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Milk fixing trial could cost state R1bn

By unknown | Feb 04, 2008 | COMMENTS [ 0 ]

Zweli Mokgata

Zweli Mokgata

The competition trial into the milk price-fixing scam could cost the government up to R1billion in administrative penalties.

This is because all penalties paid by companies found guilty of engaging in anti-competitive behaviour by the Competition Tribunal are not put back in the affected industry, but into the department of finance's coffers.

This was the case with the R98,9million fine paid by Tiger Brands for its role in the bread price-fixing scandal.

Imraahn Ismail-Mukaddam, the man who blew the whistle on the bread cartel, said he wanted to see some of the money from penalties reach affected retailers and consumers.

He said: "We were the ones to absorb the costs of higher prices, because we could not raise prices for our customers at the same rate that was done to us. Something needs to be done for us."

The treasury has not yet defined what it does with the money from the settlements. Cosatu's spokesman, Patrick Craven, said it wasn't enough for the company to be fined, but individual directors should also be penalised.

"A fine can easily be absorbed and passed onto the customer or redirected in their financials," he said.

"The commission should also enforce compulsory price reductions to effectively punish the company itself, and ensure that the consumer benefits from the outcome of the case."


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