Pioneer may appeal R195m fine

Johannesburg - Food producer Pioneer may appeal against the R195m fine imposed on it by the Competition Tribunal for its role in a bread cartel which involved the country's major bakeries.

The group's financial director Leon Cronje told Fin24.com on Wednesday that Pioneer was still studying the findings, saying the company had received an "unsigned" document from the tribunal. "We will issue a Sens [Stock Exchange News Service] announcement once we have studied the findings," he said.

Pioneer's co-conspirators were earlier fined a total of over R140m.

The company has always denied collusion in price-fixing. It never made any provision for a fine, as it told shareholders its chances of a successful defence were good.

However, correspondence from the tribunal showed Pioneer admitted guilt in some instances. "Pioneer, on the other hand, asked the tribunal to adopt a piecemeal approach and to impose a penalty upon it only in relation to the Western Cape referral, arguing that this should not exceed 2.25% of Sasko's [Pioneer's bread division's] 2006 turnover for the Western Cape."

The tribunal's decision brings the bread cartel issue closer to finalisation. Pioneer has been the only defendant, after Tiger Brands agreed to pay a R99m fine and Foodcorp one of R45m. Premier Foods escaped any fines after it sought leniency and agreed to cooperate with the Competition Commission.

Only witness gave false testimony

"The administrative penalty of R195m amounts to 10% of Sasko's [Pioneer's bread-baking division's] national 2006 bread turnover," said the tribunal. It ordered Pioneer "to desist from such conduct [collusion] forthwith".

The fine was the maximum the tribunal could impose under the Competition Act, which calls for a penalty equivalent to 10% of turnover of the guilty business.

"In fact, the tribunal finds that Pioneer's entire defence has been mounted on the basis of manifest falsehoods," said the tribunal.

It found that the testimony of Pioneer's only witness - that of general manager of Sasko Bakeries Andries Charl Goosen - was false. "The tribunal says that Goosen not only lied to the tribunal and misled it, but admitted to lying under oath."

The tribunal was also scathing of Pioneer's conduct since the charge of colluding to fix bread prices was made public.

"Pioneer did not conduct a full enquiry or investigation in order to root out this behaviour in its company or to bring to book any of the individuals involved," it said. "Up to the date of the hearing no action had been taken against any of the employees implicated in this conduct."

- Fin24.com