Foodcorp CEO Justin Williamson. Picture: MARTIN RHODES
Foodcorp CEO Justin Williamson. Picture: MARTIN RHODES

IN A surprise move on Wednesday, food company Foodcorp jumped the gun and announced that it would pay an R88.5m settlement relating to collusive practices following an agreement with the Competition Commission, despite the Competition Tribunal not having made a final decision on the matter.

The Competition Tribunal said it wanted certain amendments made to the agreement before it made a decision, and according to law, it has the final say in the settlement of competition cases.

Foodcorp, owner of such brands as Nola and Ouma Rusks, said on Wednesday afternoon it would pay an administrative penalty of R88.5m, representing an effective 10% of the turnover of its milling division for the 2010 financial year.

The penalty would be paid in three equal instalments of R29.5m over the next three years.

Nandi Mokoena, PR consultant at the Competition Tribunal, said that the pronouncement had been made prematurely. "This settlement hasn’t been decided upon. The tribunal wants certain changes made to the agreement and we are still waiting," Ms Mokoena said.

The case was referred to the tribunal on December 5 by the commission after investigations. The settlement emanates from investigation into collusive practices in the white maize and wheat milling industries between 1999 and 2007.

Foodcorp contravened the Competition Commission Act between 1999 and 2007 because it was represented in meetings with competitors at which agreements on selling prices and the implementation dates of such prices were reached for both milled white maize as well as milled wheat products.

The company has said senior employees involved in the matter were no longer with the business.

Foodcorp’s share of the retail market is 3.4% for white maize and 0.1% for flour, as it primarily supplies flour to the industrial sector and not the trade directly.

The company declined to comment on the tribunal’s position or to elaborate on the amendments to be made to the settlement.

Foodcorp CEO Justin Williamson had earlier said: "This matter relates to behaviour which ended in 2007 and which has caused great embarrassment to Foodcorp. We have learnt a very unpleasant lesson and will continue to implement extensive staff training to safeguard competitive and dynamic practices across the industry to the benefit of all consumers."

Foodcorp said as part of its ongoing employee development programmes, it would continue to implement stringent compliance training to ensure that employees and managers, including sales and marketing staff, understand competition law and do not engage in any contraventions of the act.

"A sustainable future can only be achieved if companies follow responsible business practices," Mr Williamson said. "We incorporate this approach in everything we do and will continue to make every effort to contribute positively to the South African economy by making the right choices that are not solely driven by the financial bottom line."