Since the onset of the case with the Competition Commission for collusive behavior, three of South Africa’s major bread producers; Pioneer Food Group, Tiger Brands and Premier Foods, have found themselves under the spotlight. Earlier this year, Pioneer Foods was the last to receive judgement upon which they were ordered to pay a hefty sum in the region of R1 billion. However, the saga was not yet over.
Last week Friday consumer organizations, Cosatu and activist groups, as well as 5 individual consumers, applied for 2 class actions against the bread producers.
On Tuesday, in the latest development, the accusatory organizations pushed for certification as representatives of all bread eaters in the Western Cape. Some might recall that Tiger Brands’ official case was concluded in 2007, and the three year prescription period comes to a close on Friday, which made the application all the more urgent so that a summons could be served. However, the hearing has since been adjourned until next week Tuesday, effectively taking Tiger Brands out of the fray.
The motions against the producers are driven by claims that penalties already paid to the state did not do enough to compensate for the average consumer who also suffered due to the collusion. In particular concerns were raised for the impoverished who suffered severely as a large portion of whatever income they receive goes to buying bread as it’s a staple food for many of them.
Taking all this into account, what do the plaintiffs truly expect to happen? Is it realistic to expect these producers to pay out yet another large sum which would go to the consumers? And if so, how would this payment be administered and redistributed? After all, how much did the collusion really affect the prices paid by average consumers, with only a few cents being added per loaf here and there.
If successful a class action could be very costly, particularly for Pioneer Foods, who earlier this month revealed that they are looking to acquire KWV and expect to pay a premium for the prestigious winemaker.
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