Sasol Gas (Pty) Ltd v Competition Commission of South Africa and Others (212/CAC/Apr 23) [2024] ZACAC 2 (5 March 2024)

THE COM .PETITION APPEAL COURT
OF SOUTH AFRICA
1
CASE NO: 212/CAC /Apr 23
( 1) REPORT ABLE: YE S
(2) OF INTERESTTO OTHER JUDGES: YES
(3) REVISED .
5March 2024
In the matter between:
SASOL GAS (PTY) LTD
And
THE COMPETITION COMMISSION OF SOUTH AFRICA
INDUSTRIAL GAS USERS ASSOCIATION OF
SOUTHERN AFRICA
EGOLI GAS PROPRIETARY LIMITED
THE NATIONAL ENERGY REGULATOR OF SOUTH
AFRICA
Coram: Davis , Spilg and Potterill AJJA
App licant
First Respondent
Second R espondent
Third R espondent
Fourth Respon dent
2
JUDGME N T
SPILG A JA
INTROD U CT IO N
1. This is an application brought by Sasol Gas (Pty) Ltd ("Sasof') to review and set aside
decisions taken by the Competition Commission of South Africa ("the Commission").
The decisions sought to be reviewed we re those taken by the Commission;
a. to initiate an investigation under s 8(1 )(a) of the Competition Act 89 of 1998 into
an alleged abuse of dominance by Sasol for charging an excessive price to the
detriment of its customers or the consumers2; and
b. subsequently to issue a summons on Sasol after it had failed to respond to the
Commission's detailed request for information relevant to its investigation.
2. The orders sought form Part B of the review application. In Part A Sasol had applied
for interim interdictory relief to suspend the operation of the summons pending the
outcome of the review application.
1 The Commission is the first respondent.
2 Section 8(1)(a) provides:
"Section 8: Abuse of dominance prohibited. -
(1) It is prohibited for a dominant firm to-
(a) charge an excessive price to the detriment of consumers or customers;"
3
3. The Industrial Gas Users Association of Southern Africa ("IGUASA") and Egoli Gas
(Pty) Ltd were cited as the second and third respondents. Each filed complaints
against Sasol under s 498 (2)(b) of the Competition Act which had led to the
Commission's decision to undertake an investigation. They complained that Sasol was
abusing its dominance by charging an excessive price.
Sasol sought a cost order should they oppose the application.
4. The National Energy Regulator of South Africa ("NERSA "} was joined as the fourth
respondent. It is the designated regulator under the Gas Act 48 of 2001 of the piped­
gas, electricity and petroleum pipeline industries in South Africa.
NERSA was clearly an interested party in the litigation because the Commission was
in effect assuming jurisdiction to decide whether the maximum price the former had
allowed Sasol to charge under s 21 (1 )(b} of the Gas Act was subject to scrutiny under
the abuse of dominance provisions of the Competition Act.
Unless the context indicates otherwise, reference to a section of a statute means one
under the Competition Act.
THE COMPLAINTS AND ENSUING LITIGATION
5. In early February 2022 Egoli Gas filed a complaint against Sasol on the grounds that
as from September 2021 it had decided to implement and enforce a monopoly pricing
structure on natural piped gas traders "which is excessive and which will destroy the
business models of all traders other than the Sasol trading arm. The price increase is
currently in effect and stems from a new maximum pricing methodology determined
by NERSA. The new methodology is irrational and permits Sasol to exploit its position
of dominance to effectively destroy the business of all downstream competitors."
A material allegation made in the complaint was that the new pricing methodology is
directly linked to global spot pricing which has resulted in a scenario where soaring
4
global prices have permitted the local piped natural gas price to reach unprecedented
levels. It was alleged that as a further consequence, the new methodology permitted
Sasol, as the only supplier, to abolish previously granted bulk discounts and, save for
its own trading arm, render the trading market effectively moribund.
This, it was urged, enables Sasol to receive an unprecedented monopoly windfall
because it does not source its piped gas on international markets but rather pursuant
to a series of agreements which had commenced in 2004 between itself, the South
African Government and the Mozambique Government and which entailed Sasol
constructing a transmission pipeline into South Africa from gas fields in the
Mozamb ican interior.
In its complaint, Egoli Gas alleged that by 2014 Sasol had recouped its cost of
investment and that the prevailing terms allow Sasol to lock in Mozambique gas
supplies until 2029 at a landed cost currently of approximately USD2/gj (gigajoules).
In other words, it was contended that global spot pricing cannot affect the domestic
piped gas market because it is completely insulated against international competition
by virtue of Sasol's monopoly which has been in effect since at least 2004.
6. In May 2022 the Commission decided to investigate Egoli Gas ' complaint.
Shortly after the Commission did so, IGUASA filed its own s 8(1 )(a) complaint. It
however complained of excessive pricing consequent on an abuse of dominance not
only under the new methodology but also going back to 2014 under the previous
pricing methodology.
IGUASAc ontended that, based on publicly available information, Sasol over the years
in question incurred total costs of between R2/gj and R17/gj in the production of gas
5
and that the internal transfer price (which it pays to acquire the gas molecule from its
upstream entity in Mozambique) has been between R11/gj and R36 /gj3 .
IGUASA alleged that Sasol had throughout the period charged and continues to
charge prices far in excess of these cost metrics. It also relied on the Constitutional
Court decision of National Energy Regulator of South Africa & Another v PG Group
(Ply) Limited & Others 2020 (1) SA 450 (CC) which held that NERSA in its post-2014
gas pricing methodology had acted irrationally and for that reason the court had
remitted the gas pricing back to NERSA for reconsideration4. One of the court's
reasons for doing so was that NERSA had not accounted for Sasol's costs in
determining the maximum gas price. 5
7. IGUASA submitted that the effect of the Constitutional Court judgment required
NERSA to adopt a cost-plus or pass-through approach in approving the maximum gas
price. It claimed that NERSA in its new pricing, wh ich applied retrospectively from 26
March 20146, adopted a methodology which was not based on an assessment of
Sasol's costs but rather allowed the maximum piped-gas prices to move entirely
independently of its actual costs because they are based on international benchmarks.
3 With the caveat that this may have taken into account factors in addition to just operating costs, capital costs and
a return on capital.
4 The Constitutional Court upheld the decision of the Supreme Court of Appeal in PG Group Proprietary Limited &
Others v Notional Energy Regulator of South Africa & Another 2018 (5) SA 150 (SCA) of 26 March 2013 to review
and set aside NERSA's decision to approve the application by Sasol for maximum gas prices and for a trading ma rgin
for the period 26 March 2014 to 30 June 2017 . The Constitutional Court however did not follow the SCA reasoning
for holding NERSA's decision irrational (which it paraphrased at paras 24 and 2S) but, per Khampepe J for the
majority, found at para 65 that:
" ... NERSA failed to consider Sasol's marginal costs in the method it used to determine the maximum gos
price for Sasol. The decision to apply the basket of alternatives approach specifically to Sasol was not
rational. Sasol is a monopolist and any rational attempt at regulating its prices needed to consider its costs
in order to fairly and equitably divide the economic surplus between Sosol's profit and the economic value
for Sasol's consumers."
