Price hike of daily bread an 'insult to the poor'

The increase in bread prices by large producers was blatant profiteering and an insult to the nation, particularly the poor, the Competition Commission said yesterday.

The increase in bread prices by large producers was blatant profiteering and an insult to the nation, particularly the poor, the Competition Commission said yesterday.

The commission said the move to increase the prices at roughly the same time - and following collusion uncovered in the industry - "flew in the face" of the ongoing investigation into the bread and milling industries.

"This blatant profiteering demonstrates that either the collusion is continuing or the cartel members are acting to maintain the artificially high margins they achieved by acting unlawfully," said competition commissioner Shan Ramburuth.

Tiger Brands began charging 40c more for a loaf of Albany bread on Monday, with Pioneer Foods and Premier Foods considering their increases.

The commission said it would be going ahead with the R99million fine imposed on Tiger Brands last year for price-fixing.

"Should evidence show that the collusive behaviour is continuing, we are able to withdraw the immunity we've granted to other players. We are also prosecuting the remaining cartel members, Pioneer and Foodcorp," said Ramburuth.

He said they had received new allegations of other anti-competitive behaviour by the parties, which it was "vigorously pursuing".

Ramburuth said while it was not the commission's job to ensure compliance with the law, nor set prices, it had expected its recent actions to prompt bread producers to reduce prices rather than increase them again.

He said that while wheat and transport costs might have risen, firms colluding to set prices did so to get the highest price possible.

"The increases come on top of what is an artificially high price and could have been seized by the bread producers as an opportunity to suppress the margin to what would be more market related," he said.

Tiger Brands and Premier Foods had not mentioned the increases during negotiations.

"We have to wonder if this is a cynical act to demonstrate a false transparency or if it is price signalling to their competitors.

"It would appear that old habits die hard."

Ramburuth said the commission would institute more rigorous reporting requirements for companies that contravened the act.

He said it anticipated market participants, shareholders and consumers would increasingly help as watchdogs to hold companies accountable.

Tiger Brands group executive for corporate affairs Jimmy Manyi said: "We maintain our position that the price increase was due to the wheat and fuel price increase. The wheat price has almost doubled in the past 12 months and that was the major driver in the bread price increase."

Premier Foods' corporate affairs manager Steven Mallach said: "In terms of our agreement with the Competition Commission we are prohibited from commenting on the status of those investigations [into price collusion]."

On Monday, Premier Foods said the company would finalise its increase within 10 to 14 days.

Pioneer Foods managing director Andre Hanekom said they expected increases of between 35c and 40c, depending on the loaf and where it was sold. - Sapa

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