Car­tel crooks just shrug off the shame

Sunday Times - - OPINION -

BACK in 2007, when the bread car­tel was bust wide open, I ex­pected it to serve as a cau­tion­ary tale for other com­pa­nies. Who else would wish to face the wrath of an en­tire na­tion?

The case gen­er­ated hun­dreds of news­pa­per ar­ti­cles, radio shows, TV broad­casts and car­toons smear­ing the rep­u­ta­tion of the com­plicit com­pa­nies, which, 10 years later, are still tainted by their col­lu­sive con­duct.

It was Im­raahn Mukad­dam, a Cape Town busi­ness­man, who blew the whis­tle on Pre­mier Foods, Tiger Brands, Food­corp and Pioneer for fix­ing the price of bread.

Mukad­dam him­self was in the bread busi­ness, sup­ply­ing thou­sands of loaves a day to shops in the West­ern Cape, so he was im­me­di­ately sus­pi­cious when his sup­pli­ers in­creased prices.

The col­lu­sion was not only in the West­ern Cape — these com­pa­nies also di­vided mar­kets and fixed the price of bread in four prov­inces.

It shocked South Africans as the ac­tions of these com­pa­nies hurt poor con­sumers the most.

In a 15-year re­view of the work of the Com­pe­ti­tion Com­mis­sion and Com­pe­ti­tion Tri­bunal, Com­pe­ti­tion Com­mis­sioner Tem­binkosi Bon­akele said this was per­haps one of their most sig­nif­i­cant cases: “Bread is a sta­ple prod­uct; peo­ple eat bread al­most ev­ery day.”

Which is ex­actly why South Africans were so in­censed.

Nick Den­nis, who was Tiger Brands CEO at the time, said in an in­ter­view with Money­web: “This has prob­a­bly been the worst week of my pro­fes­sional ca­reer. It re­ally has been ter­ri­ble.”

He was com­ment­ing on the me­dia on­slaught and out­rage among South Africans over the car­tel.

Den­nis’s long and (un­til the price­fix­ing scan­dal) il­lus­tri­ous ca­reer was over. Later that year, the com­pany an­nounced he would take early re­tire­ment.

At least some­one took a de­gree of re­spon­si­bil­ity in the scan­dal — an ex­am­ple our cur­rent, sorry lot of lead­ers in the rul­ing party could take heed of.

But the bread-car­tel case seems not to have de­terred oth­ers.

Since then, high-pro­file cases have in­cluded the con­struc­tion-in­dus­try car­tel which col­luded over ten­ders, for which the guilty com­pa­nies were col­lec­tively fined bil­lions.

More re­cently the com­mis­sion has tar­geted cer­tain banks over col­lu­sion among cur­rency traders.

But there have been many, many more cases — even a bi­cy­cle car­tel in which 20 bi­cy­cle re­tail­ers and whole­salers fixed prices.

In May, DStv ad­mit­ted to the fix­ing of prices and trad­ing con­di­tions. It has agreed to pay a penalty of R180mil­lion, which in­cludes a fine, pay­ments to the Eco­nomic De­vel­op­ment Fund for the de­vel­op­ment of black-owned small ad­ver­tis­ing agen­cies and bur­saries for black stu­dents study­ing me­dia or ad­ver­tis­ing.

It will also have to help smaller agen­cies par­tic­i­pate in the mar­ket.

Also in May, boat op­er­a­tors fer­ry­ing vis­i­tors be­tween Robben Is­land and the V&A Wa­ter­front in Cape Town, were caught out.

The com­mis­sion said this week five ves­sel own­ers have been re­ferred to the Com­pe­ti­tion Tri­bunal for pros­e­cu­tion on charges of price­fix­ing and col­lu­sive ten­der­ing

In the dark world of state cap­ture cases fail to even raise an eye­brow

fol­low­ing an in­ves­ti­ga­tion based on a com­plaint from the Robben Is­land Mu­seum.

The count­less cases of price-fix­ing and col­lu­sion that have been un­cov­ered by com­pe­ti­tion au­thor­i­ties in the past 18 years is com­mend­able. And the fines com­pa­nies face — in some cases, hun­dreds of mil­lions of rand — seem hefty.

But, at just 10% of a com­pany’s turnover, they are pal­try. And given the nu­mer­ous cases that keep crop­ping up, it seems to be a price com­pa­nies sim­ply fac­tor in as a cost of do­ing busi­ness.

I was wrong when I thought the bread-car­tel case would de­ter other busi­nesses. And, in the dark world of state cap­ture, such cases some­times fail to even raise an eye­brow.

Com­pa­nies, just like our politi­cians, have thick skins.

Enslin-Payne is deputy ed­i­tor of Busi­ness Times

Sa­man­tha Enslin-Payne

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