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Seven years ago, when Juan Lerena encountered things he couldn’t stomach at his employer, Malaysian multinational Sime Darby Hudson Knight, he decided to do something about it. After resigning, Lerena reported the company and Dutch multinational Unilever to the South African competition authorities – and every other regulatory body he could think of. Sime Darby has admitted collusion and paid a fine of R35m. Unilever’s hearing at the Competition Tribunal, originally scheduled for last Friday, began on Monday and is set down to run from 10am to 4pm until Friday (19 July). There’s clearly a great deal at stake for the Dutch company which has invested a fortune in projecting a squeaky clean image. Including the small matter of a potential fine of hundreds of millions of rand. We spoke to Juan Lerena on Rational Radio last week. – Alec Hogg
Juan Lerena left Sime Darby in 2012 and reported the company together with Unilever to the Competition Commission for market sharing/colluding/cartel behaviour.
Sime Darby admitted to the charges and agreed to pay a R35m fine in 2016. Plus it agreed to build a R135m black-empowered, packaging and warehousing facility to compete with Unilever.
Seven years on, and despite the embarrassment of having its offices raided, Unilever hasn’t admitted to anything and is defending the case. Not surprisingly, because if the Dutch company is found guilty, it faces a potential fine of up to 10% of its South African turnover, a number that could run into hundreds of millions of rand.
In this Rational Radio interview, Lerena explains what drove him to blowing the whistle, and why he never gave up despite the lengthy period between his allegations and the hearings – which began on Monday and are set for a full week.
Lerena said: “I just felt on my heart that it was the right thing to do and that employees need to know they need to be ethical. The brands that they built hold integrity and they need to follow through with it especially a company like Unilever which positions itself as being one of the good guys internationally.”
Here is the timeline of the alleged collusion:
2012 – Lerena reports Sime Darby and Unilever to the Competition Commission for market sharing/colluding/cartel behaviour
– He also reported Sime Darby to the SABS regarding abuse of ISO 22 000 certification. Misleading and lying to customers and consumers regarding food safety certification.
– Reported SABS to SANAS, South Africa National Accreditation System for not conducting thorough audits on Sime Darby.
– Reported Sime Darby to the ASASA, Advertising Standards Authority of South Africa for false advertising to customers and consumers.
– Reported Sime Darby to the National Consumer Commission for selling underweight product to consumers.
2013 – SABS audits Sime Darby’s and requests that all ISO 22000 advertising material be removed.
– Sime Darby issues Lerena with a Summons for “breaking the Makro rule during his tenure”. No customer was allowed to pay less than the Makro price.
2014 – The Competition Commission raids the Unilever and Sime Darby offices, seizing electronic data and hard copy documents.
2014 – Unilever applies for leniency. The Competition Commission denies the application.
2016 – Sime Darby admits to concluding an agreement with Unilever to divide markets and settled with the Competition. Sime Darby paid a penalty fine of R35m and R135m to build a packaging and warehouse facility.
2016 – 1 May, Competition Amendment Act changed providing for criminal liability of individuals who contravene the Act for colluding or price fixing. Fine up to R500,000 or 10 years in jail.
2018 – High court trial between Juan Lerena and Sime Darby regarding “the Makro rule”. Lerena lost the trial by default. He did not fight it and says Sime Darby fabricated this case.
2019 – Unilever appears before the Competition Tribunal for prosecution scheduled from 15-19 July from 10:00 to 16:00.
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