COMPETITION TRIBUNAL
REPUBLIC OF SOUTH AFRICA
Case No: 50/CR/May08
In the matter between:
The Competition Commission Applicant
and
Foodcorp (Pty) Ltd Respondent
Panel D Lewis (Presiding Member), N Manoim (Tribunal
Member), and U Bhoola (Tribunal Member)
Heard on : 06 January 2009
Decided on : 06 January 2009
Order
The Tribunal hereby confirms the order as agreed to and proposed by the
Competition Commission and the respondent, annexed hereto marked "A", in
terms of section 49D(2)(a) of the Competition Act.
D Lewis
Concurring: N Manoim and U Bhoola
Form CT 6 Notice of Motion
About this Form
This Form is issued in
terms of the Competi
tion Tribunal Rules.
Please indicate in the
space provided the
nature of your motion,
including specific
reference to the rel
evant section of the
Act or Tribunal Rules.
If this Notice of Mo
tion concerns a matter
being brought in
terms of Division Е of
Part 4 of the Competi
tion Tribunal Rules, it
must comply with the
requirements of Com
petition Tribunal Rule
42(3).
Date:
5-Jan-2009
File #
507CR/Mar08
To: The registrar of the Competition Tribunal
Concerning the matter between:
THE COMPETITION COMMISSION .(Applicant)
and FOODCORP (PTY)LTD t/a SUNBAKE BAKERIES rRespQndent)
Take notice that the Competition Commission
intends to apply to the Tribunal for the following order:
SEE SETTLEMENT AGREEMENT BETWEEN THE COMMISSION AND
FOODCORP ATTACHED AS ANNEXURE "A"
Contacting
the Tribunal
The Competition Tribunal
Private Bag X24
Sunnyside
0132
Republic of South Africa
tel: 27 12 394 3300
fax: 27 12 394 0169
e-mail: ctsa@comptrib.co.za
Name and Title of person authorised to sign:
Nene Mateane : Legal Counsel, Competition Commission
Authorised Signature: Date:
5-Jan~2009
For Office
Use Only:
Tribunal file number: Date filed:
This form is prescribed by the Minister of Trade and Industry in terms of section 27 (2) of the Competition Act 1998 (Act No. 89 of 1998),
IN THE COMPETITION TRIBUNAL OF SOUTH AFRICA
CT Case No 50/CR/Mar08
2007NOV3354
In the matter between:
THE COMPETITION COMMISSION Applicant
and
FOODCORP (PTY) LTD T/A SUNBAKE BAKERIES Respondent
In re:
THE COMPETITION COMMISSION Applicant
and
PIONEER FOODS (PTY) LTD T/A SASKO & DUENS BAKERIES First Respondent
FOODCORP (PTY) LTD T/A SUNBAKE BAKERIES Second Respondent
SETTLEMENT AGREEMENT BETWEEN THE СОМ PETITION СОМ MISSION
FOODCORP (PTY) LTD IN REGARD TO CONTRAVENTIONS OF SECTIONS 4(1)(b)(i) OF
THE COMPETITION АСТ, 1998 (ACT NO. 89 OF 1998)
The Commission and Foodcorp hereby agree that application be made to the Tribunal for an
order in terms of section 58(1)(a)(f)of the Competition Act, No, 89 of 1998, as amended, on
the terms set out more fully below.
1
For the purposes of this Settlement Agreement the following definitions shall apply:
1.1 The "Act" means the Competition Act, 1998 (Act No. 89 of 1998)
1.2 "Commission" means the Competition Commission of South Africa, a statutory
body, established in terms of section 19 of the Act, with its principal place of business
at Building C, Mulayo Building, dti Campus, 77 Meintjtes Street, Sunnyside, Pretoria,
Gauteng;
1.3 "Commissioner" means the Commissioner of the Competition Commission,
appointed in terms of section 22 of the Act
1.4 "Settlement Agreement" means this agreement duly signed and concluded
between the Commission and Foodcorp;
1.5 "Complaints" means the complaint initiated by the Commissioner of the
Commission in terms of section 49B of the Act under case number 2007Jan2717 and
a complaint filed by one Andrehette van Wyk in terms of section 49B(2) of the Act
