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[2011] ZAGPPHC 117
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Agri Wire (Pty) Limited and Another v Commissioner of the Competition Commission and Others (7585/2010) [2011] ZAGPPHC 117 (5 July 2011)
NOT
REPORTABLE
IN
THE NORTH GAUTENG HIGH COURT,
PRETORIA
REPUBLIC OF SOUTH AFRICA
CASE
NO: 7585/2010
DATE:05/07/2011
In
the matter between:
AGRI
WIRE (PTY)
LIMITED
.................................................................................
First Applicant
AGRI
WIRE UPINGTON (PTY)
LIMITED
........................................................
Second
Applicant
and
THE
COMMISSIONER OF THE
COMPETITION
COMMISSION
.......................................................................
First Respondent
MINISTER
OF TRADE AND
INDUSTRY
.....................................................
Second
Respondent
CONSOLIDATED
WIRE INDUSTRIES (PTY) LIMITED
.................................
Third
Respondent
CAPE
GATE (PTY)
LIMITED
.......................................................................
Fourth Respondent
ALLENS
MESHCO (PTY)
LIMITED
.................................................................
Fifth
Respondent
HENDOCK
(PTY)
LIMITED
.............................................................................
Sixth
Respondent
WIRE
FORCE (PTY)
LIMITED
..................................................................
Seventh Respondent
AGRI
WIRE NORTH (PTY)
LIMITED
...........................................................
Eighth Respondent
CAPRE
WIRE (PTY)
LIMITED
.......................................................................
Ninth Respondent
FOREST
WIRE (PTY)
LIMITED
.....................................................................
Tenth
Respondent
INDEPENDENT
GALVANISING (PTY) LIMITED
.......................................
Eleventh Respondent
ASSOCIATED WIRE INDUSTRIES (PTY)
LIMITED
t/a
MESHRITE
.............................................................................................
Twelfth Respondent
THE
COMPETITION
TRIBUNAL
.............................................................
Thirteenth
Respondent
JUDGMENT
ZONDO,
J
Introduction
[1]
The applicants have brought this application in this Court for an
order:
(a)
reviewing and setting aside the decision of the first respondent
granting the third respondent conditional immunity in terms
of the
first respondent's Corporate Leniency Policy.
(b)
declaring that the evidence obtained by the first respondent from the
third respondent pursuant to the first respondent's leniency
policy
was unlawfully obtained and is inadmissible.
(c)
alternatively to the prayer in (b) above, (an order) declaring that
the initiation and referral of the complaint in Tribunal
case number
63/CR/Sep 09 are unlawful and fall to be set aside.
Obviously
the applicants also seek an order of costs against those respondents
who oppose this application. Before a consideration
of the
application, it is necessary to set out the background to the
application.
Background
[2]
The purpose of the Competition Act, 1998 (Act 88 of 1998) ("the
Act") is the promotion and maintenance of competition
in the
country. Certain behaviour by business firms or enterprises
undermines that purpose and cannot be allowed if that purpose
is to
be achieved. Conduct which undermines that purpose includes the types
of conduct stipulated in sec 4(1) (b) (i) (ii) and
(iii) of the Act.
Sec 4(1) (b) of the Act falls under Chapter of 2 of the Act. Those
types of conduct involve an agreement between
or a concerted practice
by, or a decision by an association of firms that are parties to a
horizontal relationship if such agreement
or decision or practice
involves any of the following restrictive horizontal practices:
(i)
directly or indirectly fixing a purchase or selling price or any
other trading condition;
(ii)dividing
markets by allocating customers, suppliers, territories, or specific
types of goods or services; or
(iii)
collusive tendering. Sec 4(1) (b) of the Act prohibits, among others,
these types of conduct. (Sec 4(1) (b) (i) (ii) and (iii).
There are
other types of conduct that also undermine the promotion and
maintenance of competition which are dealt with in the Act
but they
are not of any relevance to the present case.
[3]
The Act has created certain institutions which play certain roles
towards the attainment of the objects of the Act. These are
the
Competition Commission, the Competition Tribunal and the Competition
Appeal Court each of which plays a critical role in the
promotion and
maintenance of competition in our country. The functions of the
Commission include:
(a)
the implementation of measures to increase transparency (sec
21(1)(a));
(b)
the investigation and evaluation of alleged contraventions of chapter
2 of the Act(s21(1)(c));
(c)
the granting or refusal of applications for exemptions in terms of
chapter 2 (S21(1)(d);
(d)
the negotiation and conclusion of consent orders in terms of sec 49D
of the Act(s21(1)(f); (e) the referral of matters to the
Competition
Tribunal as required by the Act (s21 (1) (g)).
[4]
According to the Commissioner of the Competition Commission, it is
very difficult to detect or prove conduct that is prohibited
by sec
4(1)(b) (i), (ii) and (iii) of the Act. Obviously, this is partly
because normally the parties to agreements and decisions
such as are
referred to in sec 4(1 )(b) would be very determined to keep their
agreements or decisions secret among themselves.
The Commissioner
says it was as a result of this difficulty that the Commission
decided to adopt a policy which would encourage
firms or business
enterprises involved in such decisions or agreements to break ranks
and report such prohibited conduct to the
Commission and provide the
Commission with evidence of such prohibited conduct so that the
Commission could conduct its investigations
and, in appropriate
cases, refer complaints about such conduct to the Competition
Tribunal. The policy that the Commission adopted
in this regard is
called the Corporate Leniency Policy ("CLP"). The CLP is
contained in a document that was annexed to
the first respondent's
answering affidavit and had been published in the Government Gazette.
[5]
In paragraph 2.5 of the CLP it is stated that the Competition
Commission developed the CLP "to facilitate the process through
which firms participating in a cartel are encouraged to disclose
information on the cartel conduct in return for immunity from
prosecution". It is also stated in the same paragraph that the
Commission adopted the CLP as part of its endeavours to detect,
stop
and prevent cartel behaviour. It is indicated that the adoption of a
policy such as the CLP is in line with international
practice for
bodies performing the same functions as the Commission. In paragraph
2.6 of the CLP it is provided that the CLP sets
out the benefits,
procedures and requirements for co-operation with the Commission in
exchange for immunity. It is further stated
that the granting of
immunity becomes an incentive for a firm that participates in a
cartel activity to terminate its participation,
and, inform the
Commission accordingly.
[6]
in paragraph 3.1 of the CLP it is provided that the corporate
leniency policy "outlines a process through which the Commission
will grant a self-confessing cartel member who is first to approach
the Commission immunity for its participation in cartel activity
upon
the cartel member fulfilling specific requirements and conditions set
out under the CLP. Paragraph 3.3 of the CLP explains
what immunity
means in this context. It reads:
"Immunity
in this context means that the Commission would not subject the
successful applicant to adjudication before the tribunal
for its
involvement in the cartel activity, which is part of the application
under consideration. Furthermore, the Commission would
not propose to
have any fines imposed to (sic) that successful applicant."
Paragraph
4.2 explains the term "immunity" as used in the CLP as
referring to: "Immunity from prosecution before
the tribunal in
relation to the alleged cartel which forms part of the application
under the corporate leniency policy." The
term "adjudication"
as used in paragraph 3.3 is given the following meaning:
"A
referral of a contravention of chapter 2 to the tribunal by the
Commission with a view of (sic) getting a prescribed fine
imposed to
(sic) the wrongdoer. Prosecution has a similar import to adjudication
herein.""
This
means that, when a referral of a complaint concerning the
contravention of Chapter 2 is made to the Tribunal but is not made
with a view to getting the Tribunal to impose a fine upon a party
that is a respondent in the referral proceedings before the Tribunal,
that does not amount to subjecting such party to adjudication.
[7]
In paragraph 9.1.1.1 of the CLP it is provided that conditional
immunity is granted to an applicant at the initial stage of
the
application so as to create a good atmosphere and trust between the
applicant and the Commission pending the finalisation of
the
infringement proceedings. In the next sentence it is stated that this
is done in writing between the applicant and the Commission
signaling
that immunity has been "provisionally granted". In
paragraph 9.1.2 it is stated that conditional immunity precedes
"total immunity or no immunity." It is also explained
therein that the Commission "will give the applicant total
immunity after it has completed its investigation and referred the
matter to the Tribunal and once a final determination has been
made
by the Tribunal or the Appeal Court, as the case may be, provided
that the applicant has met the conditions and requirements
set out in
the CLP on a continuous basis throughout the proceedings".
