Business

Brenner fined R12m for price-fixing, agrees to provide evidence against others

2017-08-11 21:21

The Competition Tribunal has imposed a R12 million administrative penalty on maize producer Brenner Mills for being part of a maize meal price fixing cartel that colluded over almost eight years.

The tribunal said Brenner Mills agreed to pay a R12 000 872 administrative fine for its role in fixing the price of milled white products and further agreed to assist in nailing other alleged colluders.

The price-fixing took place between 1999 and 2007.

According to the tribunal, the Competition Commission – from which the cases are referred – initiated a complaint in March 2007 against Tiger Brands, Pioneer Food, Foodcorp and Pride and Progress Milling in the maize milling industry.

The investigation was extended after leniency applications were filed by Premier Food and Tiger Brands, to include other companies in the milling industry, including Brenner Mills, Carolina Mills and Keystone Milling.

According to the agreement, which City Press has seen, the investigation found that the companies convened numerous meetings and held telephone conversations where they reached agreement on, among other things, a uniform price for wholesalers, the price of milled white maize products, the timing and implementation of the price increases and also ensured coordination of the collusive agreements at both regional and national level.

In terms of the settlement agreement reached with Brenner, the company was also obliged to provide evidence against the other respondent companies as well as develop, implement and monitor a competition law compliance programme as part of the company’s corporate governance policy and provide a copy to the commission within 60 days.

The fine is also supposed to be paid over a period of four years in instalments of R3 million,. with the last instalment set to be on or before June 30 2021.

According to the commission’s spokesperson, Sipho Ngwema, the investigation did not include aspects on how much the company benefitted through the price fixing as it was not necessary.

Asked why the case took a decade to conclude, Ngwema said the probe was dealt with through phases.

“The approach to dealing with this case was to deal with it on a phase by phase project – the first phase was to settle with the big millers (Foodcorp and Pioneer), in this phase two other small milling firms also settled with the Commission (Carolina Meule and Keystone Milling).

“The second phase was to deal with the interlocutory applications raised as exceptions to the commission’s complaint referral, three interlocutory applications against the commission by Paramount Mills, Blinkwater Mills and Godrich Milling,” he said.

Ngwema also said there was still one more interlocutory application still outstanding while the third phase was to settle with the small millers.

“Two of those applications have been decided on by the tribunal and CAC (Paramount Mills) and Blinkwater was only heard last year and the tribunal’s judgment delivered on June 30 this year. There is still one interlocutory application still outstanding. The third phase was to settle with the small millers, where we devised a fast track settlement dispensation and invitations were sent to these millers to settle with the commission. The response to the fast track settlement has been well received,” he added.

He further pointed out that the R12 million fine imposed was within the legislated 10% affected turnover of the year preceding the offence provision.

There were also a number of other factors that were taken into account when determining the final penalty depending on the circumstances and merits of the case and the attitude of the offending company.

Similar settlement agreements with Blinkwater Mills for R10 112 504, Keystone Milling for R6 730 349 and Carolina Rollermeule for R4 417 546 have already been reached for the same complaint referral, according to the tribunal.

The money, though paid to the commission, would be forwarded to the National Treasury.

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November 19 2017