under case number 2007Nov3354,
1.6.1 Justin Williamson - the Chief Executive Officer;
1.6.2 Cliff Sampson - the Managing Director; and
1.6.3 Ockert Strydom - the former Chief Executive Officer of Sunbake Bakeries.
and includes an individual reference to one or more of them, as the context may
require;
1.7 "CLP" means the Corporate Leniency Policy prepared and issued by the Commission
as a guideline, to clarify the Commission's policy approach on matters failing within
its jurisdiction in terms of the Act,
1.8 "Days" means calendar days;
1.9 "Foodcorp" means Foodcorp (Pty) Ltd trading as Sunbake Bakeries;
1.10 "Parties" means the Commission and Foodcorp;
1.11 "Pioneer" means Pioneer Foods Ltd trading as Sasko and Duens Bakeries;
1.12 "Premier" means Premier Foods Ltd trading as Blue Ribbon Bakeries;
1.13 "Tiger" means Tiger Consumer Brands Limited trading as Albany Bakeries;
1.14 "Tribunal" means the Competition Tribunal of South Africa, a statutory body,
established in terms of section 26 of the Act, with its principal place of business at
Building C, Mulayo Building, dti Campus, 77 Meintjies Street, Sunnyside, Pretoria,
Gauteng.
2.
The Complaints and Complaint Investigation
2.1 During December 2006, the Commission received information regarding price-fixing
and the division of markets by Premier, Tiger and other firms active in the production
and wholesale distribution of bread in the Western Cape.
2.2 The Commission subsequently initiated a complaint against these firms ("the Western
Cape complaint") that:
2.2.1 During the period November 2006 to December 2006, Tiger, Pioneer and
Premier directly fixed the price of bread to their customers in the Western
Cape;
2.2.2 The said firms fixed the discounts which each of them offered to their
independent distributors in the Western Cape to a maximum of 75c per loaf of
bread; and
2.2 3 The said firms agreed not to poach each other's distributors,
in contravention of section 4 of the Act Foodcorp was not named as a respondent in
the Western Cape complaint.
2.3 During the investigations the Commission's inspectors interviewed representatives of
the firms that were alleged to be involved in the price-fixing and division of markets.
2.4 Premier, shortly before its representatives were interviewed, approached the
Commission and applied for immunity from prosecution in terms of the CLP confessing
to its involvement in price-fixing and market allocation. Premier subsequently provided
the Commission with detailed information about its role and that of Tiger, Pioneer and
Foodcorp in price-fixing and market allocation, not only in the Western Cape, but
throughout the Republic of South Africa. Premier was granted conditional leniency
after agreeing to assist the Commission in its investigations and in proceedings before
the Tribunal
2.5 The Commission initiated an investigation into these allegations under case number
2007Jan2717 ("the national complaint"). The investigation established that at various
stages during the period 1995 to 2006, Premier, Tiger, Pioneer and Foodcorp were
involved in price-fixing and market allocation in contravention of section 4(1)(b)(i) and
(ii) of the Act in that representatives of the firms:
2.5.1 Held telephonic discussions and meetings where they directly fixed the selling
price of bread to their customers; and
25.2 Directly fixed the implementation dates when such agreed price increases
would be effective; and
2.5.3 Divided markets by allocating territories where each firm would be the only
one operating a bakery in a particular territory and/or supplying all distributors
in the allocated area.
2.6 The Commission subsequently received a complaint that Sunbake Bakery had been
involved in price-fixing in the Matelane and surrounding areas in that its
involved in price-fixing in the Matelane and surrounding areas in that its
representatives had held discussions and corresponded with its competitors directly
fixing the price of bread to their customers and agreeing to the timing of such
increases. This complaint was submitted under case number 2007Nov3354 ("the
Malelane complaint").
