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'We believe cartel fixed bread prices'

By Zweli Mokgata | Jun 18, 2009 | COMMENTS [ 0 ]

PIONEER Foods will have a difficult time proving its innocence over the next two weeks when a host of witnesses testify that the company broke competition laws in a bread price-fixing cartel.

Yesterday was the first day of competition tribunal hearings that could see Pioneer Foods paying a R1billion fine or 10 percent of its 2007 revenue.

The commission, which conducted the investigation into a bread cartel started in 2006, was the first party to make a statement at the hearings.

The commission said it firmly believed that the four cartel members - Premier Foods, Pioneer Foods, Foodcorp and Tiger Brands - had fixed prices of bread and allocated markets to avoid competition.

Tiger Brands and Foodcorp settled their cases for R98million and R45million, respectively, while Premier Foods provided damaging information about the cartel in exchange for corporate leniency.

Terence Lavery, Cape regional director of Premier Foods, was the first witness to make a statement yesterday detailing the meetings where the cartel discussed pricing and dividing of markets.

He said: "It was common that after the formal meetings of the Cape Chapter of the Chamber of Baking the various participants would also discuss pricing of their products.

"After discussions at a meeting in 2006 Willie Marais [director at Tiger Brands' Albany Bread] contacted me to discuss the impending bread price increases.

"During the call Marais indicated that he would like to meet representatives of Sasko [Pioneer], Duens [Pioneer] and Blue Ribbon [Premier Food] bakeries."


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