Tribunal told of bakers' secret pricing plot

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Lavery was testifying on the first day of the Competition Tribunal's public hearings on anticompetitive conduct in the bread market.

He said bakeries' representatives met in hotels to discuss their collusion, and exchanged market sensitive information. They decided on the bread price rises and dates on which they took effect.

The hearings are a sequel to an investigation into a bread cartel in the Western Cape started in 2007. During the probe, Tiger Brands and Premier, which owns the Blue Ribbon brand, applied for leniency.

Tiger Brands paid a fine of R98m. Foodcorp, a third player and owners of Sunbake Bakeries, paid a R45m fine.

But Pioneer Foods, the alleged fourth player in the cartel, denied charges of collusion, and this is the first big cartel case to have gone “to trial”.

The Competition Commission has asked the tribunal to impose a fine on Pioneer, declare that the company had engaged in anticompetitive behaviour and direct it to stop the practice.

The initial investigation concentrated on the Western Cape, but was widened after Premier told the commission that the cartel operated nationally.

Lavery, who was called to testify by the commission, said the bakers in the Western Cape had “informal meetings” about every three months at which price increases, the extent of the rises and dates of implementation, were discussed.

“As far as I can recall, there were no minutes kept of these meetings,” he said.

Gerhard Lourens, a former chairman of the Western Cape chapter of the Chamber of Baking, often convened the informal meetings, Lavery said.

“As far as I can recall, there were attempts at these meetings to align the pricing of the various bakeries and there were also discussions relating to discounts to agents,” he said.

Agents, or bread “resellers”, bought bread at discount to resell. Lavery said informal meetings ended in October 2003, which “coincided with a significant competition between the bakeries in respect of the pricing of their products”.

Source: Business Day

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