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Thread: Anti-competitive activity.

  1. #1
    Site Caretaker Dave A's Avatar
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    Anti-competitive activity.

    I was reading that Tiger Brands got slapped with a R98 million penalty for anti-competitive practices. And apparently that was relatively lenient for being co-operative.
    Tiger Brands has been ordered to pay a R98,7-million penalty by the Competition Commission after admitting to participating in bread and milling cartels, the commission announced on Monday.

    Tiger Brands also agreed to assist the commission in prosecuting remaining cartel members who have not cooperated with the commission.

    It will implement a programme to eradicate anti-competitive practices in the company.

    In December last year, Western Cape bread distributors complained about alleged bread and milling cartels. An investigation that ensued found Tiger Brands to be involved in illegal price-fixing in the bread industry, along with, among others, Premier Foods and Pioneer Foods.
    full story from M&G here
    In this case it was price-fixing, but does anyone have any ideas on what else might be considered an anti-competitive activity?
    The trouble with opportunity is it normally comes dressed up as work.

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    Site Caretaker Dave A's Avatar
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    Stand by for fireworks. This has just got really serious.
    A report on anti-competitive behaviour by South Africa's four major banks will have "serious implications" for the sector, says the Competition Commission.

    "The sheer volume of information received has enabled us to analyse the anti-competitive outcomes we have noted. Our findings will have serious implications for the sector," the head of the inquiry, Thabani Jali, said in a statement issued on Thursday.

    The release of the report will be delayed as the commission is taking time to make sure it is "thorough and well-considered".
    full story from M&G here
    The report comes from the public hearings on banking fees last year.

    I also recall seeing a call the other day that a maximum penalty of 10% of annual turnover simply wasn't enough. In this case, I suspect 10% of annual turnover would be a pretty tidy sum.
    The trouble with opportunity is it normally comes dressed up as work.

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    Administrator I Robot's Avatar
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    Human Rights Commission on business competition regulations offenders

    South African Human Rights Commission calls for harsher action against those breaking business competition regulations 22 November 2007

    The South African Human Rights Commission (SAHRC) is concerned about the negative impact anti-competitive business behaviour has on the attainment of socio-economic rights by the poor, as they are the ones heavily bearing the brunt of such practices.

    The SAHRC hopes the Competition Commission will recommend stringent action later when it completes its investigation into bread and milling cartels and in its banking enquiry report regarding anti competitive outcomes.

    Anti-competitive business behaviour should not only be characterised as a more civilised form of illegal corporate activity but should also be viewed within the same context of criminal findings of fraud and corruption perpetrated by companies and individual employees.

    Secondly, especially when dealing with basic commodities like bread, we cannot separate the illegal activities of companies from their impact on the economic and social rights of the communities who comprise their customer base and from whom they derive their profit.

    As these illegal activities concern basic commodities and disproportionately affect disadvantaged communities, they paint a picture of the ruthless prioritisation of profit at the expense of the marginalised, which are already disproportionately affected by food and fuel inflation.


    More...
    Last edited by Dave A; 23-Nov-07 at 03:39 PM.

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    Site Caretaker Dave A's Avatar
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    Now it's the turn of the milk industry.
    Prosecution procedures into alleged price-fixing by certain South African milk producers will begin next week, the Competition Commission said on Tuesday.

    Eight dairy companies investigated for alleged price-fixing will be involved in pre-hearings next week, said the commission's head of enforcements and exemption, Thulani Kunene.

    "The matter will be going ahead. It's a large number of respondents. Most of them face more than one allegation [for] different contraventions," said Kunene.
    full story from IOL here
    This comment by COSATU expresses a concern I have with how penalties are raised.
    "Should the Competition Tribunal find the companies guilty, all those responsible must be punished much more severely than Tiger Brands, whose R99-million fine could be absorbed into their running costs and passed on to the consumer in higher prices."
    That is the problem with penalties on companies - ultimately it will find its way back to the consumer.

    So what is the alternative? I'd be interested to hear what COSATU might suggest
    The trouble with opportunity is it normally comes dressed up as work.

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    just me duncan drennan's Avatar
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    Quote Originally Posted by Dave A View Post
    That is the problem with penalties on companies - ultimately it will find its way back to the consumer.
    There are two things that bother me about these penalties. Firstly the point you have raised - they ultimately end up being paid by customers. Secondly, where does the money paid in penalties actually go?

    I'm not sure how it could work, or who would regulate it, but what would happen is the competition commission imposed a penalty which was built into their pricing?

    For example, let's say bread is sold by the bakeries at R5/loaf, why not force them to sell the next 40 million or so loaves at R2.5/loaf?

    The complication here is that the end retailer would somehow have to build that into their price, and that too would have to be monitored.
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