The Court then proceeded to set out a number of interrelated reasons for finding that Sasol's marginal costs were a
necessary factor in determining its maximum price. The Constitutional Court declined to leave NERSA's decision in
place or to substitute its own decision but remitted the issue back to the regulator for determination (at paras 89
and 91)
s See para 65
6 Although the determination became effective on 31 March 2021, significantly for the positions taken both by
Sasol and the industry it was made retrospective from the March 2014 date
6
8. In June 2022 the Commission included IGUASA 's complaint as part of its investigation.
9. It should be mentioned that six months earlier, in December 2021, IGUASA had
brought an application before the Gauteng H igh Court in Pretoria against NERSA to
review and set aside its new pricing methodology. IGUASA also sought an order
directing that the matter be remitted back to the regulator for a new decision. Sasol
was cited as the second respondent. The matter was argued, and judgment is awaited.
10. On 18 July 2022 the Commission delivered a request for information to Sasol in which
it sought the disclosure of certain information. Sasol's failure to respond resulted in
the Commission issuing a summons on 12 August calling for the requested
information.
This prompted Sasol's review application which was brought before the Competition
Tribunal in September 2022.
11. By the time the matter came before the Tribunal, the new adjustment method
approved by NERSA was yielding a maximum gas price of R273.43/gj for the 2023
financial year end.7
12. This appears to have prompted IGUASA to bring its own application before the
Tribunal to interdict Sasol from increasing its prevailing gas price of R68/gj until the
conclusion of the Commission's investigation.
13. On 12 May 2023 the Tribunal (per Adv G Budlender SC, Ms Mazwai and Mr Roskam
concurring) dismissed Part A of Sasol's review application and granted IGUASA the
7 Sasol did not apply NERSA's maximum rate. Instead it started charging R133 .34/gj on the ground that the NERSA
adjustm ent would negatively im pact Sasol custom ers "as we ll as the rationality test methodology''.
7
interdict sought subject to Sasol being able to give at least two months' written notice
should it consider changing the price.8
Sasol then sought and obtained an order suspending the operation of the summons
pending the final determination of the review. This order was granted by my brother
Davis AJA.
14. Sasol also wished to pursue Part B of its review application. In light of the
Constitutional Court decision of Competition Commission of South Africa v Group Five
Construction Limited (2022) ZACC 36, which held that the Tribunal lacked jurisdiction
to review a decision of the Commission, this court was approached to have the review
transferred from the Tribunal.
The determination of Part B of Sasol's review application comes before us pursuant
to the order made by Manoim JP on 5 May 2023. The order reads;
1. Subject to paragraph 2 immediately below, Part B of the applicant's application
launched under case number OTH110Sep 22, which was initially launched in
the Competition Tribunal ('the Tribunal'') is transferred to the roll of this Court
for this Court's determination.
2. A further hearing for procedural directions in terms of section 38(2A)(e) will be
held, upon a determination by the Tribunal in Part A of the application (currently
reserved), or within one calendar month of the date of this order or such further
period as may be determined by the Judge President
3. There is no order as to costs of this application.
8 The order included a provision that such a notice must specify the price which Sasol intends charging its
customers and if and when that price was approved by NERSA. The interdict was to endure to the earlier of the
dates referred to in s 49C (4) of the Act
8
15. This Part is opposed by the Commission and IGUASA. Egoli Gas abides the decision
and NE RSA filed papers for the purposes of assisting the court.
THE ISSUES
16. Sasol contends that the decisions taken by the Commission fall outside its jurisdiction.
It also contends that the decisions are unlawful "for violating the legality principle as
being irrationa/'9 . Mr Snyckers, who represented Sasol, accepted that in the context
of the case this was just another way of saying that the Commission could not have
acted rationally because its decisions to investigate the comp laints and later to issue
the summons were not authorised by law as they fell outside its statutory powers and
functions; the substance therefore remains the jurisdictional reach of the Commission.
10
The submission advanced is that the Comm ission has no jurisdiction to investigate
whether Sasol charges an excessive price for gas because another regulator, being
NERSA, has made a price determination for that industry, the effect of which is to
immunise it from the excessive pricing provisions of the Competition Act.
At the heart of Sasol's argument is Mr Snycker's contention that its conduct, in
charging for piped gas in accordance with the maximum price level determined by
NERSA , is intended to be removed from the market and is therefore not a product of
the market (so as to render it subject to competition scrutiny).11
17. The argument is premised on the assertion that the Gas Act is sector-specific
legislation which clothes NERSA as the regulator Parliament has directed to exercise
exclusive jurisdiction to determine the legality of gas pricing. The contention is that
9 Sasol's HoA para 20
1° Compare Telkom at para 12
11 Sasol's HoA para 42:
"whether the conduct in question (in this case charging in accordance with the maximum price level
determined by NE RSA) is intended to be removed from the market ar is instead to be a product of the
market - in the latter case, it is subject ta competition scrutiny; in the former not."
9
NERSA was given the sole power "to address a potentially prohibited practice inherent
in the pricing".
18. Couched in this fashion, Mr Snyckers argues that the issue of concurrent jurisdiction
provided for in s 3(1A} of the Competition Act remains stillborn because s 21 (1 )(p) of
the Gas Act determines where the authority and jurisdiction is situated.
In other words, there is a preceding question which must be considered before s
3(1A} of the Competition Act comes into play -name ly, whether s 21 (1 )(p) of the Gas
Act confers exclusive sovereignty over the legality of the conduct in question; if it does
thens 3(1A) of the Competition Act is not engaged.
KEY LEGISLAT IVE PROVISIONS
19. Sasol relies on the provisions of s 21 (1 )(p) of the Gas Act which read:
"Conditions of licence.-
(1) The Gas Regulator may impose licence conditions within the following
framework of requirements and limitations-
(p) maximum prices for distributors, reticulators and all classes of consumers
must be approved by the Gas Regulator where there is inadequate competition
as contemplated in Chapters 2 and 3 of the Competition Act, 1998 (Act No. 89
of 1998)
Sections 21(2)(a), (b) and (c) also appear to be relevant. They provide:
"(2) (a) Any person aggrieved by a condition imposed by the Gas Regulator
in terms of subsection (1) may in the prescribed manner apply to the
Gas Regulator to have the condition reviewed.
10
(b) If the aggrieved person is not the licensee the Gas Regulator must
inform the licensee regarding the application for review.
(c) Whenever there is an application for review in terms of paragraph
@l the Gas Regulator must conduct an investigation and may for that
purpose summon witnesses to appear before it.
20. Each of the respondents, including NERSA, contends that far from s 21 (1 )(p)
conferring exclusive jurisdiction on the latter to determine a gas price which is
immunised from scrutiny under the Competition Act, ss 3(1) and 3(1A) of that Act
provide for a regime of concurrent jurisdiction. These sections read as follows:
"Section 3. Application of Act
(1) Th;s Act applies to all economic activity within, or having an effect within, the
Republic, except-
(a) collective bargaining within the meaning of section 23 of the
Constitution, and the Labour Relations Act, 1995 (Act No. 66 of 1995);
(b) a collective agreement, as defined in section 213 of the Labour Relations
Act, 1995; and
(c) .... (deleted by Act 39 of 2000)
(d) ... (deleted by Act 39 of 2000)
(e) concerted conduct designed to achieve a non-commercial socio­
economic objective or similar purpose
(1A) (a) In so far as this Act applies to an industry, or sector of an industry, that is
subject to the jurisdiction of another regulatory authority, which authority
has jurisdiction in respect of conduct regulated in terms of Chapter 2 or 3 of
11
this Act, this Act must be construed as establishing concurrent jurisdiction
in respect of that conduct.
