220709 Blue Ribbon bakery as the bread price expected to rise.photo by Simphiwe Mbokazi 220709 Blue Ribbon bakery as the bread price expected to rise.photo by Simphiwe Mbokazi
Cape consumers paid too much for just over 5.1 million loaves of bread.
And experts have pinpointed exactly who, according to them, were affected by the bread price-fixing saga: people who bought bread produced by either Pioneer Foods, Premier Foods or Tiger Consumer Brands at informal retailers, such as spaza shops and small cafes, in the Cape Town metropolitan area and the Cape Winelands between December 18, 2006 and February 14, 2007.
This information is contained in court papers filed at the Western Cape High Court in an application by several organisations and consumers (the applicants) – including the Black Sash Trust, the Children’s Resource Centre Trust, Cosatu and the National Consumer Forum – who are asking for certification to lodge a class action against the three major bread producers.
They have brought the court action in the interest of bread consumers.
Among the applicants’ court documents is a joint report by two economic consulting firms, DNA Economics and Nathan Associates Inc.
Their findings were that affected consumers had been overcharged for about 5.1 million loaves of white and brown bread within that period.
The total damages, they estimated, amounted to between R1.57 million and R2.09m.
Attorney Charles Abrahams, representing the applicants, said if they were successful, the most appropriate relief in such a case would not be to spread the damages among the affected consumers but a proportionate reduction in the price of bread.
He said the proposed price reduction would be implemented in the geographical areas affected for a period of two months – the same period during which consumers had been overcharged.
The Competition Commission investigated the three bread producers in 2006 after local distributor Imraahn Mukkadam blew the whistle on the price-fixing scandal.
Tiger Brands was fined almost R99 million and Pioneer Foods about R196m, while Premier Foods was granted leniency for co-operating with the investigation.
In their report, the applicants’ experts came to an estimate of total damages by determining what the affected consumers were charged for bread and subtracting the amount they would have paid had there been no collusion.
Citing the Competition Tribunal’s findings, they said there had been an average overcharge of 35c a loaf.
The applicants in this case are not the only group who have launched court proceedings against the producers.
Mukkadam is driving a separate court application on behalf of bread distributors.
He picked up a victory in the Constitutional Court last week, allowing him an opportunity to return to the high court for certification to launch a class action.
His attorney, Terence Matzdorff, said he would meet his clients as soon as possible to decide their next step.
Both Matzdorff and Abrahams noted the precedent that these two cases had set.
In the consumers’ case, the Supreme Court of Appeal had set guidelines for future class actions.
“Does it open the door (for other class actions)? No,” said Abrahams. “It sets the bar and it sets the bar very high.”
Matzdorff said: “When people write the legal history of the country, these are going to be leading judgments. ” - Cape Times