Fur flies at Competition Tribunal

In a desperate bid to clear its name and avoid a whopping R1,2-billion fine, Pioneer Foods pulled out all the stops on the second day of its Competition Tribunal hearing.

The Competition Commission alleges that the company was part of a bread cartel involved in price-fixing.

Pioneer’s advocate John Newdigate jumped all over new evidence introduced by some of the Competition Commission’s witnesses, going as far as suggesting that witnesses may have conspired in the last 24 hours to introduce new evidence.

However his attempts to discredit the witnesses’ testimony were well deflected and the commission’s legal team left it late in the day to launch a counterattack of its own—an early draft of one of the witnesses statements from 2007—that included some of the evidence that Newdigate was claiming was false.

Pioneer Foods is attempting to clear its name on charges of collusion being faced by its bread businesses Sasko and Duens.

While Pioneer’s alleged fellow colluders Albany (Tiger Brands), Blue Ribbon (Premier Foods) and Sunbake Bakeries (Foodcorp) have all admitted guilt and settled with the Competition Commission, Pioneer maintains it was not part of the national bread cartel.

Its defence strategy so far has revolved around attempts to discredit the commission’s witnesses.

This began on day one of the hearing, with the cross-examination of Blue Ribbon’s regional director for the Eastern and Western Cape, Terrence Lavery. Newdigate attempted to discredit Lavery’s testimony by stating that the statement of his colleague Blue Ribbon Cape regional sales manager Dave Donovan was inconsistent with his own.

However Donovan took the stand on the second day of the hearing and reinforced claims made by Lavery, that the four bakeries had met on December 6 and December 12 2006 and had agreed on price increases and the dates these increases would come into effect. They also agreed not to poach each others’ agents.

Newdigate questioned Donovan on why this evidence had not been included in his witness statement and even implied through his line of questioning that he may have consulted with Lavery after Wednesday’s proceedings and had been asked to include the evidence in his testimony.

Donovan denied this and Newdigate had little option but to pursue another line of questioning.

Donovan testified that after the December 6 meeting—which he did not attend—Blue Ribbon’s regional operations manager for the informal trade, Graham Ford, had picked up noises in the market about the bakeries sitting around a table and discussing price increases and agent discounts.

Donovan claimed that Ford had warned both himself and Lavery, who were set to attend the follow up meeting on December 12 2009, that he thought they should boycott the meeting.

This was later confirmed by Ford, who testified after Donovan.

‘I could see problems coming from that meeting as it was being stated that the bakeries were sitting around the table discussing pricing and the agent’s discounts,” said Ford.

Donovan said they ignored Ford and attended the meeting, however Lavery said that what was being discussed at the meeting may be in contravention of the Competition Act.

‘Everybody joked about and it was ignored,” said Donovan.

Ford later testified about meetings that took place before October 2003, when relationships between the bakeries broke down.

Lavery had earlier testified how meetings between the four bakeries were very common up until October 2003, and at these meetings price increases and their implementation were regularly discussed.

Lavery detailed how the relationships between the bakeries had broken down in 2003, due to their failure to stick to price increase agreements that had been negotiated.

Lavery stated that there had been serious deviations from agreements that had been reached and this led to a lot of acrimony.

Lavery said this came to a head at a meeting at the Vineyard Hotel in 2003 where he stated that Sasko’s key account manager Gerhard Lourens had said, they ‘were never going to have these meetings again because they are as waste of time”.

This ushered in what the commission’s advocate David Unterhalter termed the ‘Cold War period” where between 2003 and 2006 the Western Cape bread market was defined by “price wars”.

Ford testified about a meeting he attended in July 2003, where representatives from the bakeries agreed upon price increases.

He claimed that Lourens and Sasko Bakery manager Louis Bester attended the meeting and were part of the agreement reached.

Newdigate jumped on this new evidence because it was not in his statement—implying that Ford was not being honest about the meeting.

However Unterhalter soon dealt with Newdigate’s line of questioning when he introduced as evidence a first draft of Ford’s statement that included testimony about meetings he had attended with Bester and Lourens.

The hearing continues on Friday with the testimony of Blue Ribbon’s manager of customer services for the inland region, Willem Jakobus.

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Lloyd Gedye

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