Competition Tribunal to hear complaint against Pioneer

The Commission has alleged that Pioneer was part of a bread cartel involved in price fixing, fixing the date of implementation of price increases and dividing markets in contravention of the Competition Act.

The Commission has asked the Tribunal for an order:

- Declaring that Pioneer had entered into an agreement or engaged in a concerted practice in that their conduct involves the direct or indirect fixing of a selling price and other trading;
- Directing Pioneer to desist from such conduct; and
- To levy an administrative penalty on Pioneer of 10% of their annual turnover for the 2006/7 financial year (national complaint) and 10% of their annual turnover for the 2006 financial year in the market for the production and sale of bread in the Western Cape.

Distributors of bread in the Western Cape telephonically complained to the Competition Commission about the alleged fixing of the price of bread in the Western Cape.

Bread producers, Premier and Tiger Brands after the investigation began, applied for immunity from prosecution in terms of the corporate leniency programme and were granted conditional immunity after agreeing to assist the Commission in its investigation and in proceedings before the Tribunal.

The Competition Commission has referred two complaints to the Competition Tribunal concerning the operation of a bread cartel.

The first complaint referral, against Tiger Foods and Pioneer, concerned only bakeries in the Western Cape.

Tiger Brands settled the case with the Commission and paid a penalty of R98 million, representing 5.7% of its turnover from baking in 2006.

The second complaint referral, against Pioneer and Foodcorp, concerns the whole country.

This was initiated after Premier fully cooperated with the Commission in its investigation and revealed that the cartel did not only operate in the Western Cape but also in other parts of the country by fixing prices, since November 2006, and dividing markets by allocating territories, since 1999.

Foodcorp settled with the Commission and paid a penalty of R45 million, representing 6.7% of its turnover for baking operations for the financial year 2006.

Pioneer denied that it was involved in a bread cartel.

According to it the bread prices increased at the same time because all bread shares the same input costs and that this market information was known to the trade.

It asked that the first and second complaints against it be dismissed with costs.

The two cases against Pioneer were consolidated on 6 January 2009.

In the first complaint, the Western Cape complaint, it was alleged that meetings took place every three months at a variety of venues in the Western Cape and in the second complaint, the National complaint, in Gauteng and Mpumalanga.

No minutes were kept of any of these meetings nor were any agendas prepared.

In the Western Cape complaint the Competition Commission found that price increases became effective from December 18 2006, the amounts by which prices increased were substantially the same and the discounts were reduced to a maximum of 75 cents per loaf.

The Commission specifically referred to meetings between 2002 and 2006 in which Sasko, Albany, Duens and Blue Ribbon discussed pricing, aligning of prices and timing of price increase.

According to Pioneer it did not increase its bread prices during 2004.

Pioneer argued that the Commission's claims were vague on the dates when the alleged meeting took place, those present at the meetings as well as what was discussed at the meetings and thus denied it.

In the National Complaint the Commission alleged that meetings took place on various dates and at different venues to fix the selling price of bread and other trading conditions.

Pioneer alleged that the Commission's affidavit was extremely vague.

It argued that of the seven meetings that the Commission referred to, Pioneer was only present at three.

Pioneer denied the existence of a cartel.

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