Paragraph 9.1.13 provides that the Commission may revoke
the
conditional immunity at any stage prior to the granting of total
immunity if the applicant for immunity does not co-operate
or fails
to fulfill any condition or requirement stipulated in the CLP. It is
provided in paragraph 9.1.2 of the CLP that once
the Tribunal or the
Appeal Court has reached a final decision on the alleged cartel,
"total immunity is granted to a successful
applicant who has
fully met all the conditions and requirements under the CLP."
[8]
Paragraph 10 of the CLP deals with the requirements and conditions
for the granting of immunity under the CLP. The requirements
or
conditions are that:
(a)
the applicant must honestly provide the Commission with complete and
truthful disclosure of all evidence, information and documents
in its
possession or under its control relating to any cartel activity;
(b)
the applicant must be the first to provide the Commission with
informationj evidence and documents sufficient to allow the
Commission in its view to institute proceedings in relation to such
cartel activity;
(c)
the applicant must offer full and expeditious co-operation to the
Commission concerning the cartel activity continuously until
the
Commission's investigations are finalised and the subsequent
proceedings in the Tribunal or Competition Appeal Court are
completed;
(d)
the applicant must immediately stop the cartel activity or act as
directed by the Commission;
(e)
the applicant must not alert other cartel members or any other third
party that it has applied for immunity;
(f)
the applicant must not destroy, falsify or conceal information or
evidence and documents relevant to any cartel activity;
(g)
the applicant must not make a misrepresentation concerning the
material facts of a cartel activity or act dishonestly.
[9]
The applicants, on the one hand, and, the third up to the twelfth
respondents, on the other hand, are competitors in the manufacture
and distribution of wire and wire-related products in South Africa
and elsewhere. In July 2008 the third respondent applied to
the
Commission for conditional immunity under the CLP in exchange for
evidence revealing that, together with the applicants and
the fourth
up to the twelfth respondents, it had been engaged in conduct
prohibited by sec 4(1)(b) (i), (ii) and (iii) of the Act.
[10]
The Commission granted the third respondent conditional immunity. The
Commission then initiated a complaint and embarked upon
an
investigation of alleged contraventions of sec 49(1)(b) of the Act.
On the strength of the information and evidence provided
by the third
respondent the Commission formed the view that the applicants and the
third upto the twelfth respondents had engaged
in conduct prohibited
by sec 4(1)(b)(i), (ii) and (iii) of the Act. The prohibited conduct
alleged against the applicants and the
third up to the twelfth
respondents was said to involve price fixing, allocation of markets
and collusive tendering. The Commission
then referred a complaint to
the Tribunal in which the present applicants and the third up to the
twelfth respondents were cited
as respondents. In the referral of the
complaint to the Tribunal the present third respondent is cited as
the twelfth respondent.
[11]
In the referral of the complaint to the Tribunal the deponent to the
applicants' founding affidavit stated that no relief was
being sought
against the present third respondent as it had applied for and was
granted conditional immunity by the Commission.
It was stated that
the present third respondent was cited purely for the interest it
could have in the proceedings relating to
the complaint in the
Tribunal. In the referral of the complaint to the Tribunal the
Commission sought relief in the following terms
against the present
applicants and the present fourth up to the twelfth respondents:
"1.
an order declaring that the first to eleventh respondents have
contravened section 4(1)(b)(i), (ii) and (iii) of the Act
as detailed
in paragraphs 28 to 33 above;
2.
an order directing the first to eleventh respondents to refrain from
engaging in the aforesaid conduct in contravention of the
Act;
3.
an administrative penalty to be levied on each of the first to
eleventh respondents of 10 percent of their annual turn over for
the
2008 financial year;
4.
such further and/or alternative relief as the Tribunal may consider
appropriate."
[12]
The applicants brought this application at a time when the
Commission's referral of the complaint to the Tribunal against them
and the third up to the twelfth respondents was still pending and was
yet to be decided. Indeed, even at the time of the hearing
of this
application the referral was still pending. The Tribunal has probably
not decided it yet and it awaits the outcome of this
application.
[13]
The first respondent says in his answering affidavit that the CLP is
a policy adopted by the Commission to encourage cartel
members to
blow the whistle on cartel conduct. He says that effective
prosecution of cartels would simply not be possible without
the
incentive created by the CLP.
[14]
The first respondent points out that by granting an applicant for
leniency conditional immunity the Commission conditionally
undertakes
not to seek relief against that applicant for leniency in the
referral to the Tribunal. Such conditional immunity is
conditional on
the applicant for leniency co-operating with, and assisting, the
Commission in the referral to the Tribunal. The
first respondent says
that the Commission considers it appropriate to forsake relief
against one cartel member in exchange for
uncovering and proceeding
against the remainder of the cartel.
[15]
It is pointed out in the first respondent's answering affidavit that,
should a firm or company that has been granted conditional
immunity
not co-operate fully and not assist the Commission, the Commission
can amend the relief it seeks so as to include relief
against such
party. The first respondent makes it clear in his answering affidavit
that invariably the applicant for leniency or
the party that has been
granted conditional immunity is cited as a party in the referral to
the Tribunal. He says that the Commission
grants final immunity at
the end of the referral proceedings in the Tribunal. He says that
"the grant of final immunity is,
in essence, the final decision
by the Commission not to seek relief against the leniency applicant."
(Par 39 of the first
respondent's answering affidavit). In par
40
of his answering affidavit the first respondent states that by reason
of the express and implied powers under the Act, the Commission
has a
discretion as to the conduct of its investigations and the referral
and in respect of the relief it seeks before the Tribunal.
He says
that in accordance with such discretion, the Commission may inter
alia seek relief against some of the participants in
the prohibited
conduct but elect not to seek relief against a leniency applicant
that assists, and, co-operates with, the Commission.
[16]
The first respondent submits that the third respondent's evidence was
obtained pursuant to, and in accordance with, a lawful
measure or
policy adopted by the Commission. He submitted in par 52 of the
answering affidavit that there was no basis for the
contention that
such evidence was obtained unlawfully. He pointed out, however, that
even if the position was that such evidence
was obtained unlawfully,
this would not automatically mean that the evidence would be
inadmissible. He says that in such a case
the admissibility of the
evidence would have to be decided by the Tribunal, taking into
account all relevant factors, the nature
of the proceedings, the
nature of the evidence and the interests of justice.
[17]
The first respondent contends in par 59.1 of his answering affidavit
that the grant of conditional immunity is an interim decision
as the
Commission may yet determine at the end of the referral proceedings
in the Tribunal that the information given by the third
respondent
was incomplete or untrue and decide not to grant the third respondent
final immunity. In the light of this, contends
the first respondent,
it is inappropriate for the Court to intervene at this stage.
[18]
In par 59.2 of his answering affidavit the first respondent states
that the third respondent has furnished substantial evidence
and
assistance to the Commission and, as a result, a referral has been
made to the Tribunal. He goes on in the next sentence and
points out
that the third respondent acted "on the basis of an undertaking
by the Commission that it would not seek relief
against [the third
respondent] in any referral". He went on to say that it would be
"extremely unfair and prejudicial
to [the third respondent] if
the grant of conditional immunity to it was set aside at this stage".
[19]
The third respondent also delivered an answering affidavit in support
of its opposition to the applicant's application. It
contended that
this Court has no jurisdiction to entertain this application and that
this application should have been brought
in the Tribunal. With
reference to the applicant's prayer that the evidence obtained from
the third respondent be declared inadmissible,
the third respondent
also contended that that is an issue that should be dealt with by the
Tribunal before which the referral is
pending. The third respondent
contended that this Court has no jurisdiction to entertain that issue
either.
