Sugar industry requests exemption from the Competition Act

Stakeholders in the sugar industry have less than 20 days to submit comments to the Competition Commission, for the sugar industry to be exempted from certain provisions of Chapter 2 of the Competition Act No.89 of 1998.

The request was submitted by the South African Sugar Association (SASA) supported by its members South African Sugar Millers’ Association (SASMA), the South African Cane Growers’ Association (SACGA), and the South African Farmers’ Development Association (SAFDA) respectively.  

In 2019, SASA had called for the development of the sugar master plan in order to save the industry, as its  market share dipped by an estimated 55%. Among the factors for the decline was said to be the health promotion levy, a tax on sugar containing beverages, implemented by the government in 2018.

The submission follows from the back of an announcement made by the Minister of Trade, Industry and Competition (dtic) Ebrahim Patel in June, when he gazetted the amendments to the Sugar Industry Agreement and South African Sugar Association Constitution.

“A designation of the sugar industry, which permits the industry to be considered by the competition regulators for specified exemptions. Once the Competition Commission grants an exemption, the Masterplan will be signed and its implementation can commence” he said at the time. 

The gazetted application for exemption aims to enhance sharing of sensitive competitive information by engaging in the various options with industry and participants by “formulating agreed strategies or plans on certain issues (including for example a managed reduction and/or reallocation of capacity)” it said in its submission.

SASA went further to requested the Competition Commission to exempt the industry in the agreement and/or practice among South African sugar producers to exercise price restraint by:
1) not increasing their prices of sugar to retailers, wholesalers and industrial sugar users at a level that exceeds annual consumer price index increases on an annual average weighted basis;
2) implementing price increases no more than twice a year, at predictable and evenly spaced intervals;
3) only implementing price increases to industrial users outside of the peak trading periods of October to December (inclusive) and the four weeks preceding the Easter Weekend and including Easter.

For big sugar conglomerates, SASA made a request for the Competition Act to allow the amendment to make provision for notifying bulk industrial sugar users of price increases at least 60 days in advance of implementation. Support for small-scale growers to be part of the sugar supply chain was included as part of the agreement.

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