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COSATU Today  |  COSATU Press Statements

COSATU calls on all bread and flour producers to cut prices

COSATU calls on all bread and flour producers to cut prices

9 December 2010

In November 2010, the Congress of South African Trade Unions and its affiliate, the Food and Allied Workers Union, welcomed the Competition Commissionís settlement with Pioneer Foods (Pty) Ltd.

The CC ruled that the company had been involved in anti-competitive conduct, by colluding to fix prices of maize and wheat milling, baking, poultry and eggs and that this conduct in these important food sectors had impacted negatively on consumers and the ability of small and medium firms to enter and grow in these markets. In terms of the settlement Pioneer committed to:

  • pay R500 million to the National Revenue Fund comprised of:
    • an administrative penalty to National Revenue Fund;
    • pay R250 million to create an Agro-processing Competitiveness Fund to be administered by the Industrial Development Corporation (IDC), to promote competitiveness, employment and growth in food value chains and provide finance on favourable terms to small and medium enterprises. The Minister of Economic Development will submit a proposal for to give effect to this in terms of the government budget processes.
  • adjust its pricing of flour and bread (i.e. 600g and 700g standard white and brown loaves) over a defined period such as to reduce its gross margin by R160 million when compared to the similar period in 2009/10.

As Competition Commissioner Shan Ramburuth said at the time that: "This agreement has gone beyond just a penalty and includes price adjustment for the benefit of consumers and a Fund to promote competition in the agro-processing industry. The Commission welcomes Pioneerís approach, as evidenced in this agreement, to resolving the matters and agreeing to undertakings aimed at a more competitive and dynamic economy in these crucial sectors."

COSATU is particularly pleased that the CC obliged Pioneer to agree to cut the prices of bread and flour, so that the consumers who were robbed by the price-fixing, will receive some compensation. COSATU is pleased to note that the Competition Tribunal has now confirmed the agreement.

The federation is urging the other companies with whom Pioneer were colluding to cut their prices for the same products by the same amount, so that all consumers benefit from the crack-down on anti-competitive price-fixing. We also call on retailers and other bread distributors to pass through the price reductions to the end consumers. COSATU will monitor prices of bread and flour to ensure the realization of the agreement.