Pioneer: Watchdog wants R1.5bn

The bread price collusion-saga seems to be far from over as both the Competition Commission and Pioneer Foods have appealed against the R195m fine that was imposed by the Competition Tribunal on the food giant. The warring parties have taken opposite views to the issue; with the commission saying the fine is too small, while Pioneer wants it reduced.

The Commission said it was not happy with the manner in which the tribunal had calculated the penalty, even though it agreed that the tribunal's judgement "appropriately castigates" Pioneer's behaviour.

"Administrative fines must be set at levels that effectively deter anti-competitive behaviour," said competition commissioner Shan Ramburuth. "We believe that the precedent set by this ruling will negatively affect the commission's ability to set effective fines in future cases."

The commission wants the Appeal Court to fine Pioneer R1.5bn instead, equivalent to 10% of total group turnover for the 2006 financial year. The R195m is 10% of Pioneer's bakery division Sasko's turnover.

"The company [Pioneer] has resolved that it is in its interests to oppose the Competition Commission's appeal and to lodge a cross appeal which, if successful, may have the effect of the penalty being reduced," Pioneer said on Thursday in a statement to shareholders.

Pioneer's financial director Leon Cronje was not prepared to comment on the group's reasons for the appeal.

However, the commission confirmed that Pioneer has lodged appeal papers.

The commission's decision to appeal against the rulings seems to have caught Pioneer by surprise. Last week Pioneer told investors it "regrets it's handling" of the matter and that it would seek to "bring the matter to a swift close".

Pioneer is also facing another penalty for collusive behaviour in its maize and wheat milling business.

Speaking at the the group's annual general meeting last week, chairperson Boy Blanckenberg told shareholders the Competition Commission indicated it had concluded its investigation on the matter and was ready to refer its findings and proposed fine to the tribunal, but was open to negotiations to settle the matter without making a binding legal finding.

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