• Home
• | Terms & conditions
• | Contact us
• | RSS

Wheat milling cartel probed

16 March 2010

The Competition Commission said on Monday it has referred its findings to the Competition Tribunal regarding collusion in the wheat milling market.

Pioneer Foods, Foodcorp trading as Ruto Mills, Godrich Milling, Premier Foods and Tiger Brands were the companies involved in the matter, the Commission said in a statement.

"The case was initiated following revelations by Premier Foods during the bread cartel investigation that the cartel, which involved largely the same companies, also covered their milling operations," the Commission said.

Premier Foods and Tiger Brands were subsequently granted conditional immunity from prosecution by the Commission provided that they fully co-operated in the investigation and prosecution of the case.

The Commission said it had found that the respondents had contravened the Competition Act by engaging in price fixing and dividing markets by allocating customers.

"This was facilitated through secret meetings and telephone calls between the employees of these firms.

"Arrangements seem to have been designed to, amongst otherthings, prevent price wars and discounting in the industry," the Commission said.

The meetings were held at various venues, including churches, stadiums and hotels.

According to the Commission, Premier Foods, Tiger Brands, Foodcorp and Pioneer Foods controlled more than 90% of the wheat flour market.

"All four mill their own wheat into flour and use it to supply both their own bakeries and independent parties such as chain stores and smaller bakeries. Only Godrich does not have significant baking operations of its own," the Commission found.

Premier Foods, Tiger Brands and Pioneer Foods had mills throughout the country, while Foodcorp and Godrich had mills in Gauteng.

"The Commission has asked the Tribunal to impose an administrative penalty of 10% of annual turnover for the 2009 financial year on each of the firms involved, except Premier Foods and Tiger Brands which have been granted conditional immunity."

The Commission concluded that in addition to the negative effect of this conduct on consumers, the actions of the cartel had also inhibited small bakeries from being effective competitors.

Sapa