Pioneer Foods may have to pay second penalty

2010/02/19

Pioneer Foods may have to pay yet another penalty in addition to its bread case penalty, the JSE-listed company said on Friday

The company said that on February 3 the Competition Tribunal had released its findings in the bread matter, imposing a fine of R196 million.

However, it said in 2007 the Competition Commission had launched an investigation into the maize and wheat milling markets, concerning allegations of collusion amongst industry players, including Pioneer Foods. "The Commission has not to date issued a complaint referral with regard to the milling matter," the company said in a statement.

However, the Commission had informed Pioneer Foods that it had concluded this investigation and would be referring the matter, in which Pioneer Foods was named as a respondent, to the Competition Tribunal for adjudication The company said the Commission had also invited it to enter into discussions with a view to settling the matter.

"The company has conducted an internal investigation in respect of its operations in the maize and wheat milling industries ... The investigation is ongoing." Pioneer Foods said it wanted to resolve this matter through co-operation with the Commission, and without recourse to proceedings before the Competition Tribunal, if possible.

"In this instance, Pioneer Foods has met representatives of the Commission and intends to respond formally to the Commission's invitation to engage in discussions and co-operate with the Commission with a view to reaching a settlement." Pioneer Foods said should settlement discussions be successful, it was anticipated that Pioneer Foods could pay an additional administrative penalty in accordance with the provisions of the Competition Act. "While it is premature at this time to determine with certainty the quantum of such a potential penalty, the Tribunal in its decision in the bread case on February 3, 2010, based the administrative penalty on 10 percent of the 2006 national bakery revenue.

"Should the same principle be applied in this matter, a maximum penalty based on 10 percent of the 2006 national revenue from maize and wheaten flour sales may be handed down." Pioneer Foods said revenue from wheaten and flour sales for 2006 was R1.8 billion.

"The company is committed to fully co-operate with the Commission in all investigations where the Commission seeks its assistance. "Pioneer Foods will revert to shareholders on further progress in respect of the proposed settlement negotiations and in the event of further material developments." Source : Sapa