United front against price fixers not easy
It is unclear how consumers can hold companies accountable, writes Amanda Visser
CLASS action suits by South African consumers against companies found guilty of anticompetitive behaviour remain hard to launch even after large food producers were found guilty of fixing bread prices in the scandal of 2007.
It is almost a year since a group consisting of the Children’s Resource Centre, the Black Sash Trust, the Congress of South African Trade Unions and others brought an application for a class certification order before the Western Cape High Court.
The group had asked the court to accept it as a class representative of consumers prejudicially affected by the anticompetitive conduct of bread producers. The application was dismissed.
The group then petitioned the Supreme Court of Appeal, which granted it leave to appeal against the high court’s decision. The registrar of the court has informed the parties that the court will hear the appeal on the certification application on November 7.
At the time when the application for a class certification order was made, the group also filed an application for damages against Tiger Brands, one of the companies involved in the pricefixing scandal.
The amount in that claim, apparently hundreds of millions of rand, has created the belief that claims against each of the other bread producers involved in the scandal will be similar.
The Competition Tribunal found bread producers Tiger Brands, Pioneer Foods and Foodcorp guilty of cartel conduct, paving the way for civil claims by those harmed.
Premier Foods was granted corporate leniency by the Competition Commission for cooperating with the authorities during investigations into the cartel conduct, but that does not give the company immunity from damage claims.
Foodcorp, though, has not been included in the damage claim.
Nick Altini, head of Cliffe Dekker Hofmeyr’s competition practice, says defining the class is a major issue. “It is a major point of contention.” Mr Altini is representing Pioneer Foods.
It will also be difficult to determine the quantum of the claim. “They will try and perform a calculation to determine what the price of bread was at the time of the transgressions, and what it could have been if the bread producers had not colluded.”
If the action is successful, it appears that the money received will be used as a benevolent fund for feeding schemes.
That in itself poses some serious challenges, Mr Altini remarks. The question is who will be in charge of the fund, which communities will benefit and what amount of the money will be allocated to the administration of the fund.
There is, however, still no general provision for class action in SA’s law.
“It was introduced in the constitution for the enforcement of constitutional rights. This is why they (the consumer group) try to hang their case on the constitution.”
But the parties argue, even if they do not win on constitutional grounds, they should still be able to sue as a class for damages based on the infringement of the Competition Act.
However, there is no act in SA that allows damage actions through class action.
“We do not have that legislation. In fact, the South African Law Commission has twice suggested to Parliament to pass this legislation and Parliament has chosen not to do so,” Mr Altini says.
The Competition Act does provide for civil damage claims in the event of a guilty finding, yet only one company has so far taken the step.
The defunct airline Nationwide took South African Airways (SAA) to court after it was found guilty of abusing its market dominance by the Competition Tribunal, but settled out of court for an undisclosed amount. It has recently joined Comair for another claim against SAA, this time for around R155m.
However, no individual consumer has taken up the baton to sue for damages suffered due to cartel activities or anticompetitive behaviour under the Competition Act.