Pioneer Foods, Morreesburg Koringboere price fixing

March 5, 2010 by: admin

Johannesburg – At Pioneer Foods an investigation is under way to determine whether all information was disclosed during the Competition Commission’s investigation into the company’s role in fixing bread prices.

This could eventually lead to a request for the resignation of the entire board of directors, even should this idea not have the support of all shareholders.

The Competition Appeal Court recently fined Pioneer R195m for its role in bread-price fixing. The Competition Commission has indicated that it will appeal the fine and ask for Pioneer to be fined R1.5bn.

This would represent 10% of the company’s total turnover, in contrast to the R195m, which represents 10% of its bread division turnover alone.

Far-reaching steps are possible at Pioneer because the commission will want tangible proof that changes have taken place. Pioneer will have to send a clear message that it is serious about resolving the problem once and for all. This is what the Competition Commission has expected in all recent cases.

The two biggest shareholders in Pioneer are Kaap Agri (27.8%) and the Morreesburg Koringboere (12.2%). The PSG group has a 41% stake in Kaap Agri, via its investment in Zeder.

At the annual PSG Konsult investment conference on Thursday, PSG executive chairman Jannie Mouton said that an increased fine could have a significant impact on PSG’s earnings.

A R195m fine would dilute its headline earnings by R10m, or 6c per share. A R450m fine would cost PSG R24m, or 13.9c per share.

Source http://www.fin24.com

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