16 February 2007  

BAKERIES TO BE PROSECUTED FOR CARTEL ACTIVITY

Major South African bakeries have been referred to the Competition Tribunal ("Tribunal") for allegedly engaging in cartel activity in the Western Cape. The Competition Commission ("Commission") concluded its investigation against Pioneer Foods Limited (trading as Sasko and Duens Bakaries) and Tiger Food Brands Limited (trading as Albany Bakeries), referring these companies to the Tribunal on 14 February. The Commission granted conditional immunity to Premier Foods Limited (trading as Blue Ribbon Bakery), under its Corporate Leniency Policy.

The investigation relates to conduct in the Western Cape but the Commission has also received information of similar conduct in other parts of the country and is currently investigating the matter on a national scale.

The Commission's investigation was initiated after independent distributors in the Western Cape complained that the major bakeries, Blue Ribbon, Albany, Sasko and Duens had

  • simultaneously increased the price of bread to independent distributors in the Western Cape by 30 - 35 cents per loaf;
  • simultaneously decreased and fixed the discount given to independent distributors to a maximum of 75 cents per loaf, regardless of volumes purchased; and
  • agreed not to supply each other’s independent distributors.

Premier Foods approached the Commission for leniency in terms of the Commission’s Corporate Leniency Policy and confirmed that the firms investigated in the Western Cape had held several meetings and exchanged information relating to the pricing of bread and discounts payable to independent distributors. Premier Foods has been granted conditional leniency and will not be prosecuted for its conduct in the Western Cape, pending full co-operation and the outcome of the investigation against the other cartel members in that region.

In referring the matter to the Competition Tribunal, the Commission will ask the Tribunal to impose an administrative penalty of up to 10% of the annual turnover of the respective bakeries.

If you have any further queries on this matter, contact:

Rob Legh
T: +27 11 669 9352
E: r.legh@bowman.co.za

Derek Lotter
T: +27 11 669 9357
E: d.lotter@bowman.co.za

Jean Meijer
T: +27 11 669 9384
E: j.meijer@bowman.co.z