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The
grain and oilseed industry
of south africa – A journey through time
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R30 million over a period of three years, with the intention that the trust funds be
employed for projects to the benefit of producers.
In addition to the above transgressions, the Competition Commission investigated
a complaint of alleged abuse of their dominant position in the fertiliser industry
against Sasol Nitro. With respect to that complaint Sasol Nitro concluded a set-
tlement agreement with the Competition Commission on 5 July 2009, which in-
volved a restructuring of Sasol’s fertiliser industry, which eventually contributed to
greater competition in the fertiliser industry.
Collusion in the baking and milling industry
During December 2006 the Competition Commission received information on an
alleged bread cartel operating in the Western Cape. After a preliminary investi-
gation the Commission lodged a complaint against Premier Foods (Blue Ribbon
brand), Tiger Brands (Albany) and Pioneer Foods (Sasko).
During the subsequent investigation Premier Foods applied for indemnity and de-
clared themselves willing to assist the Commission in its investigation. Premier
Foods disclosed that it had in fact operated a bread cartel in the Western Cape
together with Tiger Brands and Pioneer Foods by agreeing on the fixing of bread
prices and other trading conditions.
Premier Foods further revealed that a bread cartel, of which it had been a mem-
ber, existed in other parts of South Africa, and that Foodcorp (Sunbake Bakeries)
was involved and that the cartel extended to the milling industry. The Competition
Commission expanded its investigation to the inland cartel and the practices in the
milling industry.
In the case of the complaint in the Western Cape the Competition Tribunal found
Premier Foods, Pioneer (Sasko) and Tiger Brands guilty of violating sections
4 (1)(b)(i) and (ii) of the Competition Act. The tribunal found that the three firms
had agreed in December 2006 on the implementation of increases in the bread
price, both with respect to the price by which it would increase, and the dates on
which it would be implemented.
They also agreed that none of them would supply new clients or previous employ-
ees with bread. Furthermore, none of the firms would deliver bread to any clients
on 25 and 26 December 2006.
In the case of the other complaint (the national/interior complaint), the Competition Tri-
bunal found that Pioneer Foods, Tiger Brands, Premier Foods and Foodcorp had been
party to various violations of the Competition Act since 1999. This included agree-
ments on the division of markets, the fixing of prices and the dates on which these
prices would come into effect. During 2003 and 2004 they had also agreed not to allow
clients to change suppliers during the implementation of price increases and not to
steal each other’s clients.
The cases against Premier Foods, Tiger Brands and Foodcorp were completed
during 2009, but in the case of Pioneer Foods finality was reached only in
February 2010.
In terms of its initial indemnity, Premier Foods did not receive any fine. Foodcorp
eventually reached an agreement with the Competition Commission in terms of
which Foodcorp paid an administrative fine of R45,4 million. Arising from the set-
tlement agreement between Tiger Brands and the Competition Commission, in
terms of which Tiger Brands agreed to assist the Commission in its investigation,
Tiger Brands paid an administrative fine of R98,7 million.
Pioneer Foods was not prepared to admit its guilt to the violation of the Compe-
tition Act and tried to prove its innocence until the end. They did not succeed,
however, and eventually the company was given a total fine of R195,7 million by
the Competition Tribunal in 2010, of which R46 million was for the transgressions
in the Western Cape and R149,7 million for the interior/national transgressions.
Through the extent of the fines and in the judgment the Competition Tribunal ad-
dressed a strong warning against uncompetitive practices in agriculture.