Pioneer under fire at cartel hearings

While Pioneer Foods’s bakery arm, Sasko, is facing charges of participating in a national bread cartel, its senior management is shirking responsibility for the contraventions of the Competition Act.

This was a key argument made by Competition Commission advocate David Unterhalter during his cross-examination of Sasko’s managing director, Andries Goosen, who he described as irresponsible.

Unterhalter argued that because Pioneer had failed to investigate the charges when it was first informed of the commission’s investigation, and because it had not taken any disciplinary action against staff who had colluded with its competitors, this illustrated that the food giant did not take the allegations very seriously.

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 is taking the commission on, claiming it was not part of a national bread cartel.

It was not surprising that Unterhalter came out all guns blazing during his cross-examination of Goosen, as Pioneer’s case, for the most part, rests on his testimony.

Pioneer’s defence seems to be based on the fact that while staff members of Sasko may have attended meetings with competitors — where issues like maximum discounts for customers were discussed, as well as agreements reached to not poach each other’s customers — Goosen was unaware of his staff’s participation and did not sanction these meetings.

Because Goosen was unaware, Pioneer claims that it was not part of the bread cartel as Goosen was responsible for setting all prices for Sasko’s products, and therefore any information shared at such meetings could not have had an impact on his decisions.

However, this does not change the fact that these meetings were violations of the Competition Act.

“You seem to be saying ‘people in my organisation did these reprehensible things, but it wasn’t me so that’s alright’,” said Unterhalter to Goosen, who said he takes full responsibility.

“No disciplinary steps have been taken,” said Unterhalter. “No one has been dismissed, suspended or demoted.”

“We haven’t made any decisions about who goes, who stays and who gets fired, because these proceedings are not complete,” said Goosen, referring to the tribunal hearing.

“You’re waiting for the tribunal to tell you what to do,” stated Unterhalter, who went on to question why Goosen had not tendered his resignation over the fact that the collusion happened on his watch.

“I take responsibility for it because it was on my watch,” said Goosen. “I thought it wouldn’t make sense for me to have offered my resignation.

“I did not think it was necessary, my board would take action if they felt it was necessary,” said Goosen, to which Unterhalter responded: “Your board may be quite as irresponsible as you are.”

The rest of Unterhalter’s cross-examination consisted of pointing out how implausible Goosen’s claim that he was not aware of his senior staffers’ conduct was, and how his claim that he took all pricing decisions independently was also not entirely accurate.

“I think you are pretending to a naivety,” said Unterhalter. “Nobody as steeped in this industry as you are could not have known about these meetings.”

Unterhalter accused Goosen of turning a blind eye to the fact that regular communication occurred between competitors after the bread industry was deregulated.

“You deliberately chose not to suspect that it was continuing,” said Unterhalter.
Unterhalter pointed out that the only time that Pioneer investigated the charges was in order to prepare for litigation.

“You didn’t do that investigation to root out collusion, you did it to prepare for litigation,” he claimed.

Unterhalter also accused Goosen numerous times of attempting to mislead the tribunal during his testimony.

The hearing continues on Thursday with further cross-examination of Goosen.

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