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Competition Commission raids fresh produce market 'cartel'

Mar 23 2017 12:26
Lameez Omarjee

Johannesburg - Nine fresh produce market agents were raided by the Competition Commission on Thursday over alleged price-fixing.

According to a statement by the Commission, the agents which are intermediaries between farmers and buyers of freshly produced fruits and vegetables in South Africa, are suspected of being involved in a cartel.

The alleged colluders are Botha Roodt Group, Subtropico, RSA Group, Dapper Market Agents, DW Fresh, Farmers Trust, Noordvaal Market Agents, Marco Fresh Produce Market Agency and Wenpro Market Agents.

The Commission alleges that the agents are involved in undercutting the prices charged by smaller intermediaries. They charge way below the market price for certain agreed periods of a trading day, the Commission explained.

The suspected agents also keep their prices unsustainably low during these periods and quickly increase prices significantly as soon as the smaller agents run out of stock. As a result certain volumes of stock of fresh produce are sold during late hours of trading with the aim to manipulate prices.

The alleged colluders also make decisions on the timing of price increases.  It is also suspected that the agents reserve certain fresh produce grades for particular buyers. It is alleged that the agents practice price discrimination based on the identity of the buyers, the Commission said.

The agents sell fruits and vegetables on behalf of farmers, for a commission rate which is suspected to be fixed.

“The Commission is concerned with the prevalence of collusion in the food sector, as higher prices of these commodities affect the most vulnerable households,” said Commissioner Tembinkosi Bonakele.  

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

The raid came about following a report to the Department of Agriculture, Forestry and Fisheries about possible price-fixing. It was conducted at the Tshwane Market in Pretoria and the Joburg Market in Johannesburg.

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