Although the Competition Commission would not confirm yesterday that an agreement had been reached, Paarl- based Pioneer may as soon as today announce a settlement with the commission. It faces a R195,7 million fine for its role in fixing bread prices, and has separate allegations hanging over its head for colluding in the markets for maize and wheat milling.
In September, Pioneer said the R350 million it had made provision for to settle both cases was likely to be insufficient to meet its fines, but it believed settlement could be finalised "within the next few weeks".
Investors hope so. "The sword of Damocles (hanging over the company) is how much is the fine. The guys want to pay the fine and get on with their business," said one analyst.
A settlement would end a gruelling year for the company, give shareholders certainty and allow the company to continue with plans it announced last week to buy wine and spirits company KWV Holdings.
Despite its self-inflicted wounds and the consequent uncertainty, Pioneer remains a company investors want to stick with. The company's share price has risen 42% over the past year. Over the same period, the JSE's all share index has gained just 16% and larger rival Tiger Brands 19%.
Pioneer was slapped with the R195,7 million fine in February by the Competition Tribunal, which was scathing in its assessment of the company.
In earlier tribunal hearings, Pioneer maintained that it had done no wrong, even as its rivals cut deals with authorities to settle for lesser fines in exchange for giving details of their collusive behaviour.
"Pioneer's entire defence has been mounted on the basis of manifest falsehoods," the tribunal said in its ruling.
The fine, equal to 10% of Pioneer's Sasko unit's bread turnover in eight provinces, plus 9,5% of its turnover in the Western Cape, was the highest fine in percentage terms the Competition Tribunal had imposed. By value, it was second only to the R250 million fine levied against Sasol 's chemicals division last May.
In March, chairman Boy Blanckenberg, vice-chairman Nols Louw and three other board members resigned. New board member Zitulele "KK" Combi was appointed chairman. Existing board member Iqbal Survé was named vice-chairman.
The company also dropped its hostile tone, saying it will co-operate with the commission to try to conclude a separate case involving price fixing in maize- and wheat-milling markets.
Spokesman Johannes van Niekerk said Pioneer could not comment on an announcement.
Oupa Bodibe, the commission's manager for advocacy and stakeholder relations, also declined to comment. "We will make an announcement when the time is right," he said.
Pioneer shares yesterday closed up 1% at R49,50.
Source: Business Day
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