GRAIN CARTEL crushed

THE Competition Commission has referred its findings to the Competition Tribunal regarding collusion in the wheat milling market, it said yesterday.

THE Competition Commission has referred its findings to the Competition Tribunal regarding collusion in the wheat milling market, it said yesterday.

Pioneer Foods, Foodcorp trading as Ruto Mills, Godrich Milling, Premier Foods and Tiger Brands were the firms involved in the matter.

"The case was initiated following revelations by Premier Foods during the bread cartel investigation that the cartel, which involved largely the same firms, also covered their milling operations," the commission said.

Premier Foods and Tiger Brands were subsequently granted conditional immunity from prosecution by the commission provided that they fully co-operated in the investigation and prosecution of the case.

The commission said it had found that the respondents had contravened the Competition Act by engaging in price fixing and dividing markets by allocating customers.

"This was facilitated through secret meetings and telephone calls between employees of these firms.

"Arrangements seem to have been designed to, among other things, prevent price wars and discounting in the industry."

The meetings were held at various venues, including churches, stadiums and hotels.

According to the commission, Premier Foods, Tiger Brands, Foodcorp and Pioneer Foods controlled more than 90percent of the wheat flour market. Premier Foods, Tiger Brands and Pioneer Foods had mills throughout the country, while Foodcorp and Godrich had mills in Gauteng.

"The commission has asked the Tribunal to impose an administrative penalty of 10percent of annual turnover for the 2009 financial year on each of the firms involved, except Premier Foods and Tiger Brands which have been granted conditional immunity."

It concluded that in addition to the negative effect of this conduct on consumers, the actions of the cartel had also inhibited small bakeries from being effective competitors. - Sapa

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