[20]
The third respondent's answering affidavit was deposed to by Mr
Johannes Jacobus Botha, the third respondent's Chief Executive
Officer. The third respondent pointed out that on 21 April 2008 and
on 5 June 2008 the Commission initiated certain investigations
in
relation to certain steel mills, namely, ArcellorMittal South Africa
("AMSA"), Scaw South Africa (Pty) Ltd ("SCAW"),
Cape Gate (Pty) Ltd ("Cape Gate"), Highveld Steel and
Vanadium Corporation Limited ("Highveld") and Cape Iron
and
Steel Works (Pty) Ltd ("CISCO"). Mr Botha says that as part
of its investigations the Commission conducted dawn raids
in the
premises of certain businesses.
[21]
Mr Botha went on to say in the third respondent's answering affidavit
that on the 23rd June 2008 the Commission issued a press
statement.
In that statement it made, among others, the following points:
(a)
on the 19th June 2008 it had raided the premises of CISCO and
Highveld as part of its investigation.
(b)
the investigation was into alleged price fixing and exclusive dealing
in the steel industry.
(c)
it initiated the investigations as a result of concerns raised by
various stakeholders.
(d)
preliminary research had shown that local customers paid prices
charged at import parity pricing levels even though South Africa
was
not a net exporting country.
(e)
it had also received a complaint from a member of the public that
ArcellorMittal South Africa, Highveld Steel and Vanadium Corporation
adjust their prices for flat and long steel products around the same
time and with similar percentage increases.
[22]
Botha points out that as a result of the Commission's investigation
referred to in the Commission's press statement, SCAW,
which Botha
says has management control over the third respondent, initiated its
own internal investigation into potentially anti-competitive
conduct
in its business operations. He says that
SCAW's
investigations revealed some anti-competitive conduct. Thereafter,
SCAW applied to the Commission for conditional immunity
in terms of
the CLP. The Commission granted SCAW conditional immunity and in due
course referred a complaint about SCAW's anti-competitive
conduct to
the Tribunal for adjudication.
[23]
Botha says that during SCAW's internal investigation, certain
anti-competitive practices on the third respondent's part also
came
to light and, the third respondent also applied to the Commission for
conditional immunity which was granted. The third respondent
says
that in its application for leniency it supplied the Commission with
a significant body of evidence relating to its involvement
in a
variety of agreements and understandings with the applicants in this
application as well as with the fourth to the twelfth
respondents.
The third respondent says that such agreements and understandings
were in contravention of the provisions of sec 4
(1) (b) of the Act.
[24]
Botha also points out that, although the third respondent was obliged
in terms of the Commission's leniency policy to produce
the evidence
that it produced, even if the CLP had not been in operation, the
third respondent would still have provided all that
evidence to the
Commission because it, like SCAW, had decided to co-operate fully
with the Commission regarding the existence of
anti-competitive
conduct in which it had been involved. In this regard Botha points
out that, given the Commission's wide ranging
investigations into
anti-competitive conduct in the South African steel industry that was
already underway, it was evident to the
third respondent that the
anti-competitive conduct in which the third respondent had taken part
was going to come to light in due
course in any event and the third
respondent accordingly decided to bring all of the evidence that it
had uncovered to the attention
of the Commission.
[25]
Botha says that the third respondent believed that its co-operative
approach to the Commission would be in its best interests
not only
for the purpose of obtaining leniency from the Commission in terms of
the CLP but also and in any event, for the purpose
of concluding a
favourable settlement agreement with the Commission if the Commission
did not grant it leniency. Botha emphasised
that irrespective of the
existence of the Commission's CLP, the third respondent would still
have provided the information that
it provided to the Commission for
potential settlement purposes.
[26]
The fourth respondent, namely Cape Gate (Pty) Ltd, also delivered to
the Tribunal and served on the other parties to the referral
an
answering affidavit in response to the referral. A copy of that
answering affidavit was attached as annexure "ITB"
to the
third respondent's supplementary affidavit. The third respondent drew
attention in its supplementary affidavit to the fact
that in such
answering affidavit the fourth respondent admitted the Commission's
allegations that it, the first applicant herein
and the fifth to the
twelfth respondents, had engaged in conduct that is prohibited by the
provisions of sec 4(1) (b) of the Act.
[27]
The fourth respondent's answering affidavit in the referral
proceedings was deposed to by Mr. Barend Nicolaas Coetzee. He is
the
Chief Operating Officer of the fourth respondent. In par 4 of the
fourth respondent's answering affidavit Coetzee says:
"[The
fourth respondent] admits that it engaged in certain conduct in
contravention of section 4(1) (b) (i), 4(1) (b) (ii)
of the
Competition Act, No 89 of 1998 ("The Act") and tenders all
reasonable co-operation to the competition authorities
in these
proceedings."
In
par 5 of its answering affidavit the fourth respondent expresses its
wish to enter into settlement negotiations with the Commission
and to
avoid having the matter reach the stage of the hearing of argument
before the Tribunal. In par 6 the fourth respondent records
that it
is sincerely remorseful for having engaged in conduct that is
prohibited by sec 4(1) (b) of the Act. In par 7 the fourth
respondent
undertakes to fully co-operate with the Commission with regard to the
Commission's investigations and to provide the
Commission "with
all and any information that fourth respondent may be aware of in
this regard". In par 6 the fourth
respondent says that it does
not resist the relief sought by the Commission against itself in
prayers 1 and 2 but contends that
the relief in prayer 3 for an
administrative penalty of 10% of its turnover could not be
appropriate.
[28]
It is not necessary to go into any further details about the contents
of the fourth respondent's answering affidavit in the
referral
proceedings before the Tribunal. It suffices to say that in the
answering affidavit the fourth respondent admits its own
participation in conduct prohibited by sec 4(1) (b) of the Act and
implicates the applicants or at least the first applicant and
the
fifth to the twelfth respondents in the present proceedings.
The
review application
[29]
I have set out above the gist of the orders which the applicants seek
in this matter. It is obvious that what the applicants
want to
achieve through this application is to avoid the adjudication by the
Tribunal of the complaint referred to it by the Commission
concerning
the alleged participation of the applicants and the third to the
twelfth respondents in conduct prohibited by sec 4(1
)(b) of the Act.
They seek to do so by having the grant of conditional immunity to the
third respondent, the initiation of the
complaint and its referral to
the Tribunal reviewed and set aside and obtaining an order declaring
that the evidence provided by
the third respondent to the Commission
pursuant to the latter's leniency policy is inadmissible and falls to
be struck out.
[30]
The first and third respondents oppose the application. The
applicants' case is briefly that the Commission promised the third
respondent through its corporate leniency policy that it would grant
the third respondent immunity if the third respondent furnished
it
with information and evidence of conduct prohibited by sec 4(1) (b)
of the Act on the part of the applicants and the third and
further
respondents and that it was as a result of such promise that the
third respondent furnished the Commission with information
and
evidence about their alleged conduct in this regard. The applicants
contend that the Commission has no authority in terms of
the Act to
grant such immunity to a participant in conduct prohibited by sec
4(1) (b) and, because it had no such authority, it
also had no
authority or right in terms of the Act to make such a promise to the
third respondent. The applicants contend that
therefore the promise
was unlawful and the grant of conditional immunity to the third
respondent was also unlawful. The applicants
also contended that in
failing to seek relief against the third respondent in its referral
of the complaint to the Tribunal while
it sought relief against the
applicants and the fourth up to the twelfth respondents, the
Commission acted selectively and it has
no authority in terms of the
Act to "prosecute" some of the participants in prohibited
conduct and not "prosecute"
others. They contend that,
since their "prosecution" is selective prosecution, which,
they contend, the Commission has
no authority to do, the initiation
of the complaint and its referral to the Tribunal are unlawful and
fall to be reviewed and set
aside.
[31]
The applicants also contended that because the Commission had no
authority to grant the third respondent conditional immunity,
the
initiation and referral of the complaint to the Tribunal was unlawful
because they occurred as a result of unlawful conduct
on the part of
the Commission in that it promised the third respondent something it
had no authority to promise (i.e. conditional
immunity) and granted
the third respondent conditional immunity when it had no authority to
do so under the Act. The applicants
also seek to have an order made
that the evidence obtained by the Commission from the third
respondent was obtained unlawfully
and is inadmissible because it was
provided by the third respondent after being induced to do so by an
unlawful promise by the
Commission.
