Milling firm was bullied into maize price fixing

A SMALL white maize milling firm has been fined R10.1 million after being bullied into participating in a price fixing cartel by Pioneer Foods, Premier Foods, Foodcorp and Tiger Brands, the four major firms operating in this market.

Thandi le Charlie, appearing for the Competition Commission, said yesterday that Blinkwater Mills, based in Middelburg, Mpumalanga, was a small firm in the market for the milling of white maize for human consumption and was not the instigator of the cartel conduct.

“The big four firms, Pioneer Foods, Premier Foods, Foodcorp and Tiger Brands, were found to be the instigators of the cartel conduct and so Blinkwater was bullied into this cartel conduct,” she told a Competition Tribunal hearing.

The hearing was to consider a settlement agreement entered into between Blinkwater and the commission.

Contravention

Charlie said the commission received information in 2007 from Premier Foods and Tiger Brands about price fixing by 17 firms in the white maize milling market in contravention of the Competition Act.

This resulted in the commission initiating a complaint against Tiger Brands, Pioneer Foods, Foodcorp, Pride Milling and Progress Milling, which was subsequently extended to include Blinkwater, Godrich Milling, TWK Milling, Keystone Milling, Westra Milling, Carolina Mills, Brenner Mills, Paramount Mills, NTK Mills, Kalel Mills, Bothaville Milling and Allem Brothers.

Charlie said the information provided by Premier Foods and Tiger Brands was in terms of the commission’s corporate leniency policy.

Premier Foods and Tiger Brands are the leniency applicants in the case.

Blinkwater previously brought a dismissal application in which it questioned the validity of the application for leniency by Tiger Brands, but this was dismissed by the tribunal.

Charlie said four firms had already reached settlements with the commission and two were granted leniency, which meant cases against 11 firms still remained.

Settlement

She said an invitation was sent to these 11 firms in December to settle with the commission, which resulted in Blinkwater reaching a settlement agreement with the commission.

Charlie said the penalty Blinkwater had agreed to pay represented 5 percent of the firm’s turnover for its 2007 financial year.

Tribunal member Enver Daniels suggested the price fixing had affected the poorest of the poor people in South Africa who ate pap daily and it was possible the price fixing had resulted in people going hungry, particularly in the area serviced by Blinkwater.

Charlie said maize meal was a staple food in South Africa that was consumed mostly by the poor and the products produced from milling white maize were maize meal, samp, maize rice, maize chop and maize flour.

Andrei Wessels, the chairman of the tribunal panel, expressed concern about the momentum in the case and the amount of time that had elapsed since the previous settlement.

Judgment was reserved by the tribunal.