The dairies are the smallest of eight milk producers entangled in the Commission’s probe into price-fixing and allocating market share in the milk market, which began in February 2005. The SCA judgment set aside the Commission’s case against the two and prevents the Commission from using evidence from the companies’ executives, saying the information was obtained on the back of an unlawful summons.Competition Commissioner Shan Ramburuth didn’t rule out the possibility that the SCA ruling could bring the case against the two to a complete halt.
“Lawyers are studying the judgment to decide whether or not to appeal. A whole lot of the evidence we gathered can’t be used. Whether the case proceeds on the basis of other evidence remains to be seen.” Other companies embroiled in the investigation are Clover Industries, Clover SA, Parmalat, Ladismith Cheese, Lancewood and Nestlé SA. While Lancewood reached a settlement with the Commission, Clover announced in 2009 it intended raising similar objections to those made by Woodlands, and Parmalat is reportedly seeking legal advice to determine whether the SCA ruling will force the Commission to drop its charges against them.
Webber Wentzel partner Robert Wilson said the investigation started when the Commission initiated a complaint for which it obtained summonses to secure information to use as evidence. But the Commission recognised its complaint was “bad” and tried to remedy the situation by initiating a new complaint a year later in 2006. This investigation was marred by the use of evidence improperly obtained under the 2005 summonses.
“The fact that the Commission corrected its 2005 initiation suggests that even back then, it was mindful that some of its investigations were somewhat broad,” said Wilson. “We don’t often have circumstances like that. It may be that the more recent initiations have been properly framed. If that’s so, I don’t anticipate a massive rush of companies trying to have their initiations set aside on technicalities.” Milk Producers’ Organisation (MPO) CEO Bertus de Jongh said the SCA decision came as a relief.
“This almost amounts to what we regard as the ideal solution of an extended sentence without paying fines. It means they would in future refrain from negotiating producer prices among themselves, if that’s what they were doing.” De Jongh said that the MPO had previously calculated that in a worst-case scenario, the dairy companies could face fines of up to R1 billion. “We always feared these fines may be passed on to farmers as they are price takers.” Clover couldn’t be reached for comment.
