Tiger Brands: fined 10 million EUR for bread cartel

Pretoria / ZA. (tb) After thorough internal investigations and months of working with the Competition Commission, Tiger Brands Limited – South Africa´s leading bread producer – has agreed to pay an administrative penalty of 98,8 million ZAR (10,05 million EUR) for contraventions of the Competition Act by certain employees at its baking operations and has been granted corporate leniency in respect of its milling operations by the Competition Commission.

Nick Dennis, Chief Executive Officer of Tiger Brands, said upon receipt, in February, of the Commission´s referral to the Competition Tribunal of a case against Tiger Brands in the bread industry in the Western Cape, Tiger Brands immediately undertook to co-operate; and instituted a wider, national, independent investigation into its milling and baking operations.

«We took extremely seriously the allegations leveled against us as they ran counter to the ethical standards for which we are known and respected. We immediately instituted an independent investigation into the matter and commissioned Edward Nathan Sonnenbergs Inc. to conduct the investigation at an arms-length from the company. Sonnebergs, in turn appointed forensic auditors from KPMG and economic experts, Econometrix».

During this process several Tiger Brands employees voluntarily agreed to co-operate with the Sonnenbergs investigation. This investigation found evidence of meetings between certain Tiger Brands employees and some competitors that amounted to anti-competitive activity. Sonnenbergs tasked Econometrix to probe whether there was any evidence of abnormal pricing of bread and maize meal and whether consumers might have been adversely affected by any anti-competitive activity. The Econometrix investigations found no evidence of abnormal pricing; nor were consumers adversely affected. Tiger Brands shared these findings with the Competition Commission.

As a result of Tiger Brands´ national investigation into its baking and milling businesses and co-operation with the Commission´s investigation into these industries, the company has been granted corporate leniency in respect of all activities in its milling business. The milling industry is the subject of a separate, but related, investigation by the Commission. Tiger Brands has been granted immunity in respect of these matters, conditional upon the company assisting the Commission in its further investigations into the milling industry.

«The anti-competitive activity was entirely unacceptable and contrary to our high standards of corporate governance. We undertook to co-operate fully with the Commission. Tiger Brands has taken full responsibility for the actions of certain of its employees. It is extremely disappointing that this has happened, but we are satisfied that this has resulted in a resolution of the matter», said Dennis.

Now the company was taking appropriate disciplinary action against the employees involved, he added. «We do not tolerate anti-competitive behaviour in any of our businesses. It is deeply regrettable that this has occurred».

SENS Announcement: Agreement Reached with Competition Commission

_{Addition: Because the company co-operated, Tiger Brands (Albany Bakeries …) got the «administrative penalty» of 98,8-million ZAR (South African Rand), which is 5,7 percent of its national turnover in bread operations for the 2006 financial year of 1,7-billion ZAR. The maximum fine is ten percent of turnover. The Competition Commission found that between 1994 and 2006, Tiger Brands, Premier Foods (Blue Ribbon Bakery), Pioneer and various independent bakeries increased bread prices «by similar amounts at or about the same time», and between 1999 and 2001 agreed to close certain bakeries. The commission also found that Tiger, Premier, Pioneer and various independent millers fixed regional and national prices of flour and maize. The Competition Commission confirms that Tiger Brands´ top management «didn´t know this was happening in their company».}