Competition Commission raids Gauteng fruit and veg market agents
The Competition Commission on Thursday conducted a search and seizure operation at the premises of nine fresh produce market agents at the Tshwane Market in Pretoria and the Joburg Market in Johannesburg.
The search and seizure operation is part of an investigation into cartel conduct which was reported by the Department of Agriculture, Forestry and Fisheries.
The suspects are:
- Botha Roodt Group
- Subtropico
- RSA Group
- Dapper Market Agents
- DW Fresh Produce
- Farmers Trust
- Noordvaal Market Agents
- Marco Fresh Produce Market Agency
- Wenpro Market Agents
The agents serve as fresh produce market intermediaries between farmers and buyers of freshly produced fruits and vegetables in South Africa. They are suspected of being involved in cartel and price fixing conduct in contravention of the Competition Act.
The Commission obtained search and seizure warrants from the High Court Gauteng Division, Pretoria.
The agents are allegedly involved in prohibited coordinated activities aimed at undercutting the prices charged by smaller intermediaries by charging way below the market price for certain agreed periods of a trading day.
It is further alleged that the suspected agents keep their prices unsustainably low during these periods and quickly increase prices significantly as soon as the smaller agents run out of stock.
Certain volumes of stock of fresh produce are thought to be sold during late hours of trading with the aim to manipulate prices. They further make decisions regarding the actual timing of the price increases.
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The Commission alleged the cartel suppresses competition and drives it out of the market. By agreement members of the cartel increase prices for fresh produce.
It is also suspected that the agents reserve 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. There are six significantly big ones and they account for about 80 percent of the fresh produce intermediaries.
The Commission said the conduct of the suspected cartel 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 fruits and vegetables on behalf of farmers, for a commission, to buyers including wholesalers, retailers and hawkers.
Commissioner Tembinkosi Bonakele said the Commission was 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 out emerging black farmers and agents out of the market," Bonakele said.
"It is for these reasons that this sector ranks high in our priority list, and cartels, big or small, will be rooted out."