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Fresh food producers lose court bid to stop cartel probe

May 12 2017 18:27

Cape Town - The Competition Commission has welcomed the North Gauteng High Court's decision to set aside, with costs, a bid by fresh produce agents to stop its investigation into alleged cartel activity.

The application by Farmers Trust to set aside a Competition Commission search warrant follows a search and seizure operation conducted on March 23 at the premises of nine fresh produce market agents in Gauteng, the commission said in a statement on Friday.

A similar operation was conducted in Cape Town and Durban the following day.

READ: Competition Commission spreads tentacles in fruit & veg crackdown

The raids were part of a probe into allegations of cartel conduct, and the commission had obtained search and seizure warrants from the high court in terms of the Competition Act.

Farmers Trust argued, among others, that the warrant should not have been granted on an urgent basis and that statements contained in the commission’s application for the warrant constituted inadmissible hearsay evidence.

Farmers Trust also maintained that it should have been informed about the commission’s application for the search warrant before it was issued.

The court said: “The (Competition) Act aims to serve the greater good and it is self-evident that in order to be able to do so the commission must be able to investigate a complaint properly.

"It will be counterproductive if the commission is required to inform a party about the possibility of a search and seizure as it will defeat the purpose of an investigation. Under these circumstances it is justifiable that a suspected firm is not given notice of the application in terms of section."

The agents serve as fresh produce market intermediaries between farmers and buyers of freshly produced fruits and vegetables in South Africa, and are being probed for conduct which allegedly contravenes the Competition Act.

Their main activity is selling fresh fruit and vegetables on behalf of farmers, for a commission, to buyers such as wholesalers, retailers and hawkers.

The Competition Commission said it has "reasonable grounds" to suspect that the agents entered into an agreement in an attempt to fix the price and trading conditions for the supply of freshly produced fruits and vegetables in the country.

"This conduct is alleged to be ongoing," said the commission.

Commissioner Tembinkosi Bonakele earlier expressed concern about the effects of these alleged activities on those who can afford it least.

“The poor spend a disproportionally high percentage of their income on food. Also, cartel activities in this sector serve to keep out (of the market) emerging black farmers and agents,” said Bonakele.

READ: Competition Commission raids fresh produce market 'cartel'

The search and seizure operations are part of an investigation into alleged cartel conduct which was reported by the Department of Agriculture, Forestry and Fisheries.

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competition commission  |  price fixing  |  cartel

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