Pioneer Foods fined R195m for cartel role

The Competition Tribunal has imposed a R195-million penalty on JSE-listed Pioneer Foods for its role in a bread cartel.

This was the maximum penalty it was entitled to levy, the tribunal said in a statement on Wednesday.

It also ordered Pioneer to immediately desist from any similar conduct.

The cartel involved the Tiger (Albany), Premier (Blue Ribbon), Foodcorp (Sunbake) and Pioneer (Sasko and Duens) bakeries.

The tribunal said two complaints were brought against Pioneer.
These pertained to bread cartels operating in the Western Cape and inland.

“During 2007, Premier Foods sought leniency from the [Competition Commission] for its role in the cartel.

“Tiger Consumer Brands and Foodcorp subsequently negotiated agreements with the Competition Commission in which they agreed to pay fines and desist from the conduct,” the tribunal said.

Pioneer opted to fight the case and was the single respondent.

The tribunal found that the bread division of Pioneer was involved in a conspiracy to fix the increase of the price of a standard loaf of bread in the Western Cape and the timing of this increase.

“This, in addition to Pioneer’s concession made regarding the fixing of the agents’ commissions and those concessions made with respect to the various market allocations, amounts to a comprehensive contravention of Section 4(1)(b)(i) and (ii) of the Competition Act,” it said.

In terms of the inland/national complaint, Pioneer was also found to have contravened the same sections of the Act elsewhere in the country over a period of time extending as far back as 1999.

The unlawful agreement between the food groups operated in the southern Gauteng, Free State, North West, Mpumalanga and Limpopo regions, the tribunal found.

It said the penalty imposed on Pioneer amounted to 10% of Sasko’s national 2006 bread turnover.

The Competition Commission had asked for a penalty of 10% of Pioneer’s total group turnover, in effect between R396-million and R1,5-billion.

Pioneer had argued for a piecemeal approach with a penalty only in relation to the Western Cape matter, and not exceeding 2,25% of Sasko’s 2006 turnover for the province. However, the tribunal said that, had it done so, Pioneer would have faced a 10% penalty for each of the 14 times it was found to have contravened the Act.

The tribunal accepted that the Western Cape agreement was for a shorter duration than that the national/inland region.

It, accordingly, imposed a 9,5% penalty on Sasko’s Western Cape turnover for 2006 (R46 019 954) and a 10% penalty on Sasko’s 2006 turnover minus the Western Cape (R149 698 660).

Pioneer managing director Andre Hanekom said it was too early to comment on the ruling.—Sapa

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