| Thu 25 Feb 2010, 13:50 | | THEE - Competition Commission - Commission appeals bread cartel penalty |
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JSE
THEE
THEE - Competition Commission - Commission appeals bread cartel penalty
Press Release
25 February 2010
Commission appeals bread cartel penalty
The Competition Commission yesterday lodged an appeal with the Competition
Appeal Court against the Competition Tribunal`s earlier ruling on the
administrative penalty imposed on Pioneer, for its involvement in the bread
cartel.
In this case the Commission alleged that Pioneer Foods, which owns Sasko and
Duens bakeries, together with Tiger Brands, Foodcorp and Premier Foods colluded
to increase the price of bread. Premier was granted leniency in exchange for its
cooperation with the Commission, while Tiger and Foodcorp settled their cases,
admitted the conduct and paid administrative penalties.
The Commission proceeded with the case against Pioneer and asked the Tribunal to
impose a penalty of 10% of the Pioneer group turnover for 2006. Following a
hearing, the Tribunal found that Pioneer had indeed colluded with fellow
bakeries to fix the selling price of bread and to allocate markets amongst
themselves. In its finding, the Tribunal noted that cartels are the most
egregious offences in competition law, that poor consumers were particularly
affected and that, absent mitigating factors, cartels deserved the maximum
penalty provided in law. The Tribunal also concluded that Pioneers defence was
premised on manifest falsehoods. The Tribunal then imposed a penalty of R195
million, being 10% of Pioneer Foods baking division`s turnover for 2006, rather
than its group turnover.
The Commission welcomes the findings of the Tribunal on the facts, namely that
Pioneer had engaged in cartel behaviour, but does not believe that the criteria
prescribed by the Tribunal to determine the penalty are appropriate to deter
cartel behaviour.
"While the Tribunal judgment appropriately castigates this cartel behaviour, we
are not happy with the manner in which it calculated the penalty. Administrative
fines must be set at levels that effectively deter anti-competitive behaviour.
We believe that the precedent set by this ruling will negatively affect the
Commission`s ability to set effective fines in future cases" says Commissioner
Shan Ramburuth.
The Commission has asked the appeal court to reverse the Tribunal`s finding on
the penalty and impose a penalty of 10% of Pioneer`s group turnover, which would
amount to approximately R1,5bn.
ENDS
Further info:
Keitumetse Letebele, HOD: Communications
012 394 3183/ 082 783 3397/ keitumetsel@compcom.co.za
Date: 25/02/2010 13:50:01 Produced by the JSE SENS Department.
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