Bread producers may face class action

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Defining a "class" for purposes of launching a class action, and the correct procedure that must be followed to certify the class, was put before the Supreme Court of Appeal in Bloemfontein on Tuesday.

The court heard a certification application from bread distributors, who claim they had been "prejudicially affected" by the conduct of the country's major bread producers, Pioneer Foods, Tiger Brands and Premier Foods.

Independent bread distributor Imraahn Ismail-Mukaddam complained at the end of 2006 to the Competition Commission that the bakers had colluded when they collectively decided to reduce the discounts offered to the distributors.

The Competition Tribunal found Pioneer Foods, Tiger Brands and Foodcorp guilty of contravening the Competition Act.

Premier Foods received corporate leniency from the commission and did not receive a penalty, but was included in the claim for damages by the distributors.

Paul Hoffman SC, appearing for the independent distributors, amended his definition of the class following some criticism from the bench on the way the class had been defined in the notice of appeal.

Judge Nugent said the principles of class action required that the class should be identified objectively and could not depend on who was likely to succeed with the action.

Hoffman said the class action was limited to the bread distributors in the Western Cape, who received a lesser discount due to the collusive actions by bread producers. It should include those distributors who did not pass on their losses to consumers. Ismail-Mukaddam's claim amounted to R4m.

The Competition Act, unlike the Consumer Protection Act, does not provide for class action. The only class action brought successfully in South Africa had been in terms of infringements under the Constitution.

Schalk Burger SC, appearing for Pioneer, argued that the court papers on which the distributors relied, where "fatally defective" as there was no clear definition of a class and there was no clear prima facie case made to the court.

It was also not clear from the evidence what the damages were.

Premier and Tiger Brands also questioned the argument raised by the distributors that their choice of profession, in terms of Section 22 of the Constitution, had been hampered due to the illegal action by the bread bakers.

John Dickerson SC, appearing for Tiger Brands said there were only vague assumptions that their choice of profession had been negatively affected. Evidence before the court was that some distributors had been liquidated and forced out of business because of a loss of income.

Today the court will hear an application for a class certification from bread consumers. The Black Sash, the Children's Resource Centre, trade federation Cosatu and the National Consumer Forum, said in a joint statement they said they were confident the Supreme Court of Appeal would overturn the decision by acting Judge Francois van Zyl in the Western Cape High Court to refuse the group a class certificate.