Unilever price-fixing: Competition Tribunal accepts R16m settlement

The Competition Tribunal has ended a long-standing market manipulation case against fast-moving consumer goods firm Unilever by accepting the firm’s settlement agreement with the Competition Commission (CompCom).

The settlement will see the Anglo-Dutch group paying a R16 million administrative penalty as well as implementing remedial actions worth over R380 million.

On Monday, the adjudicator of competition matters confirmed it had approved the settlement agreement reached by the commission and Unilever after holding a hearing earlier this month to interrogate the terms of the agreement.

This comes after the CompCom – mandated to investigate competition concerns – referred the case to the tribunal for confirmation in July.

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Unilever price-fixing

The conclusion of this matter comes a decade after local competition authorities raided the firm’s local offices on suspicions that Unilever and Sime Darby Hudson and Knight were manipulating the price of margarine and edible oil products between 2004 and 2013.

The commission, at the time of launching its investigations against the two companies, accused them of contravening competition law when the two companies “concluded a suite of agreements in terms of which, among others, Sime Darby was precluded from supplying products of a particular classification, pack size and format to specific customer channels”.

The settlement comes years after Unilever sold its edible oils business in the Ivory Coast to expand its soap business on the continent, a Reuters report in 2008 showed.

Unilever to implement over R380m in remedial action

The settlement accepted by the tribunal will also see Unilever implementing several remedies, such as donating R3 million worth of hygiene, disinfectant and oral products to public schools over five years.

The producer of Vaseline, Sunlight and Dove branded products will also be required to increase the annual value of its local procurement of products and services from local firms by at least R340 million for four years.

Additionally, as part of the agreement, Unilever must establish and administer a R40 million Enterprise Supplier Development Fund, which will provide interest-free business loans to qualifying black-owned businesses in the manufacturing, logistics and wholesale industries.

“It will also provide interest-free business loans to qualifying black-owned firms requiring start-up funds to enter the logistics, wholesale and distribution industries,” the agreement added.

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Sime Darby settlement

Even though it’s taken Unilever this long to settle with South Africa’s competition authorities, co-accused Sime Darby settled with the commission in 2016.

After admitting wrongdoing, Sime Darby – according to CompCom filings – agreed to pay a R35 million administrative penalty.

In addition to the penalty, Sime Darby agreed to invest funds to build and commission a new packaging and warehousing facility to package and store its edible fats and oils. At the time, the facility was estimated to cost R135 000.

This was just one of many remedial actions the firm undertook in its settlement with authorities.

Others included implementing behavioural changes that would prevent further breaches of competition laws.

This article is republished from Moneyweb under a Creative Commons licence. Read the original article.