‘Consumer class action launched against bread cartel’
Joint Media Statement - Children’s Resources Centre, Black Sash, COSATU (Western Cape) and the National Consumer Forum
EMBARGOED UNTIL 10am on Tuesday, 23 November 2010
The Children’s Resources Centre, Black Sash, COSATU (Western Cape), the National Consumer Forum and five individual bread consumers (Tasneem Bassier, Brian Mphlele, Trevor Benjamin, Nomthandazo Mvana and Farreed Albertus) have launched a massive class action seeking unprecedented damages against Pioneer Foods, Tiger Consumer Brands and Premier Foods. The application against the three major bread producers was filed in the Cape High Court on Friday, 19 November 2010 and follows the Competition Commission’s findings that they all participated in a cartel that fixed the price of bread in December 2006.
Human Rights lawyer Charles Abrahams (of Abraham Kiewitz Attorneys), who today applied for permission on behalf of the group to act as class representatives, says the action is unique and innovative. “It’s only the second class action ever undertaken in South Africa, and the first of its kind to seek actual damages for the victims, and on such a large scale. Although administrative penalties have been handed down by the Competition Commission, the consumers who suffered as a result of the unlawful actions of these companies have not been compensated. Our class action is initially aimed at representing the millions of bread consumers in the Western Cape, but we intend to extend it nationally as well. Should we be successful, we would like to set up a Trust that would benefit consumers,” explains Abrahams.
In a separate but parallel class action, a group of small independent bread distributors, including Imraahn Ismail-Mukaddam who blew the whistle on the price-fixing scandal, is also seeking compensation on behalf of distributers in the Western Cape. The Competition Commission finally reached a settlement with Pioneer Foods a few weeks ago after both Tiger Consumer Brands and Premier Foods admitted involvement in the cartel. Premier was granted leniency for co-operating with the Commission and Tiger Consumer Brands reached a settlement in late 2007.
Black Sash National Director Marcella Naidoo says although all the companies received record fines, the penalties were still considerably less than the initial amounts recommended by the Commission. “They had asked for a penalty of 10 percent of Pioneer’s national annual turnover for 2006/7, and 10 percent of its turnover for the production and sale of bread in the Western Cape for the same period. Although the R1 billion fine is the biggest ever imposed on a South African company, it must be remembered that Pioneer Foods was completely uncooperative. They initially denied any wrongdoing and then vigorously resisted prosecution and the payment of any penalties,” says Naidoo.
Co-ordinator of Children’s Resources Centre Marcus Solomon agrees that the cartel companies got off too lightly. “Their ongoing collusive activities impacted heavily, and directly, on the poorest and most vulnerable members of our society over many, many years. They inflated and profited illegally from the sale of a staple food that many families, especially our children, rely on to survive,” insists Solomon.
Two of the co-applicants, Tasneem Bassier and Nomthandazo Mvana, spend nearly a quarter of their meagre monthly income on bread alone. “Bread is an essential part of our daily diet. I buy 3 loaves a day and even the smallest increase impacts on my ability to feed my children,” explains Mvana. Bassier, who buys 2 loaves a day to feed her four kids, says she has “suffered very badly over many years because these companies have overcharged us for bread.”
Chairperson of the National Consumer Forum Thami Bolani insists the unlawful actions of the three bread producers violated the provisions in the ‘Bill of Rights’ dealing with the right to food and nutrition, especially for children. “We believe colluding companies deserve harsher penalties and that consumers should be compensated. Consumer law is developing very rapidly in South Africa and we hope a class action of this kind will set an important precedent, particularly in the interests of poor communities,” says Bolani.
Cosatu Western Cape Regional Organiser, Mike Louw, agrees that every consumer who bought bread during the period in question suffered damages as a result of the unlawful price fixing. “Food price increases have a particularly heavy impact on working class people. The poorest households in South Africa spend over half their income on food. At this stage, it is very difficult for us to quantify the amount of damages we are seeking as we first need to take a good look at the companies' records and results. We do, however, expect it to run into many millions of rands,” explains Louw.
Co-applicant Brian Mphlele, who supports four family members on his Disability Grant and special pension, insists the bread producers “robbed millions of poor and vulnerable people on a daily basis over many years.” The last two applicants, Trevor Benjamin and Farreed Albertus, say they hope their action will encourage other consumers to stand up for their rights. “In a country like ours, with such high levels of unemployment and poverty, it is almost unforgiveable for wealthy companies to profit illegally from the basic foods that poor people need to survive, ” says Benjamin.
“I am angry that food prices - especially those of basic goods - continue to skyrocket despite the fact that so many companies have been found guilty of collusion and price-fixing over the past three years. When are consumers going to be compensated for their suffering?” asks Albertus.
We will be holding a MEDIA BRIEFING on the steps of the Cape High Court at 1pm today (Tuesday, 23 November 2010). The Judge is due to begin hearing our provisional class certification (application to represent the whole class of consumers) at 10am this morning.
For interview requests, please contact:
Co-ordinator of Children’s Resources Centre
Cell: 072 468 2156
Black Sash National Director
Cell: 082-462 1003
Black Sash Advocacy Programme Manager
Cell: 082-429 4719
Chairperson of the National Consumer Forum
Cell: 083-679 9489
Cosatu Western Cape Regional Organiser
Cell: 082-339 5443
For more information, please contact:
Black Sash Media Officer
Cell: 073-150 9525