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Unilever faces prosecution for edible oils collusion with Sime Darby in South Africa

March 03, 2017

South Africa’s Competition Commission has recommended that global consumer goods company Unilever be prosecuted for colluding with Malaysian conglomerate Sime Darby in the manufacture and supply of baking and cooking products.

, Unilever faces prosecution for edible oils collusion with Sime Darby in South Africa

The commission said on 1 March that it had conducted search-and-seizure operations at the offices of Sime Darby in Boksburg and at Unilever’s headquarters in Durban and had referred the two companies to the Competition Tribunal for prosecution, reports South Africa’s Business Report.

Commissioner Thembinkosi Bonakele said that between 2004 and 2013, Unilever and Sime Darby allegedly entered into an agreement not to compete on certain packs of margarine and edible oils.

When Unilever sold its refinery business to Sime Darby in 2004, the two companies concluded a sale-of-business agreement that included an arrangement on how specific goods would be allocated in certain markets, in contravention of the Competition Act.

“The two agreed that Sime Darby would not supply industrial customers with packs of margarine that were less than 15kg, nor would it produce or supply 25 litre edible oils in markets where Unilever was active,” Business Report said. “In return, Unilever agreed not supply industrial customers with its Flora-brand of edible oils.”

Unilever could face a fine of 10% of its annual turnover.

Sime Darby had already settled with the commission last year, agreeing to pay a fine of ZAR35M (US$2.7M) for collusion and to invest ZAR135M (US$10.3M) in packaging and warehousing facilities that would compete with Unilever for retail customers. The company also agreed to appoint a black economic empowerment distributor.

Sibonile Dube, the corporate affairs director of Unilever Southern Africa, said in Business Report that the company would wait for the process to unfold before commenting.

“As this matter is subject to litigation, we will not be commenting on it,” Dube said.

The case comes in the wake of the Competition Commission raiding five top edible oil firms accused of price fixing (see News, OFI February 2017). These were Wilmar Continental Edible Oils and Fats; DH Brothers Industries (trading as Willowton Oil and Cake Mills); FR Waring Holdings; Africa Sun Oil Refineries and Epic Foods 

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