Johannesburg - Eight dairy processors, including Clover, Parmalat and Nestle, have been implicated in price fixing, the Competition Commission said on Thursday.
"Its investigation found evidence of price fixing for raw and retail milk, and that trading conditions were manipulated in these markets," said the commission's acting compliance manager, Tembinkosi Bonakele.
Implicated along with Clover Industries and Clover SA are Ladismith Cheese, Woodlands Dairy, Lancewood and Milkwood Dairy.
The findings followed an investigation into anti-competitive behaviour in the milk industry which started in February 2005.
Among the findings the commission would refer to the Competition Tribunal for further determination were:
Clover, Parmalat, Ladismith, Woodlands, Lancewood and Nestle exchanged sensitive information on procurement prices of raw milk. This enabled competitors to co-ordinate their pricing strategies to fix the purchase price of raw milk;
Clover, Parmalat, Woodlands and Nestle entered into long-term milk supply and exchange agreements to sell their surplus milk to each other, rather than at lower prices to end users. This arrangement enabled colluding firms to maintain the price of milk at artificially high levels;
Clover and Parmalat abused their respective dominant positions in exclusive agreements that compelled producers to supply them their total milk production. Producers were prevented from selling surplus raw milk at competitive prices to third parties or consumers directly. This also prevented the entry of smaller milk processors and distributors into the market;
Clover SA and Woodlands reached an agreement regarding the selling price of UHT "long life" milk, ultimately resulting in the consumer paying higher prices for it;
Woodlands and Milkwood agreed to fix the selling price of UHT milk and allocated geographic areas in which they would not compete in selling UHT milk. This eliminated price competition, resulting in consumers paying more; and
Clover, Woodlands and Parmalat co-ordinated the removal of surplus milk from the market. This decreased supply and kept prices high, constituting indirect price fixing. Clover successfully applied for leniency under the commission's corporate leniency programme and would not be prosecuted for this offence.
In prosecuting the case before the Competition Tribunal, the commission would seek to prevent the respondents from committing such practices.
The respondents also risked an administrative penalty of up to 10% of their annual turnover.