Cartel crooks just shrug off the shame
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