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By Adele Shevel | Feb 04, 2010 | COMMENTS [ 0 ]

THE Competition Tribunal yesterday slapped a R195,7million penalty on Pioneer for its role in a bread cartel.

The fine amounts to 10percent of Sasko's (bread baking division) national turnover for 2006 and 9,5percent of its Western Cape turnover for the same year.

It is the highest percentage fine yet imposed by the tribunal.

In 2007 the tribunal imposed a 5,7percent penalty of R98,8million on Tiger Brands as part of the same industry's anti-competitive behaviour.

The cartel involved the four main bakeries: Tiger, Premier, Foodcorp, and Pioneer.

The four bakeries together hold a market share of between 50percent to 60percent of the domestic bread market.

Two complaint referrals had been brought against Pioneer - of a bread cartel operating in Western Cape and one operating inland.

In 2007 Premier Foods sought leniency from the Competition Commission for its role in the cartel. Tiger and Foodcorp subsequently negotiated agreements with the commission in which they agreed to pay fines and desist from the conduct.

Pioneer, however, chose to fight the case before the tribunal and remained the single respondent in the matter.

The tribunal said Pioneer's main witness, Andries Charl Goosen, not only lied to the tribunal and misled it, but admitted to lying under oath. Up to the date of the hearing no action had been taken against any employee implicated in this conduct.

The tribunal found that Pioneer, Tiger Brands, Premier and Foodcorp had contravened part of the Competition Act by agreeing to a division of markets during 1999 to 2001, which in its view still persists.

As for the price increases in 2004, Pioneer's documents show its intention to increase its bread prices in 2004 in coordination with its competitors, the tribunal said.


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