| Mon 15 Mar 2010, 13:47 | | THEE - The Competition Commission - Wheat milling |
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JSE
THEE
THEE - The Competition Commission - Wheat milling cartel referred for
prosecution
Press Release
15 March 2010
Wheat milling cartel referred for prosecution
The Competition Commission, subsequent to its investigation into collusion in
the wheat milling market, has referred its findings to the Competition
Tribunal against Pioneer Foods (Pty) Limited ("Pioneer"), Foodcorp (Pty)
Limited trading as Ruto Mills ("Foodcorp"), Godrich Milling (Pty) Limited
("Godrich"), Premier Foods (Pty) Ltd ("Premier Foods") and Tiger Brands Ltd
("Tiger Brands").
The case was initiated following revelations by Premier Foods during the
bread cartel investigation that the cartel, which involved largely the same
companies, also covered their milling operations. Premier Foods and Tiger
Brands were subsequently granted conditional immunity from prosecution by the
Commission provided that they fully co-operate in the Commission`s
investigation and prosecution of this case.
In its investigation the Commission found that the respondents contravened
the Competition Act by engaging in price fixing and dividing markets by
allocating customers. This was facilitated through secret meetings and
telephone calls between the employees of these firms. Arrangements seem to
have been designed to, amongst other things, prevent price wars and
discounting in the industry. The meetings were held at various venues,
including churches, stadia and hotels.
Premier Foods, Tiger Brands, Foodcorp and Pioneer Foods control more than 90
percent of the wheat flour market. All four mill their own wheat into flour
and use it to supply both their own bakeries and independent parties such as
chain stores and smaller bakeries. Only Godrich does not have significant
baking operations of its own. Premier Foods, Tiger Brands and Pioneer Foods
have mills throughout the country, while Foodcorp and Godrich have mills in
Gauteng. Flour is the main ingredient in the production of bread.
The Commission has asked the Tribunal to impose an administrative penalty of
10 percent of annual turnover for the 2009 financial year on each of the
firms involved, except Premier Foods and Tiger Brands which have been granted
conditional immunity.
"In addition to the negative effect of this conduct on consumers, it has also
inhibited small bakeries from being effective competitors," says Commissioner
Shan Ramburuth.
ENDS
Further Info:
Keitumetse Letebele, HOD: Communications
012 394 3183/ 082 783 3397/ keitumetsel@compcom.co.za
Date: 15/03/2010 13:27:02 Produced by the JSE SENS Department.
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