[32]The
first point taken by both the first and the third respondents in
support of their opposition to the applicants' application
is that
this court does not have jurisdiction to entertain this application
and on that ground alone the application should be
dismissed. Counsel
for the first and third respondents relied upon the provisions of sec
62(1) read with those of sec 27(1 )(c)
of the Act in support of their
contention that this Court has no jurisdiction to entertain this
application. Section 62(1) of the
Act reads as follows: "62
Appellate jurisdiction (1) The Competition Tribunal and the
Competition Appeal Court share exclusive
jurisdiction in respect of
the following matters:
(a)
Interpretation and application of Chapters 2,3 and 5, other than —
(i)
a question or matter referred to in subsection (2); or
(ii)
a review of a certificate issued by the Minister of Finance in terms
of section 18(2); and
(b)
the functions referred to in sections 21(1), 27(1) and 37, other than
a question or matter referred to in subsection (2)"
The
relevant provision is in (b).
[33]
It will be observed from the provisions of sec 62(1) that the
functions of the Tribunal in respect of which the Tribunal and
the
Competition Appeal Court have exclusive jurisdiction include the
functions of the Tribunal set out in sec 27(1) of the Act.
Sec 27(1)
(c) and sec 27(1) (d) are relevant to the point under consideration.
Sec 27(1) (c) and (d) read as follows:
"27.
Functions of Competition Tribunal
(1)The
Competition Tribunal may-fa) adjudicate on any conduct prohibited in
terms of Chapter 2, to determine whether prohibited
conduct has
occurred, and if so, to impose any remedy provided for in this Act;
(b)
adjudicate on any other matter that, may, in terms of this Act, be
considered by it, and make any order provided for in this
Act;
(c)
hear appeals from or review any decision of the Competition
Commission that may, in terms of this Act, be referred to it; and
(d)
make any ruling or order necessary or incidental to the performance
of its functions in terms of this Act."
[34]
It is convenient to start with the applicants' prayer for an order
declaring that the evidence obtained by the Commission from
the third
respondent is inadmissible. Counsel for the first respondent
submitted that this court has no jurisdiction to make such
an order
and only the Tribunal has jurisdiction to make such an order. He went
on to submit that, even if the Tribunal did not
have exclusive
jurisdiction in this regard, it is for the tribunal to make such an
order if it is satisfied that such an order
should be made because
that ruling will be required in the course of the adjudication of a
matter that is before the Tribunal.
Counsel for the third respondent
also made a submission to the effect that such a ruling should be
left to the Tribunal to make.
Counsel for the third respondent
referred to the provisions of sec 55(3) (a) and (b). Sec 55(3) reads
as follows:
"The
tribunal may-
(a)
accept as evidence any relevant oral testimony, document or
other
thing, whether or not-
(i)
it is given or proven under oath or affirmation; or
(ii)
would be admissible as evidence in court; but
(b)
refuse to accept any oral testimony, document or other thing that is
unduly repetitious."
[35]
It was submitted by Counsel for the third respondent that it is clear
from the provision of sec 55(3) that the threshold for
the admission
of evidence in proceedings before the Tribunal is lower than the
threshold applicable in a court of law. It was submitted
that the
provision of sec 55(3)(a)(i) was a clear indication that the
Legislature intended the Tribunal to be the arbiter of what
evidence
is admissible or inadmissible in proceedings before it. I agree that
it is quite clear from the provision of sec 53(3)
(a) (ii) that it is
up to the Tribunal to decide the threshold for the admission of
relevant evidence in proceedings before it
and it is not for this
court to determine such issue. For reasons that are probably
connected with the nature of the Tribunal,
its functions and the
challenges it is likely to face in the performance if its functions
to help achieve the objects of the Act,
Parliament has decided that
the threshold for the admission of evidence in proceedings before the
Tribunal should be lower than
that applicable in a court of law. it
is within its power to make that choice. It is probably for a sound
reason that the Legislature
made this choice.
[36]
Counsel for the first respondent, as I have said, also argued that
the determination of whether evidence before the Tribunal
is or is
not admissible is a function or matter for the Tribunal to decide.
The submission was that the determination of the admissibility
or
otherwise of evidence presented in proceedings before any Court or
Tribunal is a "ruling or order necessary or incidental
to the
performance" of the functions of the Tribunal within the meaning
of that phrase in sec 27(1) (d) of the Act. In reply
Counsel for the
applicants did not persist in his contention that this Court should
make an order declaring the evidence provided
by the third respondent
to the Commission inadmissible. In fact for all intents and purposes
he conceded that this Court should
leave that issue to be dealt with
by the Tribunal. I am in agreement with the submissions made by
Counsel for the first and third
respondents that:
(a)
the Tribunal has exclusive jurisdiction (to the exclusion of this
court) to determine the admissibility of evidence in proceedings
before that Tribunal; this much is clear from the provisions of sec
62(1) read with sec 27(1)(d) of the Act, and,
(b)
even if the Tribunal did not have exclusive jurisdiction referred to
in (a) above, the Tribunal, and not this Court, would be
the right
forum to decide the admissibility of evidence in a matter that is
before it. In the circumstances the applicant's prayer
for this Court
to make an order declaring that the evidence in question is
inadmissible cannot be granted and falls to be dismissed.
I
now turn to the question of whether or not this Court has
jurisdiction to entertain this application in so far as it relates to
the prayer for the reviewing and setting aside of the first
respondent's grant of conditional immunity to the third respondent,
the initiation and referral of the complaint by the first respondent
to the Tribunal. Does this court have jurisdiction to review
and set
aside the Commission's grant of conditional immunity to the third
respondent?
[37]
Counsel for the first and third respondents contended that this court
does not have the requisite jurisdiction to entertain
this
application and contended that the Tribunal has exclusive
jurisdiction which it shares with the Competition Appeal Court to
deal with this review application. In support of their contention
Counsel for the first and third respondents referred to the
provisions of sec 62(1) read with sec 27(1)(c) of the Act. I have
quoted these two provisions earlier in this judgment and do not
propose to repeat that exercise. It suffices for present purposes to
say that sec 62(1) provides that the Tribunal and the Competition
Appeal Court have exclusive jurisdiction in respect of the functions
of the Tribunal set out in sec 27(1). One of the functions
of the
Tribunal set out in sec 27(1) is to be found in sec 27(1) (c). In so
far as it is relevant to this matter, sec 27(1 )(c)
provides that the
Tribunal "may . . .review any decision of the Competition
Commission that may, in terms of this Act, be
referred to it."
In other words Counsel for the first and third respondents submit
that this is an application in which this
court is asked to review
certain decisions of the Commission and yet in terms of sec 62(1)
read with sec 27(1 )(c) of the Act only
the Tribunal and the
Competition Appeal Court may review such decisions of the Commission.
[38]
Counsel for the applicants' answer to the first and third
respondents' reliance upon sec 62(1) and sec 27(1) (c) in support
of
their contention that this court does not have jurisdiction to deal
with this review was that the decisions of the Commission
which fall
within the exclusive review jurisdiction of the Tribunal and the
Competition Appeal Court under sec 27(1) (c) are those
that "may
in terms of this Act, be referred to [the Tribunal]". He
submitted that the Act does not have any provision
in terms of which
the Commission's decision to grant conditional immunity may be
referred to the Tribunal. He advanced the same
submission in respect
of the Commission's decision to initiate a complaint and its decision
to refer a complaint to the Tribunal.
This submission by Counsel for
the applicants was based upon the fact that sec 27(1) (c) refers to
"any decision of the Competition
Commission that may, in terms
of this Act, be referred to it."
[39]
Faced with this argument Counsel for the first and third respondents
submitted that this argument by counsel for the applicants
ignores
the definition of the phrase "this Act" in sec 1 of the
Act. In sec 1 the phrase "this Act" is defined
as including
"the regulations and schedules" to the Act. Indeed, the
term "regulation" is defined as meaning
a regulation made
under the Act. Against the definition of the phrase "this Act",
Counsel for the first and third respondents
drew attention to Rule 42
of the Tribunal Rules promulgated under the Act by the Minister of
Trade and Industries as regulations
under the Act. They submitted
that Rule 42 contemplated the review of any decision of the
Commission as contemplated in sec 27(1
)(c) of the Act. They also
relied on the decision of the Competition Appeal Court in the matter
of TWK Agriculture Limited v The
Competition Commission (case no.:
67/CAC/Jan 07) in support of their submission in this regard. The
question therefore is whether
or not Rule 42 provides for the
referral of any decision of the Commission to the Tribunal as is
contemplated in sec27(1)(c) of
the Act.
