Business Day

United front against price fixers not easy

It is unclear how consumers can hold companies accountabl­e, writes Amanda Visser

- Vissera@bdfm.co.za

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.

 ?? Picture: FINANCIAL MAIL ?? VICTIMS: While consumers won when bread producers were found guilty of price-fixing in 2007, they are unable to sue for damages as there is no act that allows for class action.
Picture: FINANCIAL MAIL VICTIMS: While consumers won when bread producers were found guilty of price-fixing in 2007, they are unable to sue for damages as there is no act that allows for class action.

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