16 May 2010 by

Maize milling industry cartel member admits guilt

Keystone Milling, one of the respondents in the white maize milling industry complaint, has admitted guilt and entered into a settlement agreement with the Commission. 

The complaint was initiated subsequent to a leniency application by Premier Foods in 2007 which application was corroborated by a further leniency application from Tiger Brands. The initial respondents in the complaint were Tiger Brands, Pioneer Foods, Foodcorp and Pride and Progress Milling. During the course of its investigation, the Commission amended the complaint to include other industry players, namely Blinkwater, Godrich, TWK, Keystone, Westra, Carolina Mills, Brenner, Paramount, NTK, Kalel, Bothaville and Allen Brothers.

The Commission's investigation revealed that at various points between 1996 and 2007, the respondents, through numerous meetings and telephone discussions, fixed the price of milled white maize products and created uniform price lists for wholesale, retail and general trade customers. In addition, the respondents agreed not to implement exact pricing in an effort to 'fool customers', and also agreed on the timing and implementation of the price increases.

The agreements concluded at these meetings were used to secure co-ordination at both regional and national levels and were mutually reinforcing. The above conduct constituted price fixing and limited price competition among the respondents in the white maize milling industry.

On 1 December 2009, the Commission received an anonymous call from a person who later revealed that he was a representative of Keystone and was unaware that Keystone was one of the respondents in the investigation. Keystone thereafter co-operated with the Commission and also provided another employee to corroborate the information given by the first employee. The information provided by the second employee was particularly valuable because he had previously worked for various other milling companies who were cited as respondents. The Tribunal commended Keystone for its willingness to co-operate as extensively as it did. Keystone's co-operation with the Commission culminated in a settlement order in terms of which Keystone will pay an administrative fine of R6,730,349 being only 3% of its total turnover for the 2009 financial year.

Pioneer Foods has also entered into negotiations with the Commission in relation to this matter, which are ongoing.

Chris Charter, Director, Competition
Scarlate Nkiwane, Associate, Competition

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