[40]
Rule 42 falls under Division E of the Tribunal Rules The heading for
Division E is: "Other Appeals, Reviews, Variations,
or
Enforcement Proceedings". Rule 42 reads as follows:
"42.
Initiating Other Proceedings
(1)
Any proceedings not otherwise provided for in these Rules may be
initiated only by filing a Notice of Motion in Form CT6 and
supporting affidavit setting out the facts on which the application
is based.
(2)
The applicant must serve a copy of the Notice of Motion and affidavit
named in the Notice, within 5 days after filing it.
(3)
A Notice of Motion in terms of this Rule must -
(a)
indicate the basis of the application; or
(b)
depending on the context -
(i)
set out the Commission's decision that is being appealed or
reviewed;
(ii)
set out the decision of the Tribunal that the applicant seeks
to
have varied ore rescinded;
(iii)
set out the Tribunal Rule or Commission Rule in respect of
which
the applicant seeks condonation;
(iv)
allege conduct referred to in -
(aa)
section 59(1) (c) in respect of which the Commission seeks an
administrative fine; or
(bb)
section 60(1) in respect of which the Commission seeks an order of
divestiture;
(c)
indicate the order sought;
(d)
state the name and address of each person in respect of whom an order
is sought."
[41]
Rule 42 was intended to cater for any proceedings that were supposed
to have been provided for in the Rules of the Tribunal
but were not
provided for anywhere from Rule 1 to Rule 41 and outside of Division
E. That is why Rule 42(1) states:
"Any
proceedings not otherwise provided for in these Rules may be
initiated
only
by filing a Notice of Motion...."
This
means that in order to determine whether or not Rule 42 applies to a
matter, one must ask whether or not it is a matter which
"constitutes" proceedings not otherwise provided for in the
Rules outside of Division E of the Tribunal Rules. If it
does, then
Rule 42 applies to it. If it does not, then Rule 42 is of no
application to it.
[42]There
is no Rule in the Tribunal Rules other than Rules 42 and 43 which
deals with the initiation and processing of an application
for the
review of a decision of the Commission by the Tribunal. Rule 42
reveals in Rule 42(3) (b) (i) that the proceedings which
are
contemplated to be initiated under Rule 42 include proceedings in
which a decision of the Commission is sought to be reviewed.
In my
view this suggests that all applications that may be brought before
the Tribunal for the review of any decision of the Commission
are
required to the brought in terms of Rule 42.
[43|
Against the above background, it is necessary to go back to the
question: Is this review application one in which it is sought
to
review a decision of the Commission that "may, in terms of this
Act, be referred [to the Tribunal]"? The answer to
this question
depends upon whether or not it can be said that Rule 42 provides for
the referral to the Tribunal of the decisions
of the Commission
sought to be reviewed in the present proceedings. Rule 42
contemplates the initiation ("may be initiated")
of
proceedings in the Tribunal for which there is, otherwise, no
provision in the Rules. The proceedings which may be initiated
in the
Tribunal in terms of Rule 42 include proceedings relating to the
review of a decision of the Commission. I cannot see that
there is
any difference in substance between the referral of a decision of the
Commission to the Tribunal and the initiation of
review proceedings
in the Tribunal for the review of a decision of the Commission. Rule
42 clearly contemplates proceedings that
include review proceedings
of decisions of the Commission before the Tribunal. Together with
Rule 43, Rule 42 provides for the
steps that must be taken to
initiate such proceedings in respect of a decision of the Commission
and what needs to be done to get
the matter to the stage where all
the affidavits have been filed in the Tribunal and the matter may be
set down for hearing. In
these circumstances I hold that Rule 42(1)
does contemplate the referral of a decision of the Commission to the
Tribunal for, among
other things, review by the Tribunal.
[44]
Since the phrase "this Act" in sec 1 of the Act is defined
as including Regulations and Schedules to the Act and
the Tribunal
Rules are Regulations issued by the Minister concerned, the
provisions of Rule 42 are, for this purpose, to be given
the same
effect as they would be given if they were provisions of the Act. If
they were provisions of the Act, there would have
been no doubt that
they contemplate the referral of decisions of the Commission to the
Tribunal for review. That they are in a
Rule of the Tribunal should
make no difference in the light of the definition of the phrase "this
Act" in sec 1 of the
Act and the reference to "this Act"
in sec27(1)(c) of the Act. That being the case I hold further that
the decisions
of the Commission that the applicants seek to have
reviewed and set aside in the present application are decisions that,
in terms
of Rule 42 of the Tribunal Rules, may be referred to the
Tribunal for review. In the light of the definition of the phrase
"this
Act" in sec 1 of the Act, I hold that they are
decisions of the Commission that "may, in terms of this Act, be
referred
to" the Tribunal as contemplated by sec 27(1 )(c) of
the Act. Accordingly, the contention by the first and third
respondents'
Counsel that this court does not have jurisdiction and
that the Tribunal has exclusive jurisdiction (which it shares with
the Competition
Appeal Court) to entertain this review application is
upheld.
[45]
In their papers and in the oral address of their Counsel, the
applicants took the attitude that this application was brought
under
the Promotion of Administrative Justice Act 3 of 2000 ("PAJA").
When Counsel for the first respondent dealt with
this aspect of the
case, he submitted in effect that the applicants have a serious
hurdle in this regard because their real case
is directed at the
Commission's initiation and referral of the complaint to the Tribunal
and the possible admission of the third
respondent's evidence in the
referral proceedings and there are no less than two decisions of the
Supreme Court of Appeal in which
that Court has held that the
initiation and referral of a complaint to the Tribunal do not
constitute administrative action. In
support of this submission
Counsel for the first respondent referred to Simelane NO & Others
V Seven Eleven
2003 (3) SA 64
(SCA) at paras 14-17 and Competition
Commission of SA v Telkom SA Limited & Others
2009 SA 155
(SCA)
at paras 9 to 11. In these cases the Supreme Court of Appeal held, as
Counsel for the first respondent submitted, that the
decision of the
Commission to refer a complaint to the Tribunal does not constitute
an administrative action and that, accordingly,
PAJA does not apply.
[46]
When Counsel for the applicants addressed the Court in reply after
Counsel for the first respondent had made the above submission,
I
asked him what his answer was to the submission that the Simelane and
Telkom decisions of the SCA stood in the applicants' way
to invoking
PAJA. In reply Counsel for the applicants initially submitted that
those decisions deal with the Commission's decision
to refer a
complaint to the Tribunal whereas the applicants' case is based on
the Commission's failure to refer a complaint against
the third
respondent to the Tribunal. However, immediately thereafter Counsel
for the applicants submitted that it was not in anyway
important for
the Court to decide whether PAJA did or did not apply in this case
because, as he put it, administrative action or
not, the point is
that the Commission exercised public power in making the decisions
that it made and the applicants contended
that such decisions were
invalid and fell to be reviewed and set aside. In effect the
applicants abandoned reliance on PAJA. That
being the case I need not
make any decision on PAJA in this case.
[47]The
correctness of the conclusion that I have reached above that this
Court does not have jurisdiction in this matter is not
beyond
question. For that reason I am of the opinion that I should deal with
the merits of this matter in case my above conclusion
is wrong. On
that assumption, I proceed to deal with the merits of the matter
below. I hope that irrespective of the correctness
or otherwise of
that conclusion, the views of this Court on the merits may well be of
assistance to the parties in how they move
forward in regard to the
referral proceedings in the Tribunal.
In
case this Court does have jurisdiction to entertain this application
[48]
The first question to deal with in case this Court does have
jurisdiction in this matter is whether or not the Commission's
decision to grant the third respondent conditional immunity falls to
be reviewed and set aside. To a certain extent that depends
upon
whether or not the Commission had authority to grant the third
respondent conditional immunity because the applicants attack
that
decision only on the basis that the Commission had no authority under
the Act to grant such immunity.
