Baker fined R99 million

Yeah but this ain’t no ordinary baker, its Tiger Brands trading as Albany, a household name in South Africa. Turns out they have been colluding with other members of the bread bakers oligopoly in South Africa to fix price increases. This type of collusion within an oligopoly is commonly referred to as a cartel, but unlike some of the other more famous cartels trading in diamonds and oil, this cartel provides a staple food product in a country where thousands of people live below the poverty line.

Only yesterday I wrote about the Airline (and cellphone network) oligopoly in South Africa, now it appears we have a bread oligopoly cartel. Could it be that South Africa is the land of the cartel/oligopoly, just try thinking of a few yourself, maybe start with the paper industry, the sugar industry………

PS: There are many other fascinating oligopoly, duopoly theories you may want to research. Yesterday I mentioned Nash Equilibrium but there are many other economic (and game) theories which apply to oligopoly’s such as the Stackelberg or Cournot or Bertrand competition.

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    I am so disgusted by this. And I hope the milk industry is next put under the spotlight, to check that they are pervertedly also making a quick buck at the expense of SA’s poorest people.

    I reckon punishment should be to give these top execs…let’s be sweet… R20/ day to live off. That must cover food (bread, milk, parafin to cook), transport to their house on the outskirts of the city, any bills they might have, go towards education fees, phone money, clothes, other household concerns…. A daily R1 is a lot to many people in this country. Bastards.

    As for other cartels…. weren’t the clothing companies in shite for similar reasons a few years ago? It does not help that the SA market is small OR that all the top execs all went to the same schools, varsities, pubs & sports clubs. As they say… the most important business decisions are made in the guys’ changes rooms after the round of golf.

    Dunno about the clothing market, but South Africa sure is a funny country when it comes to business, government control etc. Think about, petrol regulation…..whats that about?? Foreign exchange controls……huh??

    I like the idea of price regulation by the government. It certainly works in the petrol industry.
    I’m with Champs here though - milk next please. And then chicken. CDs and DVD’s too. Ooh - and beer. That should certainly be cheaper than it is (although I just can’t see the big brewers doing anything to help one another out).

    Actually - put beer first, then we’ll move onto milk etc if we’re still sober enough.

    Incidentally, Tiger Brands profit when last reported in Nov 2006 was R2.3 BILLION!
    http://www.flexnews.com/pages/5875/Tiger_Brands/south_africa_food_healthcare_bring_tiger_48_profit.html

    That R99m is really going to hurt, huh?

    And regarding my milk comment: http://www.fastmoving.co.za/news-archive/supplier-news/milk-processing-sector-described-as-oligopoly - an article which prominently features DairyBelle, owned until very recently by *gasp* Tiger Brands!

    In comments above you spoke of milk, now bread and also milling (flour). See what other businesses Tiger Brands controls and watch for further collusion!
    Note how Unite against Hunger started soon after the Government started investigating food prices. Possibly a PR campaign to counter this?
    Also note how they run for help when people import competing items such as sweets. (Beacon)
    And Nick Dennis swears to G.d he knows nothing

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