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The Congress of South African Trade Unions congratulates the Competition Tribunal on its decision to impose a penalty of R195 718 614, on food company Pioneer for its role in a bread price-fixing cartel.
This price-fixing is nothing less than theft from the poorest consumers, who spend a high proportion of their meagre incomes on bread. It is absolutely outrageous that they should have to pay even more in order to boost the profits of these big four bakeries - Tiger (Albany), Premier (Blue Ribbon), Foodcorp (Sunbake) and Pioneer (Sasko and Duens) - who share 50-60% of the domestic bread market in South Africa.
The Tribunal had no hesitation in finding that Sasko and Duens has been involved in a conspiracy to fix the increase of the price of a standard loaf of bread in the Western Cape and there was clearly an overall agreement or understanding among Pioneer, Tiger, Premier and Foodcorp in the inland region which led to agreements on price increases, territorial divisions, customer allocation and other trading conditions.
COSATU agrees with the Tribunal that Pioneer had not made out a case for any leniency whatsoever, since its entire defence was based on manifest falsehoods. The General Manager of Sasko Bakeries, Andries Charl Goosen, not only lied to the Tribunal and mislead it, but admitted to lying under oath.
The Tribunal also noted that even after the Commission's initial complaint, Pioneer did not conduct a full enquiry or investigation to root out this behaviour in its company or to bring to book any of the individuals involved and no action had been taken against any of the employees implicated. When it eventually did conduct an investigation it concealed the outcome of this by cloaking it in a claim of litigation privilege.
The penalty of R195m amounts to 10% of Sasko's national 2006 bread turnover, though COSATU would have favoured the Competition Commission's preferred option of a penalty of 10% of Pioneer's total group turnover, not only its Sasko baking division.
While welcoming the penalty, however, COSATU reiterates its concern that any fine on the company, however large, does not hit those directly responsible for the price-fixing. The cash will come from the companies' coffers and could even be recouped by increasing prices, which defeats the whole object of the exercise.
The federation demands that the individual company directors of Pioneer should be dismissed, and welcomes the new legislation, though it came too late to be applied in this particular case, that will enable the Competition Tribunal to fine individual directors of companies convicted of price-fixing. COSATU would also like to see legislation to compel such companies to compensate their consumers by cutting their prices by a specified amount for a specified period until the money illegally stolen has been returned