Pioneer Foods to face Competition Commission

Unlike its competitors Tiger Brands and Foodcorp — who have settled their cases for R98-million and R45-million, respectively — Pioneer has proclaimed its innocence since complaints over the operation of a bread cartel were received in 2006.

The first was lodged against Tiger Brands and Pioneer regarding bakeries in the Western Cape.

The second was against Pioneer and Foodcorp.

In this matter, Premier Foods co operated with the commission, in exchange for corporate leniency, and provided damning information on a nationwide cartel that fixed prices and divided markets since 1999.

Pioneer has historically denied any involvement in the cartel, saying bread prices increased at the same time because all producers share the same input costs.

The company will ask the competition tribunal to dismiss the case without costs.

Funeka Beja, a foods analyst at Afena Capital, said: “The others [Tiger and Foodcorp] might also not have been guilty but settled because it would have been too much trouble to try fighting the case.

“[The] authorities are raising their focus on dealing with competition matters and if Pioneer loses, it could pay the maximum fine of 10percent of group profits which will amount to R1-billion.”

She said the fact that Pioneer had not made any provisions in its budget for a fine could indicate that it felt confident about winning the case.

Various countries around the world are taking a heavier stance against competition law offenders and South Africa seems to be following suit.

Despite vociferous objections from various parties, Parliament passed the Competition Amendment Act in February that will see company directors held personally liable for any competitive transgressions.

They now face jail sentences of up to 10 years or fines of R500000, or both, if found guilty.

Lawyer Heather Irvine, a director at Deneys Reitz's competition law division, however, warned that there was a danger of the competition authorities being embroiled in needless litigation.

“Certain provisions will place a significant burden on our already overburdened criminal justice system, since enforcement will remain the responsibility of the prosecuting authorities and the criminal courts,” she said.

Beja agreed that some of the amendments were unnecessary.

Source: The Times

Published courtesy of