[49]
In dealing with the question whether or not the Commission had
authority to grant the third respondent conditional immunity,
the
first step is, in my view, to determine exactly what in essence the
granting of conditional immunity in this context means.
To do so, one
must first refer to the Commission's Corporate Leniency Policy
because the conditional immunity referred to is derived
from that
policy. Par 3.3 of the CLP is to the effect that "immunity"
in the context of the CLP has two elements to it,
namely, that the
Commission will not subject the party concerned to adjudication
before the Tribunal for its involvement in conduct
prohibited by sec
4(1)(b) of the Act and that the Commission will not seek any fines to
be imposed by the Tribunal on such party.
Par 3.3 of the CLP reads:
"Immunity
in this context means that the Commission would not subject the
successful applicant to adjudication before the Tribunal
for its
involvement in the cartel activity, which is part of the application
under consideration. Furthermore, the Commission would
not propose to
have any fines imposed to (sic) that successful applicant."
In
par 4.2 of the CLP the following appears about the term "immunity":
"The
term immunity as used in the CLP refers to immunity from prosecution
before the tribunal in relation to the alleged cartel
which forms
part of the application under the CLP."
[50]
The term "adjudication" as used in par 3.3 is explained in
footnote 4. Footnote 4 explains that the word "adjudication"
refers to "a referral of a contravention of chapter 2 to the
tribunal by the Commission with a view of (sic) getting a prescribed
fine imposed to the wrongdoer. Prosecution has a similar import to
adjudication". It seems to me from all of this that the
citing
in referral proceedings before the Tribunal of a participant in
conduct prohibited by sec
4(1
)(b) as a respondent does not on its own amount to subjecting such
party to adjudication if the Commission does not seek the
imposition
of a fine on such a party.
[51]
Par 5.9 of the CLP is to the effect that immunity under the CLP does
not protect the applicant or beneficiary of such immunity
from
criminal or civil liability resulting from its participation in a
cartel infringing act. In par 9.1.1.1 of the CLP it is stated
that
conditional immunity is given to an applicant at the initial stage of
the application for immunity "so as to create a
good atmosphere
and trust between the applicant and the Commission pending the
finalisation of the infringement proceedings".
It is stated that
such immunity is granted "provisionally".
[52]
In par 9.1.1.2 it is stated in effect that conditional immunity
precedes the decision to grant total immunity or the decision
not to
grant any immunity. It is also stated in par 9.1.1.2 that the
Commission will give the applicant total immunity once a final
determination has been made by the Tribunal or the Appeal Court, as
the case may be, on the prohibited conduct referral provided
the
applicant has met the conditions and requirements set out in the CLP
on a continuous basis throughout the proceedings.
[53]
In par 9.1.1.3 it is provided that from the time conditional immunity
is granted up to the time when the decision is made to
grant total
immunity, the Commission reserves the right to revoke the conditional
immunity if at any stage the party that has been
granted conditional
immunity does not co-operate with the Commission or fails to fulfill
any condition or requirement of the CLP.
Par 9.1.2.1 is to the effect
that, once the Tribunal or the Appeal Court, as the case may be, has
reached a final decision in respect
of the alleged cartel, total
immunity is granted to a successful applicant who has fulfilled all
the conditions and requirements
for such immunity under the CLP.
[54]
With the above background in mind what then, in simple terms, does it
mean under the CLP for the Commission to grant a party
conditional
immunity? In par 3.3 of the founding affidavit the applicants say
that "conditional immunity amounts to a promise
or an
undertaking by the Commission that it will not prosecute the
whistleblower". They go on in the next sentence: "More
specifically, it means, in the words of paragraph 3.3 and footnote 4
on page 3 of the policy that the Commission undertakes not
to refer a
contravention of Chapter 2 of the Act by the whistleblower to the
Tribunal with a view of getting a prescribed fine
imposed on him".
[55]
I have said above that par 3.3 of the CLP reveals that there are two
elements to the term "immunity" in the context
of the
commission's CLP and they are that:
(a)
the party concerned will not be subjected to adjudication for its
role in cartel activities; and
(b)
the Commission does not propose to have any fines imposed on such
party for its role in cartel activity.
If
I am correct in this understanding of the meaning of the term
"immunity" as used in the CLP, as I think I am, then,
it
seems to me, the term 'immunity" under the CLP has a special
meaning. It means that the party that is granted immunity
is free
from being subjected to adjudication before the Tribunal and, more
importantly, that the Commission will not propose to
the Tribunal
that any fine be imposed on such party. That is why the last sentence
of par 3.3 reads: "Furthermore, the Commission
would not propose
to have any fines imposed to that successful applicant".
Obviously, if the Commission says in par 3.3 that
it would not
propose to have any fines imposed on a party, it means it would not
propose that to the Tribunal because it is only
the Tribunal which
has the power to impose fines on parties for their participation in
cartel activity. Accordingly, in terms of
par 3.3 of the CLP immunity
is effectively a promise or undertaking by the Commission not to
subject a party to adjudication before
the Tribunal for its
participation in conduct prohibited by sec 4(1 )(b) and not to ask
the Tribunal to impose a fine on such a
party for its role in conduct
prohibited by sec 4(1 )(b) of the Act. If the Commission cites such a
party in referral proceedings
before the Tribunal but does not in the
referral ask the Tribunal to impose a fine on such party, that does
not constitute subjecting
that party to adjudication within the
meaning of that term as used in the CLP and that still accords with
conditional immunity
as that term is used in the CLP.
[56]
It seems to me that the fact that such party is cited as a respondent
in the referral proceedings has the advantage that that
such party is
brought before the Tribunal together with the other participants in
conduct prohibited by sec 4(1)(b) and this would
enable the Tribunal
to have such party before it in case it should reject the
Commission's proposal that no fine be imposed or
no order at all be
made against such party. In such a case the Tribunal would be able,
for example, to make a declaratory order
that such party contravened
sec 4(1 )(b) of the Act with or without making an additional order
imposing a fine of one or other
amount on such party. All of this
would be within the discretion of the Tribunal. I have no doubt that
in exercising its discretion
the Tribunal would attach a lot of
weight to the request or proposal made by the Commission in regard to
relief in relation to
such party in recognition of the co-operation
and assistance rendered by such party to the Commission in regard to
the fight against
anti-competitive conduct.
[57]
The promise or undertaking that the Commission gives to a beneficiary
of the CLP is, for all intents and purposes, a promise
or undertaking
not to seek the imposition of a fine on such party. I say this
because such a party admits or confesses its own
contravention of sec
4(1 )(b) of the Act both to the Commission and, once there is a
referral to the Tribunal, to the Tribunal
as well . That being the
case I cannot see that such a party would be seriously opposed to an
order by the Tribunal declaring that
it had contravened sec 4(1 )(b)
as long as the Tribunal does not impose a fine on such party. There
would be no basis for the granting
of an interdict restraining such
party from continuing with conduct prohibited by sec 4(1)(b) because
such a party would already
have given an undertaking to the
Commission that it will not continue with such conduct because that
is one of the requirements
or conditions for immunity under the CLP.
Indeed this is the attitude that has been adopted by the fourth
respondent in its answering
affidavit in the referral proceedings
before the Tribunal. The fourth respondent has said that it does not
oppose the granting
of a declaratory order and an interdict against
it but seeks to avoid the imposition of a fine on its self.
[58]
If immunity under the CLP is said to be conditional immunity, it
simply means that that the Commission's promise is made provisionally
pending the finalisation of the matter and on condition that such
party continues to fulfill the requirements and conditions stipulated
in the CLP. Conditional immunity is, to some extent (but not
completely), like an interim order that is granted by the High Court
pending the return day. If, on the return day, the applicant shows
that it has met the requirements for the final relief, the rule
is
confirmed but, if the applicant has failed to show that it meets the
requirements for final relief, the rule is discharged.
In the case of
conditional immunity, if at the end of the referral proceedings the
party concerned has met the requirements for
permanent immunity,
permanent immunity is granted. If it has not met the requirements,
permanent immunity is not granted.