(b) The manner in which the concurrent jurisdiction is exercised in terms of
this Act and any other public regulation, must be managed, to the extent
possible, in accordance with any applicable agreement concluded in terms
of sections 21 (1) (h) and 82 (1) and (2).
Chapter 2 of the Competition Act houses the s 8(1 )(a) abuse of dominance
provision which, it is common cause, is the subject matter of the investigation
undertaken by the Commission and to which the summon for the production of
information relates.
The sections of the Competition Act referred to in s 3(1A)(b) are relevant. They
provide:
Section 21(1) (h):
Section 21. Functions of Competition Commission. -
(1) The Competition Commission is responsible to-
(h) negotiate agreements with any regulatory authority to co-ordinate
and harmonise the exercise of jurisdiction over competition matters
within the relevant industry or sector, and to ensure the consistent
application of the principles of this Act;
Section 82 (1 ), (2) and for sake of completeness {3) provide:
Section 82 Relationship with other agencies. -
12
(1) A regulatory authority which, in terms of any public regulation, has
jurisdiction in respect of conduct regulated in terms of Chapter 2 or 3 or on
matters set out in Chapter 4A within a particular sector-
( a) must negotiate agreements with the Competition Commission, as
anticipated in section 21 (1) (h); and
(b) in respect of a particular matter within its jurisdiction, may exercise
its jurisdiction by way of such an agreement.
(2) Subsection (1) (a) and (b), read with the changes required by the context,
applies to the Competition Commission.
(3) In addition to the matters contemplated in section 21 (1) (h), an agreement in
terms of subsection (1) must-
a. identify and establish procedures for the management of areas of
concurrent jurisdiction;
b. promote co-operation between the regulatory authority and the
Competition Commission;
c. provide for the exchange of information and the protection of confidential
information; and
d. be published in the Gazette.
STATUTORY INTERPRETATION
13
21. Since the court is dealing with original legislation passed by the National Assembly,
the contents of any agreement concluded under s 82 of the Competition Act should
not be considered at the initial stage of the interpretation process. The reason is that
the conclusion of such an agreement is comparable to the exercise of a delegated,
and therefore a subordinate, power which remains subject to the overriding provisions
of the principal pieces of legislation which are being scrutinised.
22. Mr Snyckers properly conceded that there is no express provision in the Gas Act
ousting the jurisdiction of the Commission to investigate a complaint of excessive
pricing by Sasol. Counsel was therefore driven to argue that the ouster of the
Commission's jurisdiction must be necessarily implied.
This exposes the first difficulty confronting Sasol's submission. Section 3(1A) of the
Competition Act expressly states that its provisions apply, and that the institutions
established under it enjoy concurrent jurisdiction, irrespective of whether another
regulatory authority has jurisdiction to investigate or otherwise deal with the same
conduct complained of-provided the conduct falls under Chapter 2 or 3 of that Act12.
It will be recalled that the conduct complained of in the present case is abuse of
dominance under s 8(1 )(a) which is a Chapter 2 provision.
23. The applicant attempts to overcome this difficulty by arguing that s 21 (1) (p) of the
Gas Act properly interpreted requires a court, again by necessary implication, to ignore
the provisions of the Competition Act. Based on this line of reasoning Sasol argues
that a court is obliged to first analyse the "sector specific legislation" of the Gas Act
and determine if it excludes the jurisdiction of the competition authorities in respect of
the impugned conduct.
According to this argument, it is therefore only permissible to consider the concurrent
jurisdiction provisions of the Competition Act if the Gas Act in its terms does not
12 See the wording of s 3(1A)(a)
14
implicitly (once again because Sasol concedes it is not expressly so stated) exclude
the Commission enjoying concurrent jurisdiction 13.
24. Sasol relies for these propositions on its understanding of the Supreme Court of
Appeal decision ("SCA") in Competition Commission of South Africa v Telkom Ltd
[2010] 2 All SA433 (SCA) at para 29.
The cited extract does not support the proposition contended for. It reads:
"Section 3(1A)(a) establishes concurrent jurisdiction "in so far as" the
Competition Act may be applicable to an industry, or sector of an industry,
that is subject to the jurisdiction of another regulatory authoritYi and which
authority has jurisdiction in respect of the conduct regulated in terms of
Chapter 2 and 3 of the Competition Act. It is conceivable that the iurisdiction
of the competition authorities may by legislation be excluded entirely from a
particular industry. The operation of competition legislation may also be
retained expressly such as under sections 52 and 53 of the
Telecommunications Act which in a limited sense provided for concurrent
jurisdiction between the competition and telecommunication authorities.
The jurisdiction of the competition authorities may also continue but subject
to certain reservations such as under section 67(9) of the Electronic
Communications Act which provides that "[s]ubject to the provisions of this
Act, the Competition Act applies to competition matters in the electronic
industry". (emphasis added)
The highlighted sentence says no more than that legislation may exclude the
application of s 3(1A), not how one goes about construing whether it does or does not­
that remains within the realm of well understood principles applicable to the
interpretation of statutes.
13 Sasol HoA. Paras 32 and 37
15
25. Sasol does however rely on one of the aids to interpreting a statute, but this only
comes into reckoning provided it is found that a statutory provision is inconsistent with
an earlier enactment14.
As will be demonstrated, even if resort may be had to it, the foundation remains
speculative.
26. In any event, a reading of Telkom as a who le indicates that, by reason of the
concurrent jurisdiction conferred bys 3(1A ), a court wou ld require explicit legislation
to immunise another regulator's decision which may result in a restrictive practice (or
affect mergers) from the Commission's scrutiny or exclude the adjudicative functioning
and powers of the Tribunal or this court having regard to the specialist attributes each
possesses to deal with a restrictive practice issue and its effect.15
27. Whichever way one wishes to characterise the issue or frame the critical question, the
starting point remains that there exist two statutes which engage the subject of pricing
by a dominant firm; it being common cause that NERSA was obliged under the Gas
Act to determine whether there was inadequate competition as contemplated by
Chapter 2 and 3 of the Competition Act before it could lawfully set a maximum price
level that Sasol could charge for piped gas.
This is therefore an a fortiori case where the conduct under consideration wou ld also
be subject to the investigative powers conferred on the Commission under the
Competition Act unless excluded by legislation.16
28. The attempt by Sasol to ignore engaging the jurisdictional reach of ss 3(1) and 3(1 A)
of the Competition Act by contending that the answer must first be sought exclusively
within the sector specific legislation is impermissible. It disregards the basic principles
14 Sasol, HoA paras 35 to 36
15 This is dealt with later. For present purposes see e.g. Telkom at para 28. See also the Preamble and ssS(c) and(d)
of the Competition Act with their references to anti-competitive effect and anti-competitive practices
16 See also Telkom
16
of interpreting statutes and the methodology wh ich must be adopted both generally
and specifically in cases where there are conflicting statutory provisions. These will
now be considered.
lnterpretational Principles
29. A number of basic interpretational principles were set out by Madjiedt AJ (at the
time) in Cool Ideas 1186 CC v Hubbard and another 2014 (8) BCLR 869 (CC) at para
28:
A fundamental tenet of statutory interpretation is that the words in a statute must
be given their ordinary grammatical meaning, unless to do so would result in an
absurdity. There are three important interrelated riders to this general principle,
namely:
(a) that statutory provisions should always be interpreted purposively;
(b) the relevant statutory provision must be properly contextualised~ and
(c) all statutes must be construed consistently with the Constitution, that is,
where reasonably possible, legislative provisions ought to be interpreted to
preserve their constitutional validity. This proviso to the general principle is
closely related to the purposive approach referred to in (a).,_
This formulation has been consistently followed and applied17. While the formulation
refers to a tenet, any perceived limitation on the development which had occurred
since the 1950s in respect of the principles to be applied was clarified by Madjiedt J
in a judgment jointly penned with Rogers J in Minister of Police and others v Fidelity
Security Services (Pty) Ltd (Sakeliga NPC and others as amici curiae) 2023 (3) BCLR
270 (CC) at para 34. The justices said:
17 E.g. Chisuse and others v Director-General, Department of Home Affairs and another (2020] JOL 47812 (CC) at
paras 47
17
"The interpretation of the Act must be guided by the following principles:
(a) Words in a statute must be given their ordinary grammatical meaning unless
to do so would result in an absurdity.
