In an attempt to have charges of milk cartel activity against them dropped, dairy companies Milkwood and Woodlands followed their co-respondents into the Competition Tribunal on 19 and 20 January. Lawyers for the dairy companies argued that the charges should be dropped on the grounds of technical and legal flaws in the commission’s investigation, and that the companies’ constitutional rights were violated during the investigation.
The companies claim that investigators summonsed representatives of Milkwood and Woodlands to give evidence before the commission had initiated any complaint against the companies. This was contrary to procedure and therefore the evidence the commission gathered was illegal and should not be used in proceedings against the companies, lawyers claimed. They also said that the commission’s summons was invalid as no investigation had been initiated.
However, lawyers for the Competition Commission disparaged the companies’ bid, saying they were firing off a round of bullets in the hope that one of them would hit the mark. The commission stood behind its investigation, saying investigators were properly authorised and the evidence was obtained legally. The case dates back to 2005, when the Competition Commission first looked into allegations of anti-competitive behaviour in the milk industry. The commission found evidence of six contraventions of the Competition Act, such as price-fixing for raw and processed milk and the manipulation of the market to restrict competition. It subsequently laid charges against Clover, Parmalat, Ladismith Cheese, Woodlands Dairy, Lancewood, Nestlé SA and Milkwood Dairy.
On 16 January, the commission reached its first settlement agreement, when Lancewood admitted it was involved in price information exchanges and agreed to pay a penalty of R100 000, and to cooperate with the commission in its prosecution of the remaining respondents. Lancewood faced only one count out of the six. Clover and Ladismith’s attempts in June and September last year to have the charges dropped by the tribunal on technical grounds proved unsuccessful, and Ladismith and Parmalat have petitioned for permission to appeal the decision. Pending a decision, no date has been set for the main hearing before the tribunal.
Competition Commission commissioner Shan Ramburuth said technical legal
points raised by the respondents had delayed the hearing into the merits of the case, but would not deter them from “prosecuting all companies colluding in this most basic of food products”. – Robyn Joubert
