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Johannesburg - A deal was made between the Treasury and the department of economic development on Tuesday over how the state should handle the record package of penalties imposed on Pioneer Food Group [JSE:PFG] for anticompetitive behaviour.
The Treasury had opposed an arrangement whereby the R500m Pioneer was penalised by was split into two: a R250m fine and R250m fund to promote agribusiness.
The Treasury was reported as describing the Competition Commission as acting illegally. The commission brokered the deal earlier this month with the blessing of Economic Development Minister Ebrahim Patel.
The Treasury wanted the full R500m to be paid into the National Revenue Fund which it manages.
It had employed legal counsel to oppose the arrangement before it was ratified by the Competition Tribunal.
In a joint statement on Tuesday, the Treasury and economic development department said they had made an agreement on the treatment of the penalties and remedies agreed to by Pioneer and the commission.
It said the deal was "unprecedented" and "innovative", and that approach should be supported and "nothing should be done to dilute the sanctions".
Tuesday's deal will have Pioneer pay R500m into the National Revenue Fund.
The economic development department would submit a budgetary proposal and business case motivating the creation of an Agro-processing Competitiveness Fund of R250m to be administered by the Industrial Development Corporation.
According to the statement, the Treasury would then take the proposals to the ministers' committee on the budget and thereafter to the cabinet for consideration and approval.
The joint statement said the commission needed "appropriate legal mechanisms to exercise its remedy options" and they will collaborate to formulate appropriate legislative and other measures.
The confirmed agreement retains Pioneer's obligation to adjust its pricing of flour and bread so as to reduce its gross margin by R160m.
In addition, Pioneer has agreed not only to maintain its current capital expenditure but to increase it by R150m.
The Treasury had opposed an arrangement whereby the R500m Pioneer was penalised by was split into two: a R250m fine and R250m fund to promote agribusiness.
The Treasury was reported as describing the Competition Commission as acting illegally. The commission brokered the deal earlier this month with the blessing of Economic Development Minister Ebrahim Patel.
The Treasury wanted the full R500m to be paid into the National Revenue Fund which it manages.
It had employed legal counsel to oppose the arrangement before it was ratified by the Competition Tribunal.
In a joint statement on Tuesday, the Treasury and economic development department said they had made an agreement on the treatment of the penalties and remedies agreed to by Pioneer and the commission.
It said the deal was "unprecedented" and "innovative", and that approach should be supported and "nothing should be done to dilute the sanctions".
Tuesday's deal will have Pioneer pay R500m into the National Revenue Fund.
The economic development department would submit a budgetary proposal and business case motivating the creation of an Agro-processing Competitiveness Fund of R250m to be administered by the Industrial Development Corporation.
According to the statement, the Treasury would then take the proposals to the ministers' committee on the budget and thereafter to the cabinet for consideration and approval.
The joint statement said the commission needed "appropriate legal mechanisms to exercise its remedy options" and they will collaborate to formulate appropriate legislative and other measures.
The confirmed agreement retains Pioneer's obligation to adjust its pricing of flour and bread so as to reduce its gross margin by R160m.
In addition, Pioneer has agreed not only to maintain its current capital expenditure but to increase it by R150m.