(b) This general principle is subject to three interrelated riders: a statute must
be interpreted purposively; the relevant provision must be properly
contextualised; and the statute must be construed consistently with the
Constitution, meaning in such a way as to preserve its constitutional
validity.18
(c) Various propositions flow from this general principle and its riders. Among
others, in the case of ambiguity, a meaning that frustrates the apparent
purpose of the statute or leads to results which are not business-like or
sensible results should not be preferred where an interpretation which
avoids these unfortunate consequences is reasonably possible. The
qualification "reasonably possible" is a reminder that Judges must guard
against the temptation to substitute what they regard as reasonable,
sensible or business-like for the words actually used.
(d) If reasonably possible, a statute should be interpreted so as to avoid a
lacuna (gap) in the legislative scheme.
18 This follows from Khampepe J's judgment in Chisuse at para 49
"Strengthening this interpretive exercise is the obligation enshrined in section 39(2) of the Constitution,
which requires courts when interpreting legislation to give effect to the "spirit, purport ond objects of the
Bill of Rights". This requires that:
'. .. judicial officers [must] read legislation, where possible, in ways which give effect to [the
Constitution's] fundamental values. Consistently with this, when the constitutionality of legislation
is in issue, they are under a duty to examine the objects and purport of an Act and to read the
provisions of the legislation, so far as ls possible, in conformity with the Constitution.'
(citing Investigating Directorate: Serious Econom ic Offences and others v Hyundai Motor
Distributors (Pty) Ltd and others: In re Hyundai Motor Distributors (Pty) Ltd a,id others v Sm it
NO and others [2000) ZACC 12, 2001 ( 1) SA 545 (CC) at para 22
18
At this stage it is appropriate to mention that Cool Ideas relied on the minority judgment
of Schreiner JA in Jaga v Donges at 664E-H to support its analysis of the law.
30. It is also significant that these developments came about as a response to the
limitations of the so-called golden rule of interpretation. Solomon J in Venter v R 1907
TS 910 at 919 explained it by reference to the following passage in Caledonian
Railway Co. v North British Railway Co. 6 App . Cas . 114 at 131:
" Now I believe there is not much doubt about the general principle. Lord
Wensleydale used to enunciate . . . that which he called the golden rule for
construing all written engagements. I find that he stated it very clearly and
accurately, in Grey v Pearson, in the following terms: 'I have been long and deeply
impressed with the wisdom of the rule, now, I believe, universally adopted, at least
in the courts of law in Westminster Hall, that in construing wills, and indeed
statutes, and all written instruments, the grammatical and ordinary sense of the
words is to be adhered to, unless that would lead to some absurdity, or some
repugnance or inconsistency with the rest of the instrument, in which case the
grammatical and ordinary sense of the words may be modified, so as to avoid that
absurdity and inconsistency, but no further.
Solomon J then further qualified the golden rule by reference to the Privy Council
decision in The Mayor and Councillors of the Burgh of Pietermaritzburg v The Natal
Land and Colonisation Co., 13 App. Cas. 478 (at 488), observing at 921 that
repugnancy may arise when regard is had to the intention of the legislature as
gathered from the other portions of the statute when read as a who le. 19
19 See also Dadoo Ltd and Others v Krugersdorp Municipal Council 1920 AD 530 at 554-5. Venter has been
consistently followed-see for example Shiva Uranium (Pty) Ltd (In Business Rescue) and another v Tayob and others
2022 (3) SA 432 {CC) at para 38 ftn 15
19
31. It therefore follows that both the words used in ss 3 (1) and 3(1A) of the Competition
Act and those of s 21 (1 )(p) of the Gas Act have to be taken into account. Neither can
be ignored in the interpretational process.
32. Schreiner JA's minority judgment in Jaga v Donges did not stop there but also
considered the methodology to be applied in resolving interpretational problems:
"The second point is that the approach to the work of interpreting may be along
either of two lines. Either one may split the inquiry into two parts and concentrate,
in the first instance, on finding out whether the language to be interpreted has or
appears to have one clear ordinary meaning, confining a consideration of the
context only to cases where the language appears to admit of more than one
meaning; or one may from the beginning consider the context and the language to
be interpreted together. 20
After identifying each approach, Schreiner JA concluded:
"No doubt the result should always be the same, whichever of the two lines of
approach is adopted since, in the end, the object to be attained is unquestionably
the ascertainment of the meaning of the language in its context. But each has its
own peculiar dangers. While along the line approved by Lord Greene there is the
risk that the context may in a particular case receive an exaggerated importance
so as to strain the language used; along the other line there is the risk of verbalism
and consequent failure to discover the intention of the law-giver. The difference in
approach is probably mainly a difference of emphasis, for even the interpreter who
concentrates primarily on the language to be interpreted cannot wholly exclude the
context, even temporarily: and even the interpreter who from the outset tries to
look at the setting as well as the language to be interpreted cannot avoid the often
decisive first impression created by what he understands to be the ordinary
meaning of that language. Seldom indeed is language so clear that the possibility
20 Jaga v Donges at 662H to 663A
20
of differences of meaning is wholly excluded, but some language is much clearer
than other language; the clearer the language the more it dominates over the
context, and vice versa, the less clear it is the greater the part that is likely to be
played by the context.
Ultimately. when the meaning of the language in the context is ascertained, it must
be applied regardless of the consequences .... "21
(emphasis added)
The highlighted portions of the judgment reflect that neither approach should be
exclusively applied. Rather that a unitary enquiry which considers the impugned
legislation from both perspectives is to be preferred.
