Ferrial Adam
Ferrial Adam

Actually it’s business as USUAL …

This blog has nothing to do with the government’s new slogan sound bite — it has to do with thieving and unscrupulous business practices in South Africa. The recent news of price-fixing and collusion by pharmaceuticals is just one more example of what seems to be “business as usual” behaviour in South Africa.

I’m a bit surprised by the rather cool response. I expected a much more vociferous response — actually I hoped for it. I’m sure that I am not the only one who is pissed off by the price-fixing of goods and products, especially on basic foodstuffs such as bread and milk! And I am certain that this is only the tip of the iceberg.

In 2004, there was a suspicion that car dealers and manufacturers were fixing the price of cars. Nothing concrete has yet been established, but I’m inclined to believe that there must have been something “dodgy” for such a strong accusation to be made.

Then we had the price-fixing of bread. Tiger Brands was fined R98,8-million after admitting that it had conspired with rivals to fix the price of bread. I’m guessing that last month’s bread-price increase of between 35c and 40c a loaf is to ease the effects on the company’s profits. Once again the consumer will foot the bill for corporate collusion.

And then, of course, we have the eight dairy companies that have been investigated for fixing the price of milk. It is suggested that supermarkets were also involved in the price fixing. It is also alleged that Clover and Parmalat had exclusive agreements that forced producers to supply them with their total milk production. Producers were also prevented from selling any surplus milk at competitive prices to other companies or to consumers, thus forcing out smaller milk processors and distributors. What’s more is that these companies have been accused of “removing surplus milk from the market in order to keep prices high”.

Most recently, three pharmaceuticals have also been accused of colluding when bidding for government tenders. Every year, companies are invited to tender for the supply of pharmaceutical products to public hospitals. These companies would discuss the tender among themselves. They would allegedly then allocate the tender, decide which of them would win it and set the price to win the tender. Interestingly, one of these pharmaceuticals is a subsidiary of Tiger Brands.

If the milk companies are found guilty, they will have to pay a fine of up to 10% of their annual turnover (I assume the same for the pharmaceutical companies). Is a fine enough? It seems like a mere slap on the wrist. In any event the consumers are indirectly paying the fine — as these companies tend just to increase the prices of the products. Tiger Brands is a case in point — and the fine did not, apparently, stop it from colluding again.

As a consumer it makes me ill to think that people are getting away with such greed and thievery. Perhaps, in addition to a fine, the directors and executives of these companies should be named and shamed. Those who claim they had no idea of what was happening should be fired anyway. At such senior levels, if you plead ignorant, then you are just as guilty.

I have to commend the Competition Commission for the work that it has done thus far. The commission’s focus, however, is limited. Besides prices and fair competition, we need a structure to look at issues such as human rights, labour practices, environmental degradation and corporate accountability. I cannot even imagine what we would find in the mining, refineries and construction sectors.