3.
The Complaint Referral
3.1 The Commission referred the national complaint to the Tribunal on 6 May 2008. The
Malelane complaint is yet to be referred to the Tribunal.
3.2 Tiger, after receiving the Western Cape Complaint Referral conducted its own
investigation of the allegations made against it. It thereafter approached the
Commission with a view to settling the matter in consequence whereof a Consent
Agreement was concluded. As part of its cooperation, Tiger corroborated the
information contained in Premier's leniency application. Hence upon referral of the
national complaint, Tiger was not named as a party as it had settled with the
Commission.
3.3 Foodcorp, shortly after referral of She national complaint, but prior to the referral of the
Malelane complaint, approached the Commission indicating its willingness to settle
with the Commission and requesting an opportunity to conduct its own internal
investigation into the allegations made against it. Upon conceding its investigation,
Foodcorp engaged the Commission further with respect to its findings which
engagements have culminated in this Settlement Agreement.
4.
Statement of Conduct
4.1 Foodcorp admits that it has contravened sections 4(1)(b)(i) of the Act in that:
4.1.1 Sunbake Bakeries and its competitors were engaged in price-fixing in respect
of bread sold to their customers and the timing of such increases; and
4.1.2 Sunbake Bakeries and its competitors in the Malelane and surrounding areas
met to fix the prices of bread and the timing of such increase.
4.2 The Corporate Senior Management of Foodcorp confirm that, to the best of their
knowledge and belief, there are no further contraventions of section 4 of the Act.
which were and/or might have been engaged in by Foodcorp.
5.
Agreement Concerning Future Conduct
5.1 Foodcorp agrees to cooperate with the Commission in relation to the prosecution of
any other firm arising from the Commission's investigation of the Complaints,
5.2 Foodcorp agrees:
5.2.1 To circulate a statement summarising the contents of this Settlemen
Agreement to all employees above Paterson Grade D employed within
Foodcorp within 30 days from the date of confirmation of this agreement as an
order of the Tribunal.
5.2.2 To develop and implement a compliance programme incorporating corporate
governance designed to ensure that employees, management and directors
within Foodcorp do not engage in any contraventions of section 4(1)(b) of the
Act, a copy of which programme shall be submitted to the Commission within
80 days of the date of confirmation of this consent order by the Tribunal.
8.
6.1 Having regard to the provisions of section 56(1)(a)(iii), read with sections 59(1)(a),
59(2) and (3) of the Act, Foodcorp accepts that it is liable for an administrative
penalty.
6.2 The parties have agreed that Foodcorp should pay an administrative penalty in the
amount of 6,7% of its turnover from all its baking operations for the financial year
ending in 2006. This amounts to R45 406 359,82 (forty-five million, four hundred and
six thousand, three hundred and fifty-nine rand and eighty-two cents).
6.3 The penalty amount will be paid by Foodcorp to the Commission in three equal annual
payments, the first such payment to be made within 30 days of the date of
confirmation of this settlement agreement by the Tribunal. The remaining two
payments will be due on the 31st of January 2010 and the 31st of January
2011 respectively.
6.4 The Commission will pay these sums to the National Revenue Fund in terms of
section 59(4) of the Act.
7.
Full and Final Resolution
This Settlement Agreement is entered into in full and final settlement of all proceedings
between the parties, and upon confirmation as an order by the Tribunal, concludes all
proceedings between the Commission, and Foodcorp relating to any alleged contravention
by Foodcorp of section 4(1)(b) of the Act that is the subject of the Commission's
investigations under case numbers 2007Jan2717 and 2007Nov33S4.
Dated and signed in Durban this the 23 day of December 2008.
Justin Williamson
Foodcorp (Pty) Ltd
Dated and signed in Pretoria on this the 22 day of December 2008.
Shan Ramburuth
The Commissioner, Competition Commission