33. The minority judgment of Schreiner JA in Jaga v Donges was approved by the
Constitutional Court in Bato Star Fishing (Pty) Ltd v Minister of Environmental Affairs
and Others 2004 (4) SA 490 (CC); 2004 (7) BCLR 687 (CC). Ngcobo J (at the time)
adopted the passages at 662G to 663A of Jaga v Donges and added that :
"The emerging trend in statutory construction is to have regard to the
context in which the words occur, even where the words to be construed
are clear and unambiguous. Recently, in Thoroughbred Breeders'
Association v Price Waterhouse 2001 (4) SA 551 (SCA). the SCA has
reminded us that:
'The days are long past when blinkered peering at an isolated
provision in a statute was thought to be the only legitimate technique
in interpreting it if it seemed on the face of it to have a readily
21 Jago v Donges at 664C to G
21
discernible meaning. As was said in University of Cape Town v Cape
Bar Council and Another 1986 (4) SA 903 (A) at 914D-E:
'I am of the opinion that the words of s 3(2)( d) of the Act, clear
and unambiguous as they may appear to be on the face
thereof, should be read in the light of the subject-matter with
which they are concerned, and that it is only when that is done
that one can arrive at the true intention of the Legislature." 22
(emphasis added)
34. In Natal Joint Municipal Pension Fund v Endumeni Municipality 2012 (4) SA 593
(SCA) ("NJMPP') Wa llis JA at paras 18 and 19 gave perhaps the fullest explanation
of the methodology courts should apply when interpreting a statute or other
document:
"[18] Interpretation is the process of attributing meaning to the words used
in a document, be it legislation, some other statutory instrument, or contract,
having regard to the context provided by reading the particular provision or
provisions in the light of the document as a whole and the circumstances
attendant upon its coming into existence. Whatever the nature of the
document, consideration must be given to the language used in the light of the
ordinary rules of grammar and syntax; the context in which the provision
appears; the apparent purpose to which it is directed and the material known
to those responsible for its production. Where more than one meaning is
possible each possibility must be weighed in the light of all these factors,. The
process is objective not subjective. A sensible meaning is to be preferred
to one that leads to insensible or unbusinesslike results or undermines the
apparent purpose of the document. Judges must be alert to, and guard
n Bato Star at para 90.
The same portion of Schreiner's minority judgment had already received Constitutional Court approval in the case
of S v Makwonyane & Another 1995 (6) BCLR 665 (CC) at para 13
22
against, the temptation to substitute what they regard as reasonable, sensible
or businesslike for the words actually used. To do so in regard to a statute or
statutory instrument is to cross the divide between interpretation and
legislation. In a contractual context it is to make a contract for the parties other
than the one they in fact made. The "inevitable point of departure is the
language of the provision itself",_read in context and having regard to the
purpose of the provision and the background to the preparation and
production of the document.
[19] All this is consistent with the "emerging trend in statutory construction"
It clearly adopts as the proper approach to the interpretation of documents
the second of the two possible approaches mentioned by Schreiner JA in
Jaga v Donges NO and another, Bhana v Donges NO and another namely that
from the outset one considers the context and the language together, with
neither predominating over the other. This is the approach that courts in South
Africa should now follow, without the need to cite authorities from an earlier
era that are not necessarily consistent and frequently reflect an approach
to interpretation that is no longer appropriate. The path that Schreiner JA
pointed to is now received wisdom elsewhere. Thus, Sir Anthony Mason CJ
said:
"Problems of legal interpretation are not solved satisfactorily by ritual
incantations which emphasise the clarity of meaning which words
have when viewed in isolation, divorced from their context. The modern
approach to interpretation insists that context be considered in the
first instance, especially in the case of general words, and not merely
at some later stage when ambiguity might be thought to arise.~
More recently, Lord Clarke SCJ said "the exercise of construction is essentially
one unitary exercise.::_
23
35. The "unitary" nature of the interpretational task is the common thread running through
the judgments of the Constitutional Court and the SCA. It was again emphasised by
Wa llis JA in Bothma-Batho Transport (Edms) Bpk v S Bothma & Seun Transport
(Edms) Bpk 2014 (2) SA 494 (SCA) at para 12. The relevant extract reads:
"Whilst the starting point remains the words of the document, which are the
only relevant medium through which the parties have expressed their
contractual intentions, the process of interpretation does not stop at a
perceived literal meaning of those words, but considers them in the light of
all relevant and admissible context, including the circumstances in which
the document came into being. The former distinction between permissible
background and surrounding circumstances, never very clear, has fallen
away. Interpretation is no longer a process that occurs in stages but is
'essentially one unitary exercise' 23
36. Ultimately the purpose of interpreting a statute is simply stated; to discern the intention
of the legislature having regard to the only form of expressions open to it, namely
words which because they are by nature imprecise also requires an understanding of
their context which includes legally acceptable factors extrinsic the legislation.
37. A further accepted and fundamental consideration in interpreting statutes, and which
Sasol's approach also offends, is that existing law, whether it is the common law or a
statute, is not presumed to be altered unless it is expressly repealed or altered; the
corollary to which is that courts must first endeavour to reconcile conflicts between
the existing law and a new statutory provision.24 .
23 It is accepted that the method of interpreting a document, whether it be a statute or an agreement, are
essentially the same, save of course thats 39(2) of the Constitution brings a consideration of the Bill of Rights into
sharper focus when a statute requires interpretation and issues of parole evidence may intrude when discerning
the terms of a contract (see University of Johannesburg v Auckland Park Theological Seminary ond another 2021 (8)
BCLR 807 (CC) at paras 88-92 and the cases cited)
24 See Kent NO v SA Railways and another 1946 AD 398 at 405, Devenish Interpretation of Statutes (1992) at 161
and the other cases cited at ftn 43
24
38. This is regarded as one of the "seminal presumptions" and has been referred to as
"the most fundamental of all the presumptions"25. Devenish in Interpretation of Statutes
at p159 considered that:
" ... it is an all pervasive presumption since the interpretation of a provision of a
statute should always be contextual, firstly. in regard to the statutes as a whole,
secondly, in regard to other cognate statutes and then, finally. in regard to the
common law. The application of this presumption also facilitates legal certainty and
the effective administration of justice. The interpretation of a provision of a statute
should therefore be in contextual harmony with both the letter and spirit of the
whole body of law (statutory and common). The presumption therefore results in a
restrictive interpretation in favour of the existing general system of law, both
common and statutory. This presumption is of course rebuttable and does not
constitute an impenetrable obstacle because of the doctrine of legislative
supremacy, and hence there are innumerable examples in which the courts have
interpreted the provisions of statutes in a way that makes penetrating inroads into
the principles and precepts of our common law"
(emphasis added}
Devenish continues at 279:
"The presumption that the legislature does not intend to alter existing law
more than is necessary is fundamental to the process of the interpretation
of statutes and applies to both statute law and the common law. It is
therefore the duty of the courts, if it is at all possible, to endeavour to
reconcile conflicts that are encountered in the process of interpretation of
statutes.
25 Devenish at 159
25
The courts endeavour to reconcile prima facie conflicting statutes as well as
apparently conflicting provisions of the same statute. To this end the
language of every part of the statute should be construed as to be
consistent. so far as possible. with every other part of that statute. and with
every other unrevealed statute enacted by the same legislature
(Chatabai v Union Government (Minister of Justice) and Registrar of
Asiatics 1911 AD 13 at 24 and the other cases cited at ftn 7)
(emphasis added)
39. The status of the Competition Act in relation to conduct which may be subject to
another regulatory regime was definitively determined in the very case Sasol has
sought to rely on. In Telkom, Malan JA on behalf of the court said:
"Both the repeal of section 3(1)(d) and the introduction of section 3(1A)(a)
brought about a complete change from the earlier position. They are general
provisions intended to regulate the subiect-matter comprehensively and
intended to establish the general iurisdiction of the competition authorities
in all competition matters. The Competition Act applies to all economic
activity within or having an effect within South Africa. It provides for wide
powers and general remedies more effective than the limited ones given by
the Telecommunications Act."
(emphasis added)
40. Accordingly, whether regard is had to fundamental principles of interpretation, or to
the methodology to be applied. or to situations where presumptions apply in the case
of an apparent conflict between two statutory provisions, the court is not entitled, as
Sasol would have it, to bury its head in the sand and only look at one of the statutes.
