Tiger Brands cleans out its closets
May 11, 2008
Johannnesburg - Tiger Brands is continuing a company-wide review to root out anti-competitive behaviour, after a R53.5 million fine for collusive tendering was slapped on its medical supplies firm, Adcock Ingram, on Friday.
The mop-up operation was outlined by chief executive Peter Matlare, who told reporters in Johannesburg: "We are cleaning house. We are going door to door and cupboard to cupboard. We will not accept this kind of behaviour in a company such as Tiger. We will be a decent corporate citizen."
The competition commission imposed an administrative penalty of 8 percent of annual revenue on Adcock Ingram Critical Care (AICC) in a consent agreement reached with parent Tiger Brands.
Matlare said the charges of collusive tendering and market allocation were found to be "substantially correct" in an investigation conducted at the behest of the board by Edward Nathan Sonnenbergs.
The law firm had been commissioned "to review all of the businesses in the greater Tiger group in order to ensure that all operations are in compliance with the Competition Act, or to identify any non-compliant activity", Matlare said.
Non-executive chairman Lex van Vught said the board was "anxious" to get the results of the review as soon as possible. They should be released at the latest by the end of the financial year. If anything "untoward" was found, Van Vught said, it would be made public.
Matlare said the company had asked 2 500 managers to sign a declaration form indicating whether they knew of any anti-competitive behaviour. He said 2 200 of the managers had said there were "no indications of contraventions" besides the milling and healthcare matters.
The rest of the managers had already left the organisation or were on leave.
Late last year, Tiger Brands received a R98.8 million fine for fixing the price of bread.
Matlare said AICC senior executive Arthur Barnett had been suspended since February for involvement in the collusion. Disciplinary proceedings would be initiated against him.
The company was awaiting evidence from one of the commission's witnesses - allegedly implicating other employees of Tiger Brands - before proceeding with disciplinary action against anyone else.
"Outsider information will help us understand if other people are allegedly involved," said Matlare. If so, "then appropriate action can be taken".
Both Matlare and Van Vught said they still believed in the worth of the company, despite its involvement in these anti-competitive activities.
"These are pockets of unacceptable behaviour rather than endemic," Van Vught said. Just a few dozen people out of 15 000 employees appeared to have been involved.
AICC admitted to "collusive tendering" over a 14-year period. In percentage terms, its administrative penalty of R53 502 800 - 8 percent of its turnover - was the highest penalty to date for collusive behaviour, said the commission.
The fine is related to a cartel in the supply of intravenous medical products to hospitals.
AICC colluded with three other medical suppliers, Fresenius Kabi South Africa, Thusanong and Dismed.
"They would agree among one another which company would tender for which product so that they would not compete with one another in the tendering processes. They fixed the outcome of the tendering process," competition commission senior analyst Nandi Mokoena said.
"They could then inflate their prices because they knew there was no other competition in the tendering process."
Tiger Brands, which aims to spin off Adcock Ingram this year, climbed 2.73 percent to R156.15 on Friday. The food producers index rose 1.25 percent.
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