FILE PHOTO: Unilever headquarters in Rotterdam.
CAPE TOWN – The Competition Tribunal will on Friday begin its final hearings into a long-standing case of collusion and market sharing in the edible fats market, with Unilever South Africa potentially facing a fine that might run into hundreds of millions of rand.

The investigations started in 2014 against Unilever South Africa and Sime Darby Hudson Knight.

Sime Darby settled with the Competition Commission in 2016, paid an admission of guilt fine of R35million and agreed to invest R135m in a black-empowered packaging and warehousing facility that would compete with Unilever SA, the local subsidiary of Anglo Dutch consumer group Unilever.

The commission now seeks an order from the Competition Tribunal declaring Unilever SA liable for an administrative penalty equal to 10percent of its annual turnover.

The tribunal has scheduled nine days for the final hearings, a source close to the case told Business Report yesterday.

The source said the fine from the Competition Tribunal might run into hundreds of millions of rand.

Unilever SA is one of the largest fast-moving consumer goods companies on the continent with more than 3000 employees based across two offices and five manufacturing locations.

The Competition Commission has recommended that Unilever SA be prosecuted for colluding with Malaysian conglomerate Sime Darby in the manufacture and supply to the market of baking and cooking fats.

The commission had conducted search and seizure operations at the offices of Sime Darby in Boksburg, and at Unilever’s headquarters in Durban, where market sharing and collusion agreements not to compete on certain packs of margarine and edible oils were confiscated.

Unilever had sold its refinery business to Sime Darby in 2004, and the two businesses 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 packs in markets where Unilever was active.

In return, Unilever agreed not to supply industrial customers with its Flora brand of edible oils.

In February, the Competition Tribunal rejected a corporate leniency plea by Unilever SA.

“It is going to be difficult for Unilever SA to defend its case given its main partner in the collusion has admitted guilt,” the source said.

Further comment could not be obtained from Unilever SA yesterday.

BUSINESS REPORT