Foodcorp Reaches $10m Settlement With Competition Commission

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VENTURES AFRICA – South Africa’s Competition Commission has settled two cartel cases against Foodcorp, as a result of which Foodcorp is required to pay 88.5 million rand ($10.2 million) in penalties.

Foodcorp has admitted to acting in contravention of the Competition Act by colluding with other market leaders in the price fixing of wheat flour and maize meal between 1999 and 2007, pleading guilty to charges laid against it by the Competition Commission in 2007.

The Commission today revealed that a settlement agreement has been reached between the parties which sees Foodcorp agree to the 88.5 million Rand ($ 10.2 million) fine which is equivalent to 10 per cent of the company’s 2010 turnover.

Furthermore, Foodcorp has agreed to cooperate with the Commission in its prosecution of other members of the cartel, in particular, Foodcorp has undertaken to give evidence before the Competition Tribunal against the other cartel members.

The Competition Commission launched the complaints against Foodcorp and other market players – including Tiger Brands, Pioneer Foods, Foodcorp, Premier Foods and Godrich Milling with respect to wheat flour; and Tiger Brands, Pioneer Foods, Foodcorp, Premier Foods, Pride Milling, Progress Milling, Blinkwater Mills, Godrich Milling, TWK Milling, Keystone Milling, Westra Milling, Carolina Rollermeule, Brenner Mills, Paramount Mills, NTK Milling, Kalel Mills, Bothaville Milling and Allem Brothers with respect to maize meal – in 2007, pointing to price fixing among the food producing groups with a view to limiting price competition across the market.

Following investigations, the Commission found that not only had the parties agreed on fixed prices and unified price increases, but that multiple meetings took place to agree the timing of price implementations, for example.

As such, the Commission referred cases against the above companies to the Competition Tribunal, which has yet to hear the cases. However, the Commission confirms that the Tribunal has acknowledged the settlement agreement with Foodcorp.

Other settlements have also been agreed with Pioneer Foods, Keystone Milling and Carolina Rollermeule, while Godrich Milling is the sole party to contest the claims.