Cape-based milk processor Lancewood reached a settlement with the Competition Commission on Friday.
The company has agreed to pay a R100,000 penalty — less than 1% of its turnover — in exchange for co-operating with the commission in the prosecution of the others.
The other dairy-processing companies involved are Clover Industries, Clover SA, Parmalat, Ladismith Cheese, Woodlands Dairy, Nestlé SA and Milkwood Dairy.
Competition Commission manager of strategy and stakeholder relations Nandi Mokoena said on Friday the settlement did not set a precedent. The company faced only one count, and had admitted to an exchange of information between players in the industry.
The settlement is the latest development in a long and acrimonious battle between milk processors and the competition authorities, which saw Clover ask the trade and industry minister last year to exempt the dairy industry from competition regulation, because it was in distress.
Clover argued that information sharing in the industry was in line with an industry blueprint drafted and released by the trade and industry department when the industry was deregulated to deal with seasonal production fluctuations.
But the case is also dogged by allegations of serious irregularities on the part of the Competition Commission during the investigation.
Two of the companies, Milkwood and Woodlands, are challenging the basic procedure the commission followed when it expanded its investigation.
Legal counsel Jeremy Gauntlett refers in heads of argument to the “bizarre situation” the commission is defending, likening it to Alice's trial in Lewis Carroll's Alice in Wonderland, where the Queen of Hearts ordered: “Sentence first — verdict afterwards”.
Woodlands and Milkwood believe their constitutional rights have been violated in the process and want the case against them dismissed.
Gauntlett will argue that the commission's decision to use a single complaint — laid against Clover, Parmalat and Lancewood at the time — to investigate the entire dairy industry was unwarranted, and that the companies had been subjected to the “most invasive treatment” before any complaint had been initiated against them.
The companies also allege other irregularities, saying the investigators in the case were not “validly” appointed, that there were “obvious and fatal” deficiencies in the summonses against them and that interrogations conducted were “grossly irregular and unfair”.
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