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Parmalat escapes prosecution for bonuses

| Supplier news

The Competition Commission has decided not to prosecute a complaint that it had initiated against Parmalat SA for alleged abuse of dominance.

The commission authorised the launch of the formal complaint against the dairy company in December 2014. At the time it had said evidence had emerged that showed Parmalat SA operated a bonus scheme. The scheme rewarded milk farmers for the continuous supply of raw milk in the Western Cape and Eastern Cape. The conduct, the commission said, was in possible violation of sections 8c and 8d(i) of the Competition Act.

Section 8c says that a dominant company is prohibited from engaging in an exclusionary act if the anticompetitive effect of that act outweighs its technological, efficient or other pro-competitive gain.

Section 8d(i) states that it is prohibited for a dominant company to require or induce a supplier or customer to not deal with a competitor.

In its decision not to prosecute, the commission said it had found that milk processors that compete with Parmalat SA were able to grow and expand in terms of the volume of raw milk procured from the farmers, even during the operation of the bonus scheme.

"Thus, there is no sufficient evidence to demonstrate that competition between milk processors was substantially lessened or prevented as a result of Parmalat’s bonus scheme," the commission’s spokesman, Itumeleng Lesofe, said.

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