Five firms probed for forming cartel
THE COMPETITION Commission yesterday conducted a search-and-seizure operation at the premises of five companies involved in the manufacturing and distribution of refined edible oils, baking fats and margarine in South Africa.
The commission confirmed that two Durban-based companies, Africa Sun Oil Refineries and FR Waring, as well as Johannesburg’s Epic Foods and Wilmar Continental Edible Oils and Fats and Pietermaritzburg’s Willowton Group were identified as the culprits.
The commission’s head of communication, Sipho Ngwema, said the investigation was still in its early stages but the graft body suspected that the firms colluded through inter-linkages or crossshareholding, cross-directorship and family connections.
Ngwema said the cartel conduct included price-fixing accentuated by high levels of concentration in several domestic sectors of the economy including high barriers to entry.
“There is a clear relationship between the levels of concentration in the economy and cartel conduct. For as long as these structural factors persist, certain sectors of the economy will remain vulnerable to cartel formation,” Ngwema said.
The commission said the alleged collusion was believed to have started before 2007 and was still continuing.
It said the search-and-seizure operation was conducted as part of an investigation and that during the search, the commission seized documents, records and electronic data that would be analysed with other information to determine if the companies contravened the Competition Act.
However, Willowton Group’s managing director and chief executive, Zubeir Moosa, disputed the claims that his company was involved in bad practice. Moosa said the company was surprised by the investigation.
“Yes, we have allowed them in because we have nothing to hide. We are satisfied that no evidence exists of collusion and neither has any collusion taken place here,” Moosa said.
“It is certainly a surprise as this investigation has been pre-empted by the Competition Commission investigating a merger between two of our competitors. We have fully co-operated with the Competition Commission on their investigation of this proposed merger so obviously this investigation comes to us as a complete shock.”
Wilmar Continental Edible Oils and Fats, which manufactures products such as Excella sunflower oil and mayonnaise, soya oil, pan oil, canola oil and Conti dips, refused to speak to the media. “Due to some circumstances we are not available for comment,” said a woman in the company’s offices. The three other companies were also not available to state their side.
Ngwema said the food and agro-processing sector was one of the commission’s key priority sectors.
“The current investigation is not the first investigation in the food and agro-processing sector. There have been other commission’s investigations in the food and ago-processing sector including the edible oils market,” he said.
“As of (May 1 this year), the consequences for involvement by firms in cartel conduct are severe. In addition to fines, the directors and managers will face criminal sanctions if they are found to have caused or led to the firm’s involvement in cartel,” Ngwema said.