Judge rejects dairy groups' appeal

Clover Industries, Ladismith Cheese, Parmalat, Lancewood and Nestlé SA applied to have a previous appeal finding overturned, but failed again before Judge Dennis Davis. The case was dismissed with costs.

The ruling paves the way for Competition Tribunal hearings into alleged price-fixing and collusion in the dairy processing industry to finally begin.

Davis is understood to have been scathing in his assessment of the merits of the appeal application, saying there was no reasonable prospect for success before another court.

But the judge is also understood to have taken a dim view of a perceived abuse of process.

Calling cartel behaviour, and price fixing, the most grievous of anticompetitive offences, Davis said it was in the public interest for such cases to be heard expeditiously. The collusion case against milk processors has been dragging on for almost two years.

The commission first started investigations into anticompetitive behaviour in February 2005, after it received a complaint from a milk producer. Having found evidence of price fixing, it referred a case against eight dairy processors to the tribunal in December 2006. Apart from the five appeal applicants, Clover SA, Woodlands Dairy, and Milkwood Dairy have also been implicated in the collusion. In June, Clover and Ladismith lost an initial bid to have the charges dropped, when the Competition Tribunal ruled against them on in limine points, or technical legal issues.

The two companies then asked the Competition Appeal Court to overturn that ruling, arguing that the initial complaint had lapsed after the expiry of one year, prescribed by the Competition Act, and that the commission did not get the necessary extensions from the initial complaint after the investigation period had ended. The bid was rejected in September. However, the five applicants then brought the subsequent appeal.

Competition commissioner Shan Ramburuth welcomed Davis's ruling yesterday.

“The important thing I understand the judge to have said, is that competition cases need to be dealt with expeditiously in the public interest, especially given the grievousness of what cartels do, and I fully agree with that,” Ramburuth said.

“The strategy that businesses increasingly deploy to prolong cases is very worrying for us. This kind of thing is designed to frustrate us, and it consumes resources. It also means that as long as a cartel is able to prolong its actions, ordinary customers are being cheated,” he said.

The companies face charges ranging from exchanging information, having supply agreements, abusing exclusive supply agreements with producers, market allocation, fixing retail prices, to fixing the selling prices of milk and processed diary products.

Clover applied for leniency under the commission's leniency programme, and was granted leniency on the price-fixing charge in exchange for co-operating with the commission in the prosecution of other milk processors.

If they are found guilty, the companies could face penalties of up to 10% of their turnover.

Source: Business Day

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