Black Sash welcomes Competition Commission's R1bn settlement with Pioneer Foods - Wednesday, 3 November 2010
Black Sash Media Statement - Competition Commission settles with Pioneer Foods - Wednesday, 3rd November 2010
The Black Sash welcomes the fact that the Competition Commission has finally reached a settlement with Pioneer Foods. However, we are deeply disappointed that the total penalty of nearly R1 billion is considerably less than the initial amount recommended by the Commission. It had originally sought a total fine of R3.2bn - calculated as 10% of the Pioneer Food Group’s annual turnover for the financial year ending September 2009.
Although the R1 billion fine is the biggest ever imposed on a South African company, it must be remembered that Pioneer Foods has been less than co-operative since allegations of price fixing first emerged nearly four years ago. They initially denied any wrongdoing and then vigorously resisting prosecution and the payment of any penalties. Most importantly, it must be remembered that the company’s ongoing collusive activities have impacted heavily, and directly, on the poorest and most vulnerable members of our society. Not only did Pioneer Foods fix the price of bread – a staple food - but it inflated and profited illegally from the sale of other basic goods, including wheat, maize, poultry and eggs.
The Black Sash would again like to express its anger and disappointment 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. We reiterate our call on government to ring fence the monies collected from these fines and spend it directly on poverty alleviation programmes and the promotion of food security in vulnerable communities.
In terms of yesterday’s settlement, the Black Sash welcomes the fact that the agreement has gone beyond just a penalty and includes a price adjustment for the benefit of consumers. We support the call made by Economic Development Minister Ebrahim Patel on bakeries and supermarkets, to pass the windfall on to their customers and not use it as a chance to boost their own profits. We would also like to cautiously welcome the decision by the Commission to use part of the fine imposed on Pioneer Foods to create an ‘Agro-processing Competitiveness Fund’ which will promote competitiveness, employment and growth in food value chains, and look forward to engaging with the mandate of this Fund.
Finally, the Black Sash would like to express its frustration over the recent announcement of yet another delay in the implementation of the new Consumer Protection Act, the Companies Amendment Act, and the Competition Amendment Act. We are among those that advocated for the amendments and expressed an urgent need for such a body of consumer legislation to better protect poor and vulnerable consumers in South Africa. The Competition Amendment Act specifically will provide two significant deterrents to anti-competitive behavior, making it possible to jail company directors and managers for contraventions, and blocking guilty companies from benefiting from State tenders.
ENDS.
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Elroy Paulus
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