’s board was “anxious” to get the results as soon as possible.
He said they should be released—at the latest—by the end of the financial year.
Late last year, Tiger Brands received just under a R100-million fine for fixing the price of bread.
Adcock Ingram Critical Care (AICC), owned by Tiger Brands Limited, admitted to “collusive tendering” over a 14-year period and agreed to an administrative penalty of 8% of its turnover, the Competition Commission announced in a statement on Friday.
The penalty amounts to R53Â 502Â 800. In percentage terms, this is the “highest penalty to date for collusive behaviour,” it said.
The fine is related to a cartel operating in the medical market for the supply of intravenous medical products to hospitals.
AICC colluded with three other medical suppliers, Fresenius Kabi South Africa (FKSA), Thusanong and Dismed.
“They would agree amongst one another which company would tender for which product so that they would not compete with one another in the tendering processes.
“They fixed the outcome of the tendering process,” Competition Commission senior analyst Nandi Mokoena said.
“The reason why this is so bad, is that they could then inflate their prices because they knew there was no other competition in the tendering process.”
This went on for 14 years, between 1993 and 2007.
The commission is “in discussions” with Dismed and Thusanong, who were also investigated, said Mokoena.
FKSA received immunity from prosecution after making a deal with the commission to provide it with evidence.
“Collusive tendering for public contracts raises costs to public institutions and limits the quantity and quality of the goods and services they provide. Ultimately the taxpayer is being cheated,” said commissioner Shan Ramburuth.
Tiger Brands, in a statement to shareholders, said: “The ... allegations of collusive tendering and market allocation made in the complaint referral against AICC were substantially correct.”
It added that its CEO, Matlare, said the company was “extremely upset and embarrassed” about the situation and appropriate disciplinary measures would be taken.
Tiger Brands approached the Competition Commission to try to settle the matter, which led to the consent agreement that saw Adcock Ingram admit to collusive behaviour.
In the agreement with the Competition Commission, it admitted that “AICC and its competitors were involved in collusive tendering ... in the state tender for intravenous medical products”.
It also admitted that AICC and FKSA divided the private hospital market by allocating customers and specific types of goods or services among themselves.
“This is a good outcome. We would have achieved a similar result had we prosecuted the case, but that would have been costly. An agreement like this frees up our resources and enables us to pursue other cases,” said Ramburuth.—Sapa
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