[59]
On the papers it is common cause between the parties that the reason
why the third respondent furnished the Commission with
the evidence
and assistance that it did was the Commission's promise not to seek
any relief against it in subsequent referral proceedings
relating to
conduct prohibited by sec 4(1 )(b) in which it admitted its
participation. That this is common cause between the parties
can be
gathered from a comparison of how the applicants and the Commission
dealt with this aspect in the Commission's answering
affidavit and in
the applicant's replying affidavit. In paragraph 3.8 of its answering
affidavit the Commission says in the last
sentence:
"The
Commission considers it appropriate to forsake relief against one
cartel member in exchange for uncovering and proceeding
against the
remainder of the cartel."
[60]
In par 21 of their replying affidavit the applicants say that this is
not in dispute. In 39.1 of its answering affidavit the
Commission
says in effect that the granting of conditional immunity to a
leniency applicant "means that the Commission conditionally
undertakes not to seek relief against it in the referral to the
Competition Tribunal (also referred to as the prosecution, although
it is not in fact a criminal trial)". In par 21 of their
replying affidavit the applicants reply to the paragraph containing
this allegation. They say that this is not in dispute.
[61]
In par 59.2 of its answering affidavit the Commission says that the
third respondent has "furnished substantial evidence
and
assistance to the Commission and, as a result, a referral has been
made to the Competition Tribunal. [The third respondent]
acted on the
basis of an undertaking by the .commission (encapsulated in the CLP)
that it would not seek relief against [the third
respondent] in any
referral (my underlining). The applicants' reply to these allegations
is to be found in par 28 of the applicants'
replying affidavit. There
the applicants do not dispute these allegations. Whether or not the
third respondent provided the Commission
with the evidence that it
provided as a result of the Commission's undertaking that it would
not seek any relief against it in
a subsequent referral of a
complaint to the Tribunal is a question of fact. Accordingly, the
matter must be decided on the basis
that the reason that the third
respondent furnished the Commission with the evidence and assistance
that it did was that the Commission
promised the third respondent
that it would not seek any relief against it in any referral
proceedings that could ensue. In par
71 of its answering affidavit
the Commission states:
"As
outlined above, the grant of conditional immunity is an undertaking
by the Commission that it will not seek relief against
the leniency
applicant in the complaint referred to the Tribunal provided if
continues to co-operate and assist the Commission
in the conduct of
the referral. However, the leniency applicant is still joined in
proceedings before the Tribunal and its conduct
is disclosed to the
Tribunal. Accordingly, if it is not granted final immunity, the
Commission may seek relief against it"
[62]
What must be highlighted in the passage quoted in the preceding
paragraph is that the Commission said that the grant of conditional
immunity is an undertaking by the Commission that it will not seek
relief against the leniency applicant in the complaint referred
to
the Tribunal. In their replying affidavit the applicants did not
reply to this allegation. Accordingly, the allegation is not
disputed. From this it is clear that the granting of conditional
immunity by the Commission in terms of its CLP is not the granting
of
immunity in the normal sense of that term because par 3.3 of the CLP
does not define immunity in the sense of giving the Commission
the
final say on what happens or does not happen to the party concerned.
Par 3.3 defines immunity in such a way that it includes
the
Commission not asking the Tribunal to impose a fine on the party
concerned. Nothing in the CLP says that the Tribunal is obliged
not
to impose a fine on a party if the Commission asks it not to. Indeed,
even if there was something in the CLP to that effect,
it would not
in law have been binding on the Tribunal. Accordingly, there is
acknowledgment that the Tribunal has the final authority
whether or
not a fine is imposed on a respondent before the Tribunal.
[63]
By Against this understanding of what the grant of conditional
immunity under the CLP means, it now becomes necessary to ask
the
question:
Is
the Commission entitled to promise a party that has participated in
conduct prohibited by sec 4(1 )(b) that it will not seek
any relief
against it in referral proceedings before the Tribunal and will,
accordingly, not ask the Tribunal to impose any fine
upon it for its
involvement in such conduct?
It
is clear from the above that what the third respondent was promised
by the Commission was that in subsequent referral proceedings
before
the Tribunal arising out of the prohibited conduct to which it had
been party the Commission would not seek any relief against
it. It is
this promise or undertaking, therefore, that this court must find the
Commission to have had no right or authority to
make if it is to find
in favour of the applicants on this issue.
[64]
In support of his contention that the Commission does have authority
in terms of the Act to grant conditional immunity to a
party in the
possession of the third respondent, Counsel for the first respondent
submitted in effect that such authority derived
from the provisions
of the Act that contemplates that the Commission can be a party to a
consent order made by the Tribunal. In
my view this submission has
merit. I proceed to consider it together with the relevant statutory
provisions. In terms of sec 49B
of the Act, the Commissioner has
power to initiate a complaint against an alleged prohibited practice.
In terms of sec 49B(3) the
Commissioner must direct an inspector to
investigate the complaint after he has initiated it. A prohibited
practice is a practice
that is prohibited in terms of Chapter 2 of
the Act. That includes conduct prohibited by sec 4(1 )(b) of the Act.
In terms of sec
21(1)(c) of the Act the Commission is "responsible
to" "investigate and evaluate alleged contraventions of
Chapter
2" of the Act. In terms of sec 21(1 )(g) of the Act the
Commission is responsible to "refer matters to the Competition
Tribunal, and appear before the Tribunal, as required by this Act."
In terms of sec 21(1)(f) the Commission is responsible
to "negotiate
and conclude consent orders in terms of [sec 49D]." Sec 21(1)(f)
refers to sec 63 but it was common cause
between the parties that
this was a printing error as sec 63 has nothing to do with consent
orders and the reference should have
been to sec 49D which deals with
consent orders.
[65]
Sec 49D deals with consent orders. It reads as follows:
"49D
Consent Orders
(1)
If, during, on or after completion of the investigation of a
complaint, the Competition Commission and the respondent agree
on the
terms of an appropriate order, the Competition Tribunal, without
hearing evidence, may confirm that agreement as a consent
order in
terms of sec 58(1 )(b)".
Sec
58(1 )(b) provides that the Tribunal may "confirm a consent
agreement in terms of section 49D as an order of the Tribunal".
It is clear from the provision of sec 49D(1) that the making of a
consent order contemplated therein has as its foundation the
existence of an agreement between the Commission and a respondent.
Sec 49D(1) refers to the confirmation as a consent order of
an
agreement between the Commission and a respondent. It is clear from
sec 49D(1) that it is within the contemplation of the Act
that the
Commission may enter into an agreement that may be confirmed by the
Tribunal as a consent order. This is confirmed by
reference in sec
58(1 )(b) to an agreement.
[66]
It is clear from par 3.3 of the CLP that the Commission accepts that
it is the Tribunal which has the authority to decide whether
or not
to impose a fine upon a party which is a respondent in proceedings
before it. That is why the second of the two elements
to "immunity"
under the CLP is a promise or undertaking by the Commission not to
ask the Tribunal to impose a fine on
a participant in conduct
prohibited by sec 4(1 )(b) which has applied for immunity and meets
the conditions and requirements for
it.
[67]
If the Commission can be a party to an agreement that can later be
made a consent order, it obviously also can in terms of
the Act
promise a party in the position of the third respondent that it will
ask the Tribunal not to impose a fine on such a party
if the latter
gives it full co-operation such as is required of the third
respondent in this matter under the CLP. It can say to
such a party
that such promise is conditional upon such party continuing to give
it co-operation in this regard up to the end of
the referral
proceedings before the Tribunal. The third respondent or any entity
in the same position can accept that proposal
by the Commission in
which case then the two parties have an agreement. There is no reason
why such an agreement cannot be said
to be an agreement as
contemplated by sec 49D(1) and section 58(1)(b). After all, the
agreement contemplated in sec 49D(1) and
sec 58(1 (b) is not even
required to be in writing. This means that it can even be an oral
agreement. In this case the Commission
and the third respondent
signed a written agreement. At the end of the referral proceedings,
if the third respondent or a party
in its position, has met all the
conditions and requirements for immunity under the CLP, the
Commission will ask the Tribunal not
to impose a fine on such party
and, if the Tribunal accepts that, it will not impose a fine on such
party. In terms of sec 58(1)(a)(iii)
read with sec 59 of the Act the
imposition of a fine lies within the discretion of the Tribunal. I am
satisfied that the Tribunal
will be acting within its discretion if,
in an appropriate case, it decides not to impose a fine on a party
which is a respondent
before it if such party has helped the
Commission in a manner such as is contemplated in the CLP of the
Commission. In that way
then such party will have been saved from
having a fine imposed upon it. The Commission and such party can at
the end of the referral
proceedings hand up an agreement that no fine
is to be imposed on such party and ask the Tribunal to make it a
consent order and
the Tribunal may, in its discretion, make it an
order of the Tribunal.
