State will get cream from fixed milk price

The competition trial into the milk price-fixing scam could net the government as much as R1-billion in administrative penalties.

This is because no penalties paid by companies found guilty of engaging in anti-competitive behaviour by the competition tribunal are put back in the affected industry, but into the department of finance's coffers.

This was the case with the R98.9 million fine paid by Tiger Brands for its role in the bread price-fixing scandal.

Imraahn Ismail-Mukaddam, the man who blew the whistle on the bread cartel, said some of the money from penalties should reach affected retailers and consumers.

He said, “We were the ones to absorb the costs of higher prices, as we could not raise prices for our customers at the same rate that was done to us. Something needs to be done for us.”

The treasury has not yet defined what it does with money from competition case settlements.

Patrick Craven, spokesman for the Congress of South African Trade Unions, said it was not enough for the company to be fined. He said individual directors should also be penalised.

“A fine on a company can easily be absorbed and passed on to the customer or redirected in their financials. The commission should also enforce compulsory price reductions to effectively punish the company itself, and ensure that the consumer benefits from the outcome of the case,” he said.

HB Senekal, a senior analyst for the Competition Commission and the lead investigator in the case in which eight dairy-product producing companies were accused of colluding to fix the price of milk, said: “The only way to deter companies from being involved in this type of activity is to give offenders the highest fine possible.”

Clover Industries, Clover SA, Parmalat, Ladismith Cheese, Woodlands Dairy, Lancewood Dairies, Nestle SA and Milkwood Dairy all face hefty fines for allegedly fixing the price of milk.

Heather Irvine, Deneys Reitz director, said: “The competition commission is starting to be more aggressive about prosecuting corrupt companies through more effective methods of investigation.”

Parmalat and Clover were both charged on six counts of violating competition laws, but Clover managed to have this reduced to five counts in exchange for information about fellow defendants.

Woodlands is being charged with five counts while the rest of the defendants are being charged with one count each.

Senekal said the case would take 10 weeks to complete, but would be pushed to the second half of the year because most of the companies' representatives would not be available until then.

He said, “Between now and then, the parties can decide to reach a settlement, but at the moment none of them is willing to admit guilt.”

Source: The Times

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