It is obliged to consider both pieces of legislation and, as its first task, to attempt to
reconcile such conflict as may exist and if that is not possible because there is no
express provision doing so, then, and only then, can consideration be given to the
aids to interpretation regarding sector specific legislation or that the legislature
26
intended to alter existing law by necessary implication (as opposed to only a "possible
implication"26). 27
41. The court therefore cannot have regard to the Gas Act alone in order to determine if
its words were intended to preclude the jurisdictional scrutiny of the Competition Act
and its institutions, but is obliged to consider both statutes. In order to undertake the
required unitary exercise for the purposes of this case it is first necessary to determine
whether the two Acts are reconcilable. If they are, then that ends the matter and
questions as to whether there was an implied repeal of s 3(1A) of the Competition Act
bys 21(1)(p) do not arise.
42. In undertaking the enquiry it is necessary to have regard to the meaning of the words
used in their "context'.
In Makwanyane at para 13 Chaskalson P explained the meaning of context in relation
to interpretating legislation:
"Our Courts have held that it is permissible in interpreting a statute to have regard
to the purpose and background of the legislation in question.
'Certainly no less important than the oft repeated statement that the words
and expressions used in a statute must be interpreted according to their
ordinary meaning is the statement that they must be interpreted in the light
of their context. But it may be useful to stress two points in relation to the
application of this principle. The first is that 'the context', as here used, is
not limited to the language of the rest of the statute regarded as throwing
light of a dictionary kind on the part to be interpreted. Often of more
importance is the matter of the statute, its apparent scope and purpose,
26 Devenish at 161 under the heading" 2.2 Statute law' citing Kent and the other cases at ftn 43
27 See especially Devenish at 279 citing Sedgefield Ratepayer's and Voters' Association and others v Government of
the Republic of South Africa and others 1989(2) SA 685 ( C) at 700: " ... courts do not readily come to o conclusion
that there is an irreconcilable conflict, rather by using all means at their disposal they attempt to effect a
reconciliation."
27
and, within limits, its background. (Per Schreiner JA in Jaga v Donges NO
and Another (supra) at 662G-H )"'
(emphasis added)
In NJMPF Wallis JA qualified the notion that the court's interpretational function is
to discern the intention of the legislature and distilled the unitary enquiry to reading
"the words used in the context of the document as a whole and in the light of all
relevant circumstances"26. Constitutional Court and SCA cases still identify the
enquiry as one to glean the intention of the legislature although it may now be
understood in the more nuanced sense explained in NJMPF 29. I will also use it in
this sense.
WHETHER THE COMPETITION ACT AND THE GAS ACT ARE RECONCILABLE
43. The first enquiry is whether the two statutes are reconcilable.
Even if the enquiry commences with a consideration of s 21 (1 )(p) of the Gas Act, the
unitary nature of the interpretation al process requires the court to also have regard to
the provisions of s 3(1) and 3(1 A) of the Competition Act.
44. Since Sasol correctly concedes that the Gas Act does not expressly exclude the
operation of these umbrella provisions of the Competition Act, what remains is s
21 ( 1 )(p) which identifies that among the many conditions N ERSA is entitled to impose
as a requirement or limitation on the issue of a licence is its approval of a maximum
28 At para 24 read with paras 20 to 23
29 By way of illustration see Cool Ideas at para 36, Bato Star and Chisuse, Smit v Minister of Justice and Correctional
Services and othr?rs
2021 (3) BCLR 219 (CC) at para 121; KGA Life limited v Multisure Corporation (Pty) Ltd and others (Funeral
Federation of South Africa as Amicus Curiae) [2023] 4 All SA 613 (SCA) at para 36 and Mazars Recovery &
Restructuring (Pty) Ltd and others v Montie Dairy (Pty} Ltd (In Liquidation) and others [2022] JOL 55888 (SCA) at
para 30
28
price for distributors, reticulators and all classes of consumers where there is
inadequate competition as contemplated in Chapters 2 and 3 of the Competition Act.
45. At this initial stage three observations can be readily made regarding this provision.
The first is that, in it the legislature readily acknowledges the existence of the
Competition Act. The next is that it only refers to the Competition Act as a convenient
point of reference and statutory shorthand to identify the meaning which is to be
ascribed to the term "inadequate competition". Finally, despite being aware of the
Competition Act and therefore appreciative of its intent, purpose and reach into all
other legislation where the decision of a regulator may impact on a restrictive practice,
the drafters did not see fit to expressly exclude the concurrent jurisdiction of the
Commission or the collaborative agreement mechanism provided for in that Act.
46. As to the reach of the Competition Act, all the respondents submitted that the scope
of the Competition Act and the activities to which it applies are clearly set out in s 3
(1) which, in unambiguous terms states that the Act applies to;
" ... all economic activity within, or having an effect within, the Republic."
and expressly explains ins 3(1A) what occurs if an economic activity is also subject
to another regulator who in addition has jurisdiction over a practice prohibited in terms
of Chapter 2 or 3 of the Competition Act30. In such events 3(1A) directs that;
" ... this Act must be construed as establishing concurrent jurisdiction in respect
of that conducf'.
(emphasis added)
30 See the s 1 definition of "prohibited practice" in the Competition Act
29
47. It was further argued that the SCA decision of Compe tition Commission of South Africa
v Telkom SA Ltd and others [2009] ZASCA 155; [201 0] 2 All SA 433 (SCA) made two
significant observations with regard to s 3(1) and 3(1A) of the Competition Act which
are destructive of Sasol's position.
The first is that before the repeal of s 3(1 )(d) of the Competition Act (with effect from
1 February 200131) certain restrictive practices were immune from
the Competition Act "despite their anti-competitive aspects not being regulated by the
other regulatory authorities". 32
The other is that;
"The Legislature established the competition authorities as the primary authority in
competition matters and by introducing section 3(1A)(a) established that where
another regulator has jurisdiction over any area of matters covered by the
Competition Act their jurisdiction would be concurrent with that of the competition
authorities". 33
48. In other words, the legislature was aware that the Competition Act had excluded anti­
competitive behaviour which was subject to or authorised by public regulation from its
purview, but then took a deliberate decision by Act 39 of 2000 to no longer immunise
such behaviour from scrutiny under the provisions of the Competition Act. Instead, it
created a regime where even in such cases, the Competition Act wou ld enjoy
concurrent jurisdiction, the exercise of which would be addressed through the
agreements contemplated by ss 21 (h) and 82(1) to (3) .. In this way the legislature
expressly extended the range of economic activity to which the Competition Act
31 Competition Second Amendment Act 39 of 2000 which was assented to on 5 December 2000
32 Telkom at para 27. Prior to its repeal s3 (l)(d) read:
"(1) This Act applies to all economic activity within, or having an effect within, the Republic, except-
(d) acts subject to or authorised by public regulation: ... "
(emphasis added)
33 Telkom at para 27
30
applied to even those where anti-competitive behaviour remained subject to or was
even authorised by another regulator.
49. One of the significant issues dealt with in Telkom was whether the Commission
exceeded its powers by investigating a matter that fell w ithin the purview of another
regulator-on that occasion ICASA.34
A number of contentions were advanced to support Telkom's contention.
Telkom argued that ICASA had exclusive jurisdiction to deal with "uncompetitive
actions" covered by s 53(1) of the Independent Communications Authority Act 13 of
2000 ("the Telecommunications Acf');
a. despite s 9( 1 ) of the Competition Act covering the same conduct which
would otherwise be subject to the jurisdiction of the Commission,
Tribunal and this court35.
