South Africa’s Competition Commission has referred a cartel case against eight dairy processors to the Competition Tribunal.
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The commission initiated an investigation into anticompetitive behaviour in the milk industry in February 2005. In a statement it said its investigation found evidence of price fixing for raw and retail milk, and that trading conditions were manipulated in these markets.
The dairy processors caught up in the investigation are: Clover Industries; Clover SA; Parmalat; Ladismith Cheese; Woodlands Dairy; Lancewood; Nestle SA and Milkwood Dairy.
The statement said that the commission will refer a number of specific findings to the Competition Tribunal for further determination.
These included allegations that Clover, Parmalat, Ladismith, Woodlands, Lancewood and Nestle had exchanged sensitive information on procurement prices of raw milk in various ways. Exchange of pricing information enabled competitors to co-ordinate their pricing strategies to fix the purchase price of raw milk, the commission claimed.
Furthermore, Clover, Parmalat, Woodlands and Nestle were said to have entered into long term milk supply and exchange agreements to sell their surplus milk to each other rather than at lower prices to end users. This arrangement enabled colluding firms to maintain the price of milk at artificially high levels, the report said.
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By GlobalDataMeanwhile, the CC claimed that Clover and Parmalat abused their respective dominant positions in exclusive agreements that compelled producers to supply them their total milk production. Producers were prevented from selling surplus raw milk at competitive prices to third parties or consumers directly. This practice also prevented the entry of smaller milk processors and distributors into the market, it was alleged.
In prosecuting this case before the Competition Tribunal, the commission will seek an order to declare that the respondents committed a prohibited practice under the Competition Act and impose an administrative penalty of up to 10% of the annual turnover of the applicable respondent.
