PFG - Pioneer Food Group Limited - Update on competition issues
PIONEER FOOD GROUP LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1996/017676/06)
JSE share code: PFG
ISIN: ZAE000118279
("the Company" or "Pioneer Foods")
Update on Competition Issues
Shareholders are referred to the announcement dated 3 February 2010 regarding
The Competition Tribunal's decision earlier this month to impose a fine of R196
million in respect of the bread related matter ("the bread matter").  The
Company wants to bring the matter to a swift close.  Further announcements will
follow in due course.
As disclosed in Pioneer Foods' pre-listing statement and audited financial
statements for the financial year ended 30 September 2007, the Company became
aware during 2007 that the Competition Commission ("the Commission") had
launched an investigation into the maize and wheat milling markets, concerning
allegations of collusion (in the form of price fixing and/or market allocation)
amongst industry players, including Pioneer Foods ("the milling matter").  The
Commission has not to date issued a complaint referral with regard to the
milling matter.
Pioneer Foods was informed by the Commission towards the end of 2009 that it had
concluded its investigation into the maize and wheat milling industries and
would soon be referring the matter, in which Pioneer Foods was named as a
respondent, to The Competition Tribunal for adjudication.  At the same time, the
Commission invited Pioneer Foods to enter into discussions with it, with a view
to settling the matter.
The Company has conducted an internal investigation (with the assistance of
external advisors) in respect of its operations in the maize and wheat milling
industries.  The investigation is ongoing.
The Company wants to resolve this matter through cooperation with the
Commission, and without recourse to proceedings before the Competition Tribunal,
if possible. In this instance, Pioneer Foods has met representatives of the
Commission and intends to respond formally to the Commission's invitation to
engage in discussions and cooperate with the Commission with a view to reaching
a settlement.
Should settlement discussions be successful, it is anticipated that Pioneer
Foods could pay an additional administrative penalty in accordance with the
provisions of the Competition Act. While it is premature at this time to
determine with certainty the quantum of such a potential penalty, the Tribunal
in its decision in the bread case on 3 February 2010, based the administrative
penalty on 10% of the 2006 national bakery revenue. Should the same principle be
applied in this matter, a maximum penalty based on 10% of the 2006 national
revenue from maize and wheaten flour sales may be handed down. Revenue from
wheaten and flour sales for 2006 was     R 1.8 billion.
The Company is committed to fully cooperate with the Commission in all
investigations where the Commission seeks its assistance. Pioneer Foods will
revert to shareholders on further progress in respect of the proposed settlement
negotiations and in the event of further material developments.
Paarl
19 February 2010
Sponsor:
Barnard Jacobs Mellet Corporate Finance (Pty) Ltd
Date: 19/02/2010 09:13:03 Produced by the JSE SENS Department.
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