Criminal charges mooted

A R195-million fine handed down by the Competition Tribunal may just be the start of Pioneer Foods' concerns, as the Competition Commission is considering laying perjury charges against senior manager Andries Goosen. Goosen, who is the managing director of Sasko, Pioneer's bakery division, is accused in the tribunal's judgment of lying under oath, misleading the tribunal and providing false testimony. "We should be clear that we believe that Goosen has lied to the tribunal," the judgment states. "Whether or not Goosen chose to mislead this tribunal of his own volition or was asked to protect other persons in the organisation is not clear to us," states the judgment. "What is clear to us is that Goosen's lack of credibility as a witness was put beyond doubt." However, Goosen was not singled out on his own, with the tribunal arguing that Pioneer's conduct left "much to be desired" and that its attitude towards the tribunal and commission was "downright disdainful".

The tribunal's judgment argues that Pioneer's entire case was "mounted on the basis of manifest falsehoods". "Moreover, these were no ordinary falsehoods; they did not involve the mere distortion of a particular fact. We believe that successive layers of Pioneer's management, reaching up to Goosen at least, were involved in concocting these elaborate falsehoods."

If Goosen is charged with perjury, the decision would have to come from the Competition Commission and commissioner Shan Ramburuth says it is considering its options. The commission has laid perjury charges before -- the last time after it emerged that a senior Vodacom executive had lied to the tribunal during a merger hearing. Pioneer Foods had attempted to clear its name on charges of ­collusion being faced by its bread businesses, the Sasko and Duens bakeries. This followed an investigation by the commission into certain companies suspected of fixing prices for bread in contravention of the Competition Act. Other companies included in the investigation included Premier Foods (Blue Ribbon Bakeries), Foodcorp (Sunbake Bakeries) and Tiger Brands (Albany Bakeries).

Premier was granted immunity from prosecution because of its cooperation with the investigation and the fact that it confessed to its role in the cartel. Tiger Brands also decided to cooperate with the commission, culminating in its admission of participation and a fine of more than R90-million. Foodcorp was third to settle with the commission, paying a fine of R45-million.

But Pioneer decided to take the commission on, claiming it was not part of a national bread cartel. "When we consider the evidence placed before us in its totality, what we see from all these accounts is a culture of cooperation so entrenched in the daily operations of these four companies that their employees, in full knowledge of the unlawfulness of these arrangements, had no difficulty in reproducing it on all levels," the judgment states. 'They met regularly, they called each other frequently, they asked the one to call the other, they agreed on implementation dates for their increases, they exchanged increase letters to give each other comfort, they divided markets at both a national level and a local level, they monitored each other's compliance and had no hesitation in enforcing their illegal arrangements under the guise of 'fairness'. "Naked cartel behaviour is not justifiable under our legislation and is presumptively harmful," the judgment states. "In this particular case the offences are more so repugnant because they have affected the poorest of the poor, for whom standard bread is a staple."

The tribunal points out that, up to the date of the hearing, Pioneer had not taken any action against employees implicated in the collusive conduct. Pioneer issued a statement to its shareholders this week advising them of the tribunal's decision and the R195-million fine. "The company will review the findings of the Competition Tribunal and consider its response, after which further announcements will be made," says the statement.

Source: Mail & Guardian

Commission approves Vodafone-Vodacom merger

The Competition Commission has recommended the approval of the proposed large merger between Vodafone and Vodacom, it said on Monday. It has referred the transaction to the Competition Tribunal for approval. Currently, Vodacom is jointly owned by Telkom South Africa, which holds a 50% stake in Vodacom, and Vodafone, which also holds 50%. In terms of the proposed transaction, Vodafone will acquire a further 15% of the issued share capital in Vodacom from Telkom.

Vodacom will be listed on the JSE and Telkom will unbundle its remaining 35% shares in Vodacom to its own shareholders. On completion of the proposed transaction, Vodafone will hold 65% of the issued share capital of Vodacom. The remaining shares of Vodacom will be publicly held. Vodafone will exercise sole control over Vodacom post-merger, the commission said.

During its investigation of the proposed merger the commission established that Vodafone did not compete with Vodacom in any of the product markets in South Africa. "The commission is also of the view that the vertical integration between the parties is unlikely to result in any substantial prevention or lessening of competition," the commission said.

The commission contacted the merging parties' competitors and customers to solicit their views regarding the proposed transaction. No significant competition concerns were raised by either the customers or competitors of the merging parties. The commission's investigation revealed that there were "other credible players in the relevant markets in which the merging parties were involved".

The commission also concluded that there were "no significant public interest issues that warranted a prohibition or conditional approval of the transaction". The tribunal will hold public hearings into the matter on February 25 at 10am.

Source: Mail & Guardian -- Sapa

COMPETITION ACT 89 OF 1998

To provide for the establishment of a Competition Commission responsible investigation, control and evaluation of restrictive practices, abuse of dominant, position and mergers; and for the establishment of a Competition Tribunal responsible to adjudicate such matters; and for the establishment of a Competition Appeal Court; and for related matters.

The people of South Africa recognise:

That apartheid and other discriminatory laws and practices of the past resulted in excessive concentrations of ownership and control within the national economy, inadequate restraints against anti-competitive trade practices, and unjust restrictions on full and free participation in the economy by all South Africans. That the economy must be open to greater ownership by a greater number of South Africans.

That credible competition law, and effective structures to administer that law are necessary for an efficient functioning economy.

That an efficient, competitive economic environment, balancing the interests of workers, owners and consumers and focussed on development, will benefit all South Africans.

IN ORDER TO-

provide all South Africans equal opportunity to participate fairly in the national economy; achieve a more effective and efficient economy in South Africa;

provide for markets in which consumers have access to, and can freely select the quality and variety of goods and services they desire;

create greater capability and an environment for South Africans to compete effectively in international markets;

restrain particular trade practices which undermine a competitive economy;

regulate the transfer of economic ownership in keeping with the public interest;

establish independent institutions to monitor economic competition; and give effect to the international law obligations of the Republic.

Source: SABINET