South Africa: Rhodes Food agrees to fine for colluding on exports
Rhodes Food faced action in SA for anticompetitive behaviour in an external market, the first time this has happened.
Rhodes listed on the JSE last week, joining giants such as Tiger Brands and Pioneer Foods to become the latest company to join the bourse’s food products sector, where the average market cap is about R12bn. Rhodes recorded sales of R1.8bn last year.
Rhodes’ settlement with the Competition Commission, confirmed by the tribunal, follows a probe in 2009 which revealed the firm had been fixing prices, dividing markets and collusively tendering with Langeberg & Ashton on in specific export markets.
However, the Competition Commission concluded Rhodes’s conduct had not affected the South African market and was limited to foreign countries.
On Wednesday, the Competition Tribunal heard the application for an order to confirm the settlement agreement. It requested an explanation from the commission into how it had calculated the penalty agreed on with Rhodes Food.
In its defence, the group said the conduct lasted only four months in an era when other export cartels were operating in the foreign markets that Rhodes was targeting. These included two of the bigger players in the canned and processing fruit market, according to Rhodes.
It is a contravention of section 4 of the Competition Act for firms in a horizontal relationship to enter an agreement that might prevent or lessen competition.
Langeberg & Ashton Foods received leniency from prosecution under the corporate leniency programme introduced by the commission more than a decade ago.
The two competitors had agreed on the selling price and discount of peaches in the Japanese market, and had also agreed that the price charged for canned fruit products in the Far Eastern and Southeast Asian markets should be the same as in the Japanese market.
They had also decided to charge the same price for canned apricots, peaches, pears and fruit cocktail in Australia as was charged in the Japanese market.
The two charged the same minimum price for customers of canned apricots, peaches and pears in the European market, and agreed on the minimum price for canned apricots, pulp apricots and peaches in the UK market.
They also colluded with each other on tenders and customers in the UK market.
Rhodes Food said the conduct had ceased in 2007.
However, the company said that it had never approached the commission for leniency as it had been under the impression that export conduct was not subject to the jurisdiction of SA’s Competition Act.
Source: bdlive.co.za