[68]
I note that sec 49D(2) reads as follows:
"(2)
After hearing a motion for a consent order, the Competition Tribunal
must-
(a)
make the order as agreed to and proposed by the Competition
Commission and the respondent;
(b)
indicate any changes that must be made in the draft order before it
will make the order; or
(c)
refuse to make the order.
The
reference in sec 49D(2)(a) to an "order as agreed to and
proposed by the Commission and respondent" is important because
in par 3.3 of the CLP the second element of immunity is that the
Commission will not propose the imposition of a fine on a party
which
has applied for immunity and has met all the conditions and
requirements for such immunity under the Commission CLP. There
is
nothing in either the provision of subsection (1) or subsection (2)
to sec 49D that suggests that the intention of the Legislature
was
that sec 49D should apply only in those cases where there was only
one wrongdoer who was a respondent in referral proceedings.
If the
intention of the Legislature was that sec49D applies only in those
cases where there is only a single respondent in proceedings,
it
would have said so in a clear language. It did not say so. Sec 49D
applies whether one is dealing with a single wrongdoer or
a number of
joint wrongdoers who are respondents in referral proceedings before
the Tribunal. If this is accepted, then it applies
in the present
case as well. That being the case, there can be no doubt whatsoever
that the Commission does have authority to make
the promise it made
in this case. For that reason the applicants' contention that its
decisions to grant the third respondent conditional
immunity, to
initiate the complaint and to refer the complaint to the Tribunal
were unlawful falls to be rejected.
[69]
Counsel for the applicants advanced another ground to support his
submission that the initiation and referral of the complaint
to the
Tribunal were unlawful and fall to be reviewed and set aside. This
ground was that the Commission acted unlawfully in not
seeking any
relief against the third respondent whereas it sought various reliefs
against the other participants in conduct prohibited
by sec 4(1 )(b)
i.e. the applicants and the fourth and further respondents. In other
words the applicants accused the Commission
of "selective
prosecution" and submitted that the Commission had no authority
to be selective in "prosecuting"
joint wrongdoers in
prohibited conduct and, that for that reason, the initiation of the
complaint and their "prosecution"
are unlawful. In support
of this submission Counsel for the applicants referred to sec 49B(1).
That provision says that "the
Commissioner may initiate a
complaint against an alleged prohibited practice". In this
regard he emphasised that the complaint
is against the prohibited
practice and not against the participants in the prohibited practice.
If I understood Counsel well, he
implied that, if there was a number
of entities which had participated in a prohibited practice, the
Commissioner would no longer
be initiating a complaint against
prohibited practice as contemplated in sec 49B(1) of the Act if he
initiated the complaint only
against some as opposed to all those who
had participated in the prohibited practice.
[70]
I am unable to agree with the above submission made by Counsel for
the applicants. A prohibited practice in which a number
of
participants took part does not cease to be a prohibited practice
simply because the Commissioner initiates a complaint about
such
practice in relation to only some and not all the participants in the
practice. If one of the participants in a prohibited
practice is a
natural person and has died by the time the Commissioner has enough
evidence to initiate a complaint, that would
not mean that the
Commissioner cannot initiate a complaint because, by virtue of the
fact that one of the participants therein
has died, such complaint
will only be in relation to some and not all the participants. A
complaint that the Commissioner would
initiate after the death of one
of the participants would be as much a complaint against the
prohibited practice as it would have
been if the deceased had been
alive and a complaint had been initiated in relation to all the
participants. Indeed, it would be
as much of a complaint against a
prohibited practice as it would have been if the deceased had been
alive but no relief had been
sought against him.
[71]
In the field of labour law there is the concept of an unfair labour
practice. Under the Labour Relations Act, 1956 (Act 28
of 1956) it
was held quite early in the life of the Industrial Court that for
conduct to fall within the ambit of an unfair labour
practice, it was
not necessary that such conduct should have occurred a number of
times. It was held that a single act of dismissal
could constitute an
unfair labour practice. In my view under the
Competition Act, the
exclusion of one participant from relief or adjudication does not
turn a prohibited practice into something other than a prohibited
practice. In any event in this case the Commission cited the third
respondent in the referral proceedings but simply did not ask
for any
relief against it. The Commission was entitled to adopt the attitude
that it would not propose to the Tribunal that a fine
be imposed
against the third respondent.
[72]
If the applicants and the fourth and further respondents want the
Tribunal to impose a fine upon the third respondent, they
must go to
the Tribunal, participate in the referral proceedings and make
representations to the Tribunal to the effect that in
the exercise of
its discretion it must impose a fine on the third respondent as well
if it imposes a fine upon them. It will then
be up to the Tribunal
how it exercises its discretion after hearing argument on all sides.
In these circumstances I am of the view
that, in doing what it has
done in this case in respect of not seeking any relief against the
third respondent, the Commission
has done nothing wrong in law and
has, in fact, acted within its authority. Accordingly, the
applicants' contention that the initiation
and referral are unlawful
because of "selective prosecution" is bad and falls to be
rejected.
[73]
I note in that par 9.1.2.1 of the CLP it is stated in effect that
whether or not a party is granted total immunity (i.e permanent
immunity) is decided after the Tribunal or the Competition Appeal
Court, as the case may be, has finalised the matter relating
to
prohibited conduct. This gives the impression that a decision
separate from the decision of the Tribunal or the Competition
Appeal
Court is taken after the finalisation of the matter, e.g. a decision
of the Commission. That may give a wrong impression.
Par 3.3 of the
CLP contemplates that one of the elements of immunity under the CLP
is that in subsequent referral proceedings before
the Tribunal the
Commission proposes not to ask the Tribunal to impose a fine on a
party which was granted conditional immunity
and which meets all the
requirements for permanent immunity. Such a party will automatically
obtain permanent immunity if, by the
time the Tribunal issues its
decision or judgment, the Commission has not asked it to impose a
fine on such party and the Tribunal
does not in its decision impose a
fine on such party. Once the Tribunal has issued its decision that
does not include a fine for
such party, the Commission cannot,
thereafter, ask the Tribunal to impose a fine on such party nor can
it start referral proceedings
against it relating to the same
prohibited conduct in respect of which the Tribunal has already
adjudicated. This is so because
sec 67(2)
is to this effect. It
reads:
"A
complaint may not be referred to the Competition Tribunal against any
firm that has been a respondent in completed proceedings
before the
Tribunal under the same or another section of this Act relating
substantially to the same conduct."
This
means, therefore, that the Commission has upto just before the
Tribunal makes its decision to ask for the imposition of a fine
upon
such party if in the meantime such party has not provided its full
co-operation to the Commission despite an earlier undertaking
to do
so under the CLP. If the Commission fails to do that and the Tribunal
issues its decision and such decision does not include
a fine for
such party, it will be too late for the Commission thereafter to
purport to refuse permanent or final immunity to such
party. Such
party will have effectively obtained final or permanent immunity
through the Tribunal's completion of the referral
proceedings (in
which such party was a respondent) without imposing any fine on such
party.
[74]
In the light of the above even if this court had jurisdiction to deal
with this review application, I would have dismissed
it.
[75]
In the result the application is dismissed with costs, such costs to
include the costs consequent upon the employment of two
Counsel by
the first and third respondents.
ZONDO
J
Appearances:
For
the Applicants: Mr S J Du Plessls SC (with him, Mr Kevin Hopkins)
Instructed by: Roestoff & Kruse, Pretoria
For
the First Respondent; Mr Gilbert Marcus SC (with him, Isabel Goodman)
Instructed by: Mothle Jooma Sabdia Inc, Pretoria
For
the Third Respondent: Mr Wim Trengove SC (with him, Jerome Wilson and
Michelle Le roux)
Instructed
by: Nortons Ine, Johannesburg
Date
of hearing: 7 February 2011
Date
of Judgment: 5 July 2011