Produce markets raided in probe
Commission seeks information
THE COMPETITION Commission yesterday conducted search and seizure operations at the premises of nine fresh produce market agents it suspected of being part of a price fixing cartel.
The anti-graft agency said the raids were conducted to gather valuable information from employees of the Joburg Market and Tshwane Market.
It said it obtained warrants authorising the raids on farm produce premises in Johannesburg and Pretoria from the North Gauteng High Court in Pretoria.
The commission’s head Thembinkosi Bonakele said the commission was concerned about the prevalence of collusion in the food sector as higher prices in the sector affected the most vulnerable households.
Bonakele said the operation was part of an investigation into cartel conduct which was reported by the Department of Agriculture, Forestry and Fisheries to the commission.
“Cartel activities in this sector serve to keep emerging black farmers and agents out of the market. It is for these reasons that this sector ranks high on our priority list, and cartels, big or small, will be rooted out,” said Bonakele.
The agents under scrutiny include Botha Roodt Group, Subtropico, RSA Group, Dapper Market Agents, DW Fresh Produce, Farmers Trust, Noordvaal Market Agents, Marco Fresh Produce Market Agency, and Wenpro Market Agents.
None of the nine companies could be reached for comment yesterday.
The Joburg market is the biggest fresh produce market in the country, with a market share of 47 percent.
The market said it serves about 5 000 farmers from across the country who send fresh produce to be traded to a large buyer base, which included budding entrepreneurs.
Fraud Johannesburg mayor Herman Mashaba earlier this month said the city had uncovered fraud amounting to R7.5 million at the Joburg Market.
Mashaba said the scheme involved officials and suppliers who allegedly defrauded the market by misrepresenting the amount of various goods received through procurement processes.
The Tshwane Market is the second largest market in South Africa and holds a 22.8 percent market share of the total turnover of the 17 fresh produce markets in the country.
The market said it was supported by buyers from South Africa and neighbouring countries.
The commission said the agents, which serve as fresh produce intermediaries between farmers and buyers, were suspected of undercutting the prices charged by smaller intermediaries by charging way below the market price for certain agreed periods of a
trading day.
It said the agents kept their prices unsustainably low during these periods and quickly increased prices significantly as soon as the smaller agents run out of stock.
The regulator said it also suspected that agents also reserved certain fresh produce grades for particular buyers, thus contravening the Competition Act.
It accused them of price discrimination based on the identity of the buyers.
According to the commission, there are about 30 fresh produce market agents in the country and only the six biggest accounted for about 80 percent of the fresh produce intermediaries.
Bonakele said the commission believed that the agents used their dominance to fix the commission rate they charged buyers, including wholesalers on behalf of farmers.
“Given the sheer size (numbers) of the suspects, the suspected cartel conduct results in a large proportion of freshly produced fruits and vegetables being sold at much higher prices than the average daily selling price,” said Bonakele.
The commission had previously frowned upon moves to stifle competition by the big retail groups in the country.
In 2007, it successfully blocked Pick n Pay’s acquisition of Fruit & Veg City, saying it would undermine competition in the sector.
The commission has been in a crusade to uproot collusion and price fixing across all industries in the country.
The anti-graft agency this month said that it had referred Unilever to the Competition Tribunal for prosecution in a case that could see Unilever transnational consumer goods company being fined 10 percent of its annual turnover.
Last month, the commission said it had referred a case involving 18 banks to the Competition Tribunal after they were accused of price fixing in international markets involving the exchange rate of the rand to the dollar.