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.
Send the guilty companies a message >>
Boycott them as much as you can and encourage others to do the same.
I suggest consumer activism instead of consumer pacifism.
Put a dent in their brand equity, include some logos in the article.
Yes, what a shame.
I also feel very sorry for the droves of dairy farmers who were forced out of the business by these self same businesses who forced the gate price for milk down. It is a tragedy that does not even reach the newspapers.
What is the point of a fine anyway? send them to jail!
I agree with you on the thoughts that a fine is insufficient. Well said – The companies responsible just increase the price to cover the fine – and the consumer is left paying for the ‘crimes’ of the corporate.
Justice will only be done when these corporate leaders are jailed – and their names published in the local news.
I don’t think boycotting will help -as most consumers are brand loyal when it comes to shopping – and the crimes committed by the corporates do little in forcing them to change brand.
Now if there was a way to defame the brand – by printing their crimes on their products – that would be great! Let their brand speak of their crimes.
Maybe some law could be passed to do this.
The fact is that big business is corrupt, and the people can’t fight against them all by ourselves. Consumerism is not the solution. The answer is political activism. (The only real counterbalance to big corporations is the government. Therefore the people need to take control of the government. Sadly, under Mbeki big corporations have had too much power, while under Zuma it looks like they are going to run the whole show.)
The competition board has over many years allowed too many consolidations and so has limited competition in many areas.
Also globalisation is just creating very large monopolies that are beyond individual government control.
Perhaps the business leaders concerned should be tried for fraud as they are deliberately misleading the public.
Hoelieha, never knew you could commit such heinous crimes and go scot-free?
I’ve seen many politician caricatures-M&G cartoonist where are the fixers’ cartoons.
salivating in anticipation.
Thanks for all comments.
I agree that consumer activism will not solve the issue but it does have the potential to make companies become more accountable – or at least expose them more. The dolphin-friendly tuna and badger-friendly honey are a result of activism and awareness. Similarly, organisations in South Durban have been quite vocal about the air pollution from the refineries. This kind of activism has been good but it needs to increase and move beyond the boundaries of the affected areas.
The louder people’s voices are the more it would force governments to take action. If we sit back and allow this to happen then we will find more price fixing and more injustices.
I attended a meeting a couple months ago and I heard the phrase “Long, Loud and Legal”. Perhaps that is one way to go to stop these companies.
Companies are taxed at the lowered rate of 28%.
Now to have to pay a once of fine is not going to work because they will get it back through icreased prices.
So here is what if think should happen once
found quilty they pay taxes not at a lower rate
but at an increased rate for the next three years
of say 28 % plus a penaltiy of 5%,i.e 33%.
The additional tax should be used to subsidise
medicines for the poor.Hit them where they feel
it most.
why is there no one ivestigating Tjaart Kruger in the role he played in Tiger’s fiasco. Now he has gone to head up another monopoly at Afrox …. watch this space … see what haPPENS AT AFROX
R