Consumer class action against bread cartel to go ahead, despite setback

The parties seeking to take action against Tiger Brands, Pioneer Foods and Premier Foods for bread price fixing have vowed to go ahead with the suit, despite the Cape High Court’s recent dismissal of their application to formally certify the claim as a “consumer class action”.

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The judge also dismissed a similar application by Western Cape bread distributors.The parties – Cosatu Western Cape, the National Consumer Forum of South Africa, the Children’s Resource Centre Trust, the Black Sash, and five consumers – are seeking as yet uncalculated damages against the food companies.

Tiger Brands was found guilty of collusive behaviour in 2007 and Pioneer and the Competition Commission came to a settlement agreement totalling about R1 billion. Cosatu Western Cape regional organiser Mike Louw said the judge had rejected their application to be recognised as a legitimate representative of the class action. But that doesn’t stop them from appealing the decision, he added.
“If we had got the certification we were hoping for, then the respondents would automatically have had to come to court. Now, of course, we will have to summons them and do all sorts of other legalities before the case will be heard.” Louw said it’s important the case goes ahead, “based on the facts that these companies have been found guilty by the Competition Commission, that they were penalised with fines that are going to be paid to the state, and that the ordinary poor consumer hasn’t been provided with relief”.

The Competition Tribunal is currently hearing submissions concerning the settlement reached between Pioneer and the Competition Commission. The original whistle-blower, Imraahn Ismail-Mukaddam, who is pursing a separate class action with a group of small independent bread distributors, has already made a submission. In it, he reportedly said the food groups should be required to get permission from competition authorities for any bread price increases for up to a year after concluding the settlement to prevent them from raising prices to cover the cost of the penalties.

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Black Sash advocacy programme manager Nkosikhulule Nyembezi said since the cartel activity had been exposed, consumers hadn’t seen a drop in the price of bread. “From 1 November, the price of bread went up. We know that Pioneer and the Competition Commission reached a settlement agreement in the month of October, so there are questions as to whether the 1 November increase wasn’t already calculated into the fine that Pioneer would be getting.”

Since then, Blue Ribbon (Premier Food’s bread brand) had announced a bread price rise on 1 December. “A reduction in the bread price from these companies would be one of immediate things that could benefit all consumers, although an unintended consequence is that it would squeeze out the innocent guys who can’t compete,” Nyembezi said.

“We need to ensure that these companies reverse the action that they took. The overall solution is for us as a country to have policies and legislation that will ensure food security, so that we break our reliance on this small, thin chain of food supply that’s controlled by these companies.”

She said South Africa also needs to break the “unhealthy reliance” on imported food that has been seen over the past five years. Premier Foods CEO Ian Visser was unable to comment on whether or not the company planned to increase their bread price, saying: “The quickest way to get into trouble with the Competition Commission is to discuss prices.”

Referring to the class action suit, he said they’ll comment as matters proceed. “As it stands, we won the first round and we’re now awaiting further action.”Premier hadn’t responded to questions about the bread price increase at the time of going to print.