Unilever reaches nearly R400m settlement with competition watchdog over margarine case

Unilever reaches nearly R400m settlement with competition watchdog over margarine case

The Competition Commission said on Thursday it had reached a settlement with Unilever over alleged market division of margarine, with the global consumer goods giant agreeing, among other things, to an administrative fine of 16 million rand and to provide interest-free loans to eligible black businesses.

In 2017, the commission referred a case against Malaysia’s Unilever and Sime Darby Hudson Knight for prosecution over the possible division of markets between 2004 and 2013. The commission’s investigation found that the two companies agreed not to compete with each other regarding certain package sizes of margarine. and edible oils.

At the time, the commission, which acts as an investigative and prosecuting body, said, when Unilever sold its refining business to Sime Darby in 2004, the parties reached agreements, including that Unilever would not supply Flora-branded edible oils to industrial customers. Among other agreements, Sime Darby’s agreed not to supply Crispa-branded edible oils to retail customers. Sime Darby settled the matter with the Commission in July 2016.

On Thursday, the authority said, within the framework of the settlement agreement it concluded with Unilever, that the company agreed to the administrative penalty without an admission of responsibility. The settlement is still subject to approval by the Competition Tribunal, which acts as the tribunal.

In addition, Unilever has agreed to a range of initiatives, including that it will increase the annual value of its purchases of products and services from local entities by a minimum of R340 million over four years.

Unilever will also establish a R40 million enterprise and supplier development fund, which will provide interest-free business loans to eligible black-owned entities in South African manufacturing, logistics and wholesale industries that meet Unilever’s credit and selection criteria, the Commission said in a statement. This includes black-owned manufacturing companies that require startup funds to enter the logistics, wholesale, and distribution industries.

The consumer goods company also agreed to donate hygiene, antiseptic and oral care products worth R3 million to no fewer than 18,780 public schools over a five-year period.

The London-based group has more than 400 brands including Dove, Lux, OMO, Surf, Sunlight and Domestos as well as Magnum and Ben & Jerry’s.

However, Unilever has exited the spread business worldwide, with Remgro acquiring its spread business – Rama, Flora, Stork, Rondo, Marvello and Meadowland – for R4.9 billion in cash in 2018, while also forfeiting for its stake in Unilever SA.

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