Why Premier Foods is off the hook in bread price scandal

Premier Foods was granted immunity from a hefty fine by the Competition Commission when it helped the Commission bring its fellow bread cartelists to book.

In spite of this‚ Premier Foods was still included in a Competition Tribunal declaration which said it had broken the law with Tiger Brands and Pioneer Foods.

It challenged this in the Supreme Court of Appeal (SCA)‚ saying it had immunity and the court ruled in its favour.

But the Commission said this decision had deprived the consumers of their rights to access the courts.

The Commission investigates and prosecutes companies found to be colluding. Upon referral to the Competition Tribunal‚ which adjudicates cases‚ a guilty party may be fined up to 10% of its annual turnover.

Premier Foods‚ which makes Blue Ribbon bread and owns brands such as Snowflake‚ Iwisa and Lil-lets‚ was granted immunity under the Commission’s corporate leniency policy and did not pay a fine for its involvement in the cartel.

It then gave evidence against Tiger Brands and Pioneer Foods and blew the whistle on Foodcorp‚ which it had colluded with on a national scale.

This evidence helped secure large fines for Pioneer Foods‚ which was fined R195.7-million‚ and Tiger Brands and Foodcorp‚ which negotiated fines of more than R98-million and R45-million respectively.

The Tribunal included Premier Foods in a declaration it made against the cartelists in the Western Cape bread market‚ saying they had broken competition laws.

With this declaration‚ the door was opened for consumers to sue the cartelists for losses they suffered due to the activities of the cartel.

The Commission said the Tribunal was right to do so because its leniency policy should not protect cartelists from legal action by other parties as well as a fine.

But the SCA said the Tribunal did not have the authority to issue the declaration against Premier Foods.

Today Premier Foods has an annual turnover of R11-billion.