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Tribunal imposes penalty of R195 million on Pioneer

(To date, the maximum penalty the tribunal is entitled to levy)

Summary

The Competition Tribunal has, today 3 February 2010, imposed a penalty of R195 718 614, on Pioneer for its role in a bread cartel and has ordered Pioneer to desist from such conduct forthwith. The cartel involved the four primary bakeries Tiger (Albany), Premier (Blue Ribbon), Foodcorp (Sunbake) and Pioneer which owns Sasko and Duens bakeries. Together the four bakeries enjoy a market share of between 50-60% of the domestic bread market in South Africa.

The case concerns two complaint referrals brought against Pioneer of a bread cartel operating in the Western Cape (the Western Cape complaint) and a bread cartel operating in inland region (referred to as the Inland/National complaint). During 2007 Premier Foods sought leniency from the Commission for its role in the cartel. Tiger Consumer Brands and Foodcorp subsequently negotiated agreements with the Competition Commission (consent order agreements) in which they agreed to pay fines and desist from the conduct. Pioneer opted to fight the case before the Tribunal and remained as the single respondent in the matter.

The administrative penalty of R195m amounts to 10% of Sasko’s (Pioneer’s bread baking division) national 2006 bread turnover. The Competition Commission asked the Tribunal to impose a penalty of 10% of Pioneer’s total group turnover, not only on its baking division for each complaint. In effect the Commission was seeking a penalty of between R1.5bn to R396m. Pioneer on the other hand asked the Tribunal to adopt a piece-meal approach and to impose a penalty upon it only in relation to the Western Cape referral arguing that this should not exceed 2.25% of Sasko’s (bread division) 2006 turnover for the Western Cape. Had the Tribunal followed the latter approach, Pioneer would be facing a maximum penalty of 10% in respect of each occasion when it was found to be in contravention of the Act – in this case this would amount to fourteen contraventions - seven in the Western Cape and seven in the inland region.

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Competition Tribunal Judgement