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Appeal to allow alleged victims of bread cartel to sue Premier is withdrawn
Appeal to allow alleged victims of bread cartel to sue Premier is withdrawn

Appeal to allow alleged victims of bread cartel to sue Premier is withdrawn


Business Day Live - May 12th 2016, 14:42

A group of civil society organisations along with the Competition Commission have withdrawn their Constitutional Court appeal‚ which they had hoped would enable victims in the Western Cape bread price-fixing cartel to sue Premier Foods. 

The Constitutional Court was expected to hear the matter on Tuesday but the parties withdrew their application last week.

They had planned to challenge a Supreme Court of Appeal (SCA) ruling that effectively let Premier Foods off the hook for its role in the 2006 bread cartel‚ by setting aside a declaration that opened it up to lawsuits.

Without the declaration, the Congress of South African Trade Unions (Cosatu)‚ the National Consumer Forum‚ the Children’s Resource Centre Trust and other parties that are planning a class action against the bread cartelists cannot sue Premier Foods.

Premier Foods‚ which makes Blue Ribbon bread and owns brands such as Snowflake‚ Iwisa and Dove‚ was granted immunity under the Competition Commission’s corporate leniency policy in exchange for assisting it in the investigation of the cartel.

It argued that the certification declaring that it had acted unlawfully under competition laws should not have been issued against it because it had immunity and the Supreme Court of Appeal agreed.

Charles Abrahams, lawyer for the alleged victims‚ said previously that the application for class action certification‚ currently pending before the Western Cape High Court‚ against the cartelists would continue with or without Premier Foods.

Pioneer Foods was fined R195.7m for its involvement in the cartel while Tiger Brands and Foodcorp negotiated fines of more than R98m and R45m respectively.

Why Premier Foods is off the hook

PREMIER Foods was granted immunity from a hefty fine by the Competition Commission when it helped the Commission bring its fellow bread cartelists to book.

In spite of this‚ Premier Foods was still included in a Competition Tribunal declaration which said it had broken the law with Tiger Brands and Pioneer Foods.

It challenged this in the Supreme Court of Appeal (SCA)‚ saying it had immunity and the court ruled in its favour.

But the Commission said this decision had deprived the consumers of their rights to access the courts.

The Commission investigates and prosecutes companies found to be colluding. Upon referral to the Competition Tribunal‚ which adjudicates cases‚ a guilty party may be fined up to ten percent of its annual turnover.

Premier Foods‚ which makes Blue Ribbon bread and owns brands such as Snowflake‚ Iwisa and Lil-lets‚ was granted immunity under the Commission's corporate leniency policy and did not pay a fine for its involvement in the cartel. It then gave evidence against Tiger Brands and Pioneer Foods and blew the whistle on Foodcorp‚ which it had colluded with on a national scale.

This evidence helped secure large fines for Pioneer Foods‚ which was fined R195.7m‚ and Tiger Brands and Foodcorp‚ which negotiated fines of more than R98m and R45m respectively.

The Tribunal included Premier Foods in a declaration it made against the cartelists in the Western Cape bread market‚ saying they had broken competition laws.

With this declaration‚ the door was opened for consumers to sue the cartelists for losses they suffered due to the activities of the cartel.

The Commission said the Tribunal was right to do so because its leniency policy should not protect cartelists from legal action by other parties as well as a fine.

But the SCA said the Tribunal did not have the authority to issue the declaration against Premier Foods.

Today Premier Foods has an annual turnover of R11bn.

TMG DigitalFrom 

Read more about: south africa | premier foods | bread

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