Collusion fine ‘will not affect’ Karan deal

Karan Beef’s fine for collusion is unlikely to affect its multibillionrand transaction with the Public Investment Corporation (PIC), the Competition Commission said on Monday.

The commission found beef processing companies Karan Beef and I&J guilty of collusion for dividing markets in the supply of processed beef products such as crumbed beef steaklets, beef burger patties, steak sizzlers, viennas and boerewors.

SA s largest investor, the PIC, group’Pelo Agricultural Ventures and black-owned investment said last week they would buy a majority shareholding in Karan Beef for up to R5.2bn. The deal is subject to final approval by the Competition Commission.

“In no way does this investigation into Karan Beef and the fine affect the PIC’s deal with Karan Beef,” David Maimela, the commission’s acting chief of staff, said.

Karan Beef operates the largest cattle feedlot and abattoir in Africa. The feedlot accommodates 150,000 head of cattle at any given time. The Balfourbased abattoir has the capacity to process 2,100 cattle a day.

The investigation found that Karan Beef and I&J were dividing markets by allocating specific types of goods and customers in the supply of processed beef products. According to the commission, from 2000 until recently, Karan Beef and I&J had a manufacturing agreement in terms of which Karan Beef would not produce certain processed beef products for its own account but would produce on behalf of I&J.

Karan Beef has admitted guilt and will pay an administrative penalty of R2.7m, which was 3.5% of the annual turnover of the affected division, he said.

“Karan Beef has admitted guilt and will not be prosecuted. I&J is fighting the charges and will be taken to the Competition Tribunal. As the commission, we have asked the tribunal to impose an administrative penalty of 10% of I&J’s annual turnover,” said Maimela.