Foodcorp responds to Competition Commission charges

6 Jan 2009

Food manufacturer and distributor Fodor (Foodcorp) will not contest recent bread price fixing charges brought against the company by the Competition Commission. However, the company categorically denies taking part in any market division activity.

Resolution of the Competition Commission's investigation into the company's alleged involvement in bread price fixing was confirmed by the Competition Tribunal on 6 January 2009. In terms of the Consent Order, Foodcorp will agree to pay a fine of R45 million which will be payable in three annual instalments. The fine amounts to 6.7% of Foodcorp's annual turnover from its bakery operations.

Foodcorp was implicated in 2007 in the bread price fixing investigation, which included Tiger Brands (Albany), Premier Foods (Blue Ribbon) and Pioneer Foods (Sasko), with charges being brought against the company by the Competition Commission. Foodcorp, by far the smallest bread producer of the four, produces approximately only 6% of the country's bread.

”After conducting a comprehensive internal investigation, Foodcorp will not be contesting the charges of bread price fixing levelled by the Competition Commission. Far-reaching internal corrective measures within the company have been put in place to ensure that Foodcorp in future does not find itself in this position again,” said Foodcorp CEO Justin Williamson. In addition, we have co-operated throughout with the Competition Commission's process.”

On the charges of market division and allocation among the milling and baking companies, Williamson says, “Foodcorp categorically denies any charges of wrongdoing in this area. Any bakery closures were based purely on the continual decline in the viability of running them.”

Premier Foods was earlier granted immunity from prosecution through its cooperation with the investigation and Tiger Brands was fined over R98 million after admitting guilt.

Concludes Williamson, “Our unwillingness to contest these charges should be seen as evidence of our commitment to ethical dealings since the present structure of Foodcorp was established in 2004. We have put measures and processes in place to ensure that our business stands up to scrutiny in the future, and we hope that the Competition Commission will see this in a positive light, as well as accept that, even though we are a small player in the bread market, we have given our full co-operation.”

The Competition Tribunal confirmed the Consent Order on 6 January 2009.