Telkom asserted, as does Sasol in the present case, that conduct
authorised under specific legislation will ordinarily not be conduct to
which a general enactment applies (generalia specialibus non
derogant). 36
b. despite Telkom being under investigation by the Commission for
allegedly breaching ss 8(b), (c) or (d)(i) of the Competition Act by
engaging in excessive pricing or price discrimination.37
34 Telkom at paras 1 and 12.
ICASA is the Independent Communication Authority of South Africa established in terms of s 67 of the
Independent Communications Authority Act 13 of 2000
35 See Telkom at para 31
36 Telkom at para 35
37 Telkom at para 6. It was alleged that Telkom had charged customers of Its own value-added network service
provider lower prices than it charged licensees and their customers for certain line rental services and also that it
had charged its own customers about half the price it charged private licensees and their customers for value­
added services and other competing products
31
As Sasol does in the present case, Telkom claimed that its alleged
excessive price fixing or price discrimination was regulated and
approved by ICASA under the functions entrusted to it by s 45 of the
Telecommunications Act.38
50. The SCA dealt with both issues, and unless distinguishable, its decision is binding.
Telkom and the exclusive jurisdiction argument
51. Reference was made earlier to the SCA's ratio in Telkom that section 3(1) of the
Competition Act contains words of great generality, that originally conduct subject to
or authorised by public regulation was excluded and that this was expressly changed
by the repeal of s 3(1)(d) and the introduction of s 3(1A).39
The SCA proceeded to deal with s 3(1A) and its establishment of concurrent
jurisdiction in cases where the same conduct is susceptible to the jurisdiction of
another regulatory authority. It considered the situation by reference to the primary
object of the Telecommunications Act and it's functioning.40
After referring to the same conduct falling within Chapter 2 of the Competition Act, the
SCA addressed Telkom's argument that ICASA enjoyed exclusive jurisdiction to deal
with the conduct complained of by reason of the application of the generalia
specialibus non derogant maxim. It did so in the following manner:
"The implication of exclusivity contended for will be refuted where it is clear that
the intention is that the later general enactment should regulate the subject-matter.
Where this is the position the later enactment necessarily supersedes the earlier
specific legislation to the extent that they may differ. Both the repeal of section
38 Telkom at para 34
39 Telkom at para 27
40 Telkom at paras 31 and 32
32
3(1 )(d) and the introduction of section 3(1A)(a) brought about a complete change
from the earlier position. They are general provisions intended to regulate the
subiect-matter comprehensively and intended to establish the general iurisdiction
of the competition authorities in all competition matters. The Competition Act
applies to all economic activity within or having an effect within South Africa. It
provides for wide powers and general remedies more effective than the limited
ones given by the Telecommunications Act. There is no room for the implication of
exclusive jurisdiction vested in /CASA contended for. The authorising legislative
and other provisions Telkom relied upon did not oust the jurisdiction of the
Commission and the Tribunal but could well give rise to defences to the complaints
referred. The competition authorities not only have the required jurisdiction but are
also the appropriate authorities to deal with the complaint referred."
(emphasis added)
52. The highlighted portion of the judgment, when considered in the context of the broad
issue concerning the purpose and function of the Commission, the Tribunal and this
court ( dealt with in the later paragraphs of Telkom41 ), makes it clear that the legislature
intended the statute to "establish the general jurisdiction of the competition authorities
in all competition matters"42 because of the specialist knowledge required by members
of its various bodies tasked with what may be complex and technical matters in order
to apply and enforce its provisions from the investigative and referral stages to the
adjudicative phases (in the first instance presided over by a specialist administrative
tribunal and then to this specialist court).43
53. The SCA fully recognised that if the Competition Act could be by-passed in relation to
any anti-competitive behaviour then so too would its specialised adjudicative bodies,
which in the case of the Tribunal is presided over not only by lawyers but by other
specialists and does not sit as an ordinary court but is inquisitorial and plays "an active
41 Telkom at paras 36 to 38
42 Telkom at para 35
43 Telkom at paras 36 to 38
33
role ... in protecting that (i.e. the public) interest.44 . It also noted that the competition
authorities are provided with w ide powers and general remedies (see s 27(1 )(a))
which are more effective than those under the Telecommunications Act.45
54. Mr. Snyckers for Sasol could not suggest any distinguishing feature between the Gas
Act and the Telecommunications Act or the regulatory powers of NERSA when
comp ared to ICASA save that the Competition Act preceded the enactment of the Gas
Act whereas it proceeded the Telecommunications Act.
While that is correct, it does not engage the ratio of Telkom set out earlier; name ly that
the object and purpose of the amendment was to take away exclusive jurisdiction from
all regulatory authorities to deal with conduct amou nting to anti-competitive trade
practices under Chapters 2 or 3 and to confer concurrent jurisdiction to the institutions,
established under the Competition Act. This will be reverted when considering the
context of both the Gas Act and the Competition Act.
55. But even the argument that subsequent sector specific legislation may by necessary
inference repeal other exiting laws overlooks the prior question which must asked
before this interpretational aid is triggered: Where is there any indication that the Gas
Act intended to confer exclusive jurisdiction on NE RSA when Telkom tells us that the
Competition Act is the specialised legislation which, at least since the introduction of
s 3(1 A) (and repeal of s 3(1 )(d)), qualifies all other laws that purport to vest exclusive
jurisdiction in other regulatory bodies to deal with anti-competitive practices?
It certainly cannot be inferred from the Gas Act as a necessary, as opposed to even a
possible, interpretation of the legislature's intention. This is not a case where remedial
or consolidated legislation is enacted some years later justifying the irresistible
conclusion that Parliament was we ll aware of the provisions found in s 3(1A) of the
44 Telkom at para 38
~s Telkom at paras 35 and 38
34
Competition Act and the reason for the repeal of s 3(1 )(d), yet took a conscious step
to exclude its impact on N ERSA by means of enacting 21 ( 1 )(p) into the Gas Act. 46
Where the coming into effect of the Competition Act preceded that of the Gas Act by
a number of months, such a conclusion would be highly speculative and certainly
cannot support an argument that Parliament must have intended the latter to replace
the former, which ultimately is the object of establishing meaning to a statute; i.e. to
discern the intention of the legislature. 47
In order to support such an argument in circumstances where legislation followed each
other in short succession, it wou ld be necessary in my view to produce evidence
regarding the passage of the Bills, the existence of any White Papers, proceedings
before separate or joint Portfolio Committees during the passage of the Bills prior to
their enactment and Hansard in order to demonstrate whether the drafters of the two
pieces of legislation48 and the National Assembly during its debates were or were not
aware of the prior passage of the Competition Act.
56. While the Gas Act may be sector specific legislation, Telkom is clear that the
Competition Act is specialised legislation intended to comprehensively regulate its
subject matter to all economic activity, which includes anti-competitive trade practices
in the nature of restrictive practices, and that it is preferable to use specialist structures
46 It may well be thats 3(1)(d) was repealed ands 3(1A) was introduced because of the decision in Standard Bank
Investments Corporation lld v Competition Commission and others [2000) 1 All SA 494 (T) ( a judgment which came
out on 7 February 2000). The court there found that because of the clear wording of the ouster provision
contained ins 3(1)(d), the wide wording of s 3(1)(a) of the Competition Act was insufficient to deprive the Minister
of Finance from exercise exclusive regulatory powers under section 37 of the Banks Act 94 of 1990 in
relation to mergers and acquisitions and, for the same reason, an argument of concurrent jurisdiction also
failed
47 The amendments to the Competition Act by Act 90 of 2000 which repealed s 3(1)(d) and introduction of s 3(1A)
were assented to on 5 December 2000 and commenced on 1 February 2001. The Gas Act 48 of 2001 was assented
to on 12 February 2001 which was less than two weeks after the Competition Act had come into law.
