A South African food giant has been ordered to pay a fine of 99 million rand ($14.83 million) by the Competition Commission, after an Indian origin businessman exposed a racket to fix the price of bread in the country.
Imraan Ismail Mukaddam, who deals in bread, has been hailed as a hero after exposing price-fixing between the three largest producers of bread in the country -- Albany, Blue Ribbon and Sasko Duens.
Mukaddam complained to the Competitions Commission after he received letters of exactly the same price increase simultaneously from the three bakeries in December 2006.
Subsequent investigations of price-fixing by a cartel uncovered what the Commission called "a very serious contravention of competition laws" dating back to 1994.
"We can't think of a worse form of cartelling than fixing prices for products to the poor," the commission's manager for enforcement and exemptions, Thulani Kunene, told The Star.
Tiger Consumer Brands, of which Albany Bakeries is part, was fined 99 million rand by the Commission, which found that the three bakeries had at regular intervals over 12 years entered into agreements that constituted illegal price fixing in contravention of the Competition Act.
"The ant-competitive activity that took place was completely unacceptable and contrary to our ethical standards," Tiger Brands chief executive Nick Dennis said in a statement.
"The company has accepted full responsibility for the actions of the employees involved."
But consumer advocates have slammed the fine as inadequate, as it amounts to just 5.7 percent of the annual turnover of the bread operations of the company. The South African National Consumer Union called for criminal charges to be instituted.
Premier Foods, owner of Blue Ribbon bakeries, received immunity from prosecution after agreeing to cooperate with the Commission, which said it is now determined to press charges and seek much higher fines against the third largest group, Pioneer Foods, owner of Sasko and Duens bakeries, which allegedly stopped cooperating in the Commission's investigation.
Mukaddam, lauded as the David in the fight against three Goliaths, now plans to team up with other bread distributors to bring civil damages cases against the three bakeries.