Lobby groups welcome food price probe
30 June 2009, 12:06
By Gershwin Wanneburg
Consumer lobby groups are considering taking legal action against the country's biggest supermarket chains, buoyed by news that the Competition Commission has launched an investigation into their actions.
A series of protests is also planned to highlight the plight of those bearing the brunt of the high cost of living.
The Competition Commission said on Monday it would investigate Pick 'n Pay, Spar, Shoprite/Checkers and Woolworths, after a government advisory body said in a report that the retailers may have played a role in fuelling food inflation.
Massmart and Metcash were not mentioned in the report by the National Agricultural Marketing Council (NAMC), but they would also be investigated, the commission said.
Retailers have denied that they fixed prices and repeated on Monday that they would co-operate with the investigation.
But lobbyists took news of the investigation as a sign that there was something to their claims.
Consumer groups said the commission's investigation would not address food inflation, only price-fixing.
They have called for tougher action to be taken, such as jail terms for those found guilty of contravening the Competition Act.
The money that was generated from fines should also be used to spread consumer awareness, instead of being funnelled to the National Treasury.
Consumer activist Imraahn Ismael-Mukaddam said South Africans ended up paying the price each time competition authorities slapped companies with fines for breaking the law.
"Every time the Competition Commission slaps a fine onto producers, producers recoup that cost from the consumer," said Ismael-Mukaddam, whose complaint to the commission triggered an investigation into price-fixing in the bread industry.
At a meeting last night a network of groups, including Ismael-Mukaddam's Conscious Consumer Initiative, endorsed plans to take legal action against the bread and dairy industries.
Major bread and dairy producers have been found guilty of collusion by the Competition Commission, but both cases are still awaiting a final outcome.
The meeting also discussed the possibility of a class action suit against retailers.
The decision was partly driven by the NAMC report, which argued that retailers imposed unfair conditions on smaller suppliers that fanned inflation.
"We are in fact calling on the community to engage in mass action against the retailers," said Shaheed Mahomed, national secretary of the Workers International Vanguard League, whose organisation was also at Monday night's meeting.
The Competition Act allows the commission to recommend a fine of up to 10 percent of a company's annual turnover. Thami Bolani, chairman of the National Consumer Forum, said that was not enough.
"You remember the case of Tiger Brands, when they were fined R96-million after they admitted they were guilty of collusion and then a few days later raised the price of bread, which means we consumers were paying the fine."
The Competition Commission said it had so far uncovered a number of areas of "potential concern" among supermarkets.
Some of those concerns were also highlighted in the NAMC report, which said suppliers often inflated their prices in order to compensate for losses resulting from discounts insisted on by retailers.
The Competition Commission pinpointed other issues, such as exclusive lease agreements allegedly entered into between property developers with major retailers for up to 20 years at favourable rates, which may restrict new entrants into the market.
Consumer lobby groups are considering taking legal action against the country's biggest supermarket chains, buoyed by news that the Competition Commission has launched an investigation into their actions.
A series of protests is also planned to highlight the plight of those bearing the brunt of the high cost of living.
The Competition Commission said on Monday it would investigate Pick 'n Pay, Spar, Shoprite/Checkers and Woolworths, after a government advisory body said in a report that the retailers may have played a role in fuelling food inflation.
Massmart and Metcash were not mentioned in the report by the National Agricultural Marketing Council (NAMC), but they would also be investigated, the commission said.
Retailers have denied that they fixed prices and repeated on Monday that they would co-operate with the investigation.
But lobbyists took news of the investigation as a sign that there was something to their claims.
Consumer groups said the commission's investigation would not address food inflation, only price-fixing.
They have called for tougher action to be taken, such as jail terms for those found guilty of contravening the Competition Act.
The money that was generated from fines should also be used to spread consumer awareness, instead of being funnelled to the National Treasury.
Consumer activist Imraahn Ismael-Mukaddam said South Africans ended up paying the price each time competition authorities slapped companies with fines for breaking the law.
"Every time the Competition Commission slaps a fine onto producers, producers recoup that cost from the consumer," said Ismael-Mukaddam, whose complaint to the commission triggered an investigation into price-fixing in the bread industry.
At a meeting last night a network of groups, including Ismael-Mukaddam's Conscious Consumer Initiative, endorsed plans to take legal action against the bread and dairy industries.
Major bread and dairy producers have been found guilty of collusion by the Competition Commission, but both cases are still awaiting a final outcome.
The meeting also discussed the possibility of a class action suit against retailers.
The decision was partly driven by the NAMC report, which argued that retailers imposed unfair conditions on smaller suppliers that fanned inflation.
"We are in fact calling on the community to engage in mass action against the retailers," said Shaheed Mahomed, national secretary of the Workers International Vanguard League, whose organisation was also at Monday night's meeting.
The Competition Act allows the commission to recommend a fine of up to 10 percent of a company's annual turnover. Thami Bolani, chairman of the National Consumer Forum, said that was not enough.
"You remember the case of Tiger Brands, when they were fined R96-million after they admitted they were guilty of collusion and then a few days later raised the price of bread, which means we consumers were paying the fine."
The Competition Commission said it had so far uncovered a number of areas of "potential concern" among supermarkets.
Some of those concerns were also highlighted in the NAMC report, which said suppliers often inflated their prices in order to compensate for losses resulting from discounts insisted on by retailers.
The Competition Commission pinpointed other issues, such as exclusive lease agreements allegedly entered into between property developers with major retailers for up to 20 years at favourable rates, which may restrict new entrants into the market.
- This article was originally published on page 3 of The Cape Argus on June 30, 2009
Cape Town
