Photo by: Bloomberg
The Competition Commission on Thursday morning conducted a search and seizure operation at the premises of nine fresh produce market agents suspected of involvement in alleged cartel and price-fixing conduct in contravention of the Competition Act.
The operation formed part of an investigation into possible cartel conduct at the Tshwane Market, in Pretoria, and the Joburg Market, in Johannesburg, which had been reported to the commission by the Department of Agriculture, Forestry and Fisheries.
The agents under scrutiny, which serve as intermediaries between farmers and buyers of freshly produced fruit and vegetables in South Africa, include Botha Roodt Group; Subtropico; RSA Group; Dapper Market Agents; DW Fresh Produce; Farmers Trust; Noordvaal Market Agents; Marco Fresh Produce Market Agency and Wenpro Market Agents.
"The big agents push the price significantly below the market price very early in the morning, which sees the margins for small agents (farmers) squeezed and their stock quickly depleted. By very early in the morning they are out of the market and the big agents are suspected of colluding to raise the prices of produce – enabling them to earn bigger margins for the farmers and higher commissions for themselves.
“We have reasonable grounds to suspect that the agents entered into an agreement and/or engaged in a concerted practice to fix the price and trading conditions for the supply of freshly produced fruits and vegetables in South Africa,” said the commission.
It noted that it was also suspected that the agents reserved certain fresh produce grades for particular buyers. It is alleged that the agents practice price discrimination based on the identity of the buyers.
There are about 30 fresh produce market agents in the country, six of which are large entities accounting for about 80% of the fresh produce intermediaries. “Given the sheer size of [these agents], the suspected cartel conduct results in a large proportion of freshly produced fruits and vegetables being sold at much higher prices than the average daily selling price.”
The agents’ activities mainly include selling fresh fruit and vegetables on behalf of farmers, for a commission, to buyers including wholesalers, retailers and hawkers. The commission suspects the agents have, over the years, fixed the commission rate.
It is the responsibility of the fresh produce market to determine daily average prices for all types of fruits and vegetables available for sale in the market. The average price is calculated with reference to the available stock levels and the closing prices for the previous trading day.
During the search, the commission seized information, documents, data and records that have a bearing on the investigation.
“The commission is concerned with the prevalence of collusion in the food sector, as higher prices of these commodities affect the most vulnerable households. The poor spend a disproportionally high percentage of their income on food.
“Also, cartel activities in this sector serve to keep emerging black farmers and agents out of the market. It is for these reasons that this sector ranks high in our priority list, and cartels, big or small, will be rooted out,” said Commissioner Tembinkosi Bonakele.