Margarine and cooking oil maker Sime Darby Hudson Knight agreed to pay a R35m fine for colluding with Unilever, the Competition Commission said.

After raiding Unilever’s offices in Durban and Sime Darby’s offices in Boksburg in 2014, the commission said it discovered they had entered into a collusive agreement whereby Sime Darby would focus on large industrial customers, leaving retail customers to Unilever.

The parties agreed Sime Darby would not sell margarine in pack sizes less than 15kg, or edible oils in bottles smaller than 25 litres.

As part of its settlement with the commission, Sime Darby has agreed to invest R135m in packaging and warehousing facilities to enable it to compete with Unilever for retail customers, and to appoint a black economic empowerment (BEE) distributor.

Using a BEE company for some of its distribution requirements would ensure Sime Darby’s reliance on its potential competitors for distribution of its products came to an end, the commission said.

"This cartel is more harmful because it denied end consumers choice of edible oils and fats at the retailers’ shelves and the benefit of lower prices," commissioner Tembinkosi Bonakele said in the Competition Commission’s statement.

"We are happy now that Sime Darby Hudson has owned up and committed to enter the market to supply retailers with edible oils and fats in competition with Unilever."

The commission said its investigation followed complaints it received in 2012 that Sime Darby and Unilever were colluding.

"The commission’s investigation uncovered evidence which shows that between 2004 and 2013, Unilever and Sime Darby engaged in the prohibited practice of market division by allocating customers and specific types of edible fats and oils to each other," Thursday’s statement said.

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