48 The definition of "Minister" was substituted by s. 1 (g) of Act No. 18 of 2018 to mean "The Minister
responsible for the administration of the Act"
35
which have been "designed for the effective and speedy resolution of particular
disputes". 49
57. Sasol however contends that, if the Commission has jurisdiction over the piped-gas
industry then it's decision would amount to an impermissible review of NERSA 's
maximum pricing determination since it has no powers of review.
The argument does not support there being an irreconcilable difference between the
two statutes. The functions of NERSA and the Commission differ materially. NERSA's
function is to grant licences in order to "promote the development of competitive
markets for gas and gas services" as well as to regulate prices in terms of s 21 ( 1 )(p)
when issuing a licence in a market where there is inadequate competition50.
Context where there is an apparent conflict between legislation
General
58. It has already been mentioned that case law requires a unitary interpretational process
which must have regard to both the language used and to context.
By context is meant (per Makwanyane at para 13) not only considering the language
of the rest of the statute but also, and possibly of greater importance, "the matter of
the statute, its apparent scope and purpose, and, within limits, its background".
59. Telkom considered the scope and purpose of the Competition Act. This has already
been dealt with: The SCA found that the legislature intended the Act to establish the
general jurisdiction of the competition authorities in all competition matters because
of the specialist knowledge required by members of its various bodies tasked with
what may be complex and technical matters in order to apply and enforce its
49 Telkom at paras 35 and 36
so Sections 2(h) and 4(g) of the Gas A ct
36
provisions from the investigative and referral stages to the adjudicative phases while
also retaining the broader range of remedies provided under that Act.
NERSA and the Gas Act
60. In National Energy Regulator of South Africa and Another v PG Group (Pty) Limited
and Others 2020 (1) SA450 (CC) ("PG Group") the Constitutional Court had occasion
to consider the provisions of the Gas Act in relation to piped gas.
The background to the procurement by Sasol of piped-gas from Mozambique in terms
of a pipeline agreement with the Mozambican Government has already been dealt
with. The agreement was conditional on it being binding on NERSA for a period of ten
years. This was achieved by the inclusion of suitable provisions to the Gas Act which
was in embryonic form at that time.
Because the implementation of the agreement wou ld result in Sasol enjoying a
monopoly in the distribution of piped-gas, it was recognised that there would be
inadequate competition in this market and that for as long as the situation prevailed
NERSA would be required to regulate and approve the maximum price in the
prescribed manner as one of the conditions for the grant of the licence to Sasol (being
a regulated entity as defined).
These considerations were statutorily entrenched through ss 4(g) and s 21 ( 1 )(p} of
the Gas Act.
Section 4(g) provides:
4. The Gas Regulator must, as appropriate, in accordance with this Act-
(g) regulate prices in terms of section 21 (1) (p) in the prescribed manner
37
61. Regulations were promulgated under Government Notice 321 of 20 April 2007.
Regulations 4(3) and (4). set out the principles and procedures NERSA was obliged
to apply when regulating prices under s 21(1)(p).
62. In PG Group the Constitutional Court set out the process by which the maximum
gas prices were determined once NERSA had found that there ·was inadequate
competition in the piped-gas market.51
After NERSA determined that there was inadequate competition, the next step was
initiated by Sasol when it applied to NERSA for a determ ination of its maximum gas
price. In its application Sasol elected to use the basket of alternatives method and not
the pass-through approach for the determination of its application.52
NERSA then proceeded to first decide on the methodology to be applied. This was
determined after inviting public comment. NERSA published the reasons for
determining the appropriate methodology to be the basket of alternatives approach. It
is referred to as the Maximum Pricing Methodology.
The next and final interrelated determination made by N ERSA was to decide on
Sasol's Maximum Price Application.
63. The Constitutional Court also identified the matters which NERSA was obliged to
consider in making its determinations as set out in Regulations 4(3) and (4).
In summary, under Regulation 4(3) NERSA must, when approving the maximum
prices, be objective (i.e. based on a systematic methodology applicable on a
consistent and comparable basis), be fair, be non-discriminatory, be transparent, be
predictable and "include efficiency incentives". Regulation 4(4) then significantly adds
51 PG Group at paras 10, 14, 15, 17 and 18
52 The distinction between the two is set out in paras 15 and 16 of the judgment. The basket of alternatives had
regard to indicator prices in a basket of alternative sources of fuels while the pass-through approach adopts a
"cost plus percentage" method
38
that the maximum prices referred to in sub-regulation (3)" musf' enable the licensee
to recover all efficient and prudently incurred investment and operational costs and in
addition make a profit commensurate with its risk.
64. It is therefore evident that under the Gas Act the licensee initiates the application and
sets out what it considers to be the appropriate methodo logy as well as producing the
data it w ishes to rely on to motivate its application for a maximum price that should be
regulated by NERSA.
In this regard it is significant that Regulation 4(7) requires the licensee to provide
NERSA with sufficient information to enable it to determine maximum prices.
Moreover NERSA 's function is to approve a maximum price pursuant to an application
made to it by a licensee. Its determinations are the exercise of a discretionary power
which must be taken within the four corners of the Gas Act as read with Regulations
4(3) and (4).
65. In PG Group the Constitutional Court identified NERSA's objective as being:
"to promote the development of a competitive market for gas and gas services in
South Africa on an equitable basis considering the interests and needs of all
parties concerned. Where there is inadequate competition in the gas market,
nurser is required to regulate and approve maximum gas prices dash which it does
in accordance with the maximum pricing methodology it adopted. "53
Ms Le Roux on behalf of NERSA also drew attention to the preamble of the Gas Act
which identifies as its purpose:
"To promote the orderly development of the piped gas industry; to establish a
national regulatory framework; to establish a National Gas Regulator as the
53 PG Group at paras 41 and 42 referencing ss 2 (e) to (h) and 4{g) and (j) of the Gas Act
39
custodian and enforcer of the national regulatory framework: and to provide for
matters connected therewith."
(emphasis added)
66. NERSA exercises a discretionary power which is subject to review on grounds of
legality and irrationality and its determination of a maximum pricing methodology is
not law but a guideline made in accordance with its empowering legislation which
meant that it enjoyed a " discretion not to rigidly apply the methodology if its
application would lead to irrational or otherwise unlawful results. "54
The argument that NERSA had been concerned with prices for individual consumers
whose alternative energy choices were considerably more expensive than those of
other consumers and that it had successfully brought those higher prices under control
through its maximum price decision, was therefore found by the Constitutional Court
to be a rational consideration. 55
67. One of the accepted means by which the purpose of a statute is determined is to
inquire as to the mischief sought to be addressed.
Where there is introduced a provision such as s 3(1 A) which immediately affects
every existing statutory provision whereby a regulatory authority had jurisdiction in
respect of conduct regulated under Chapters 2 and 3 of the Competition Act, then the
first question to be asked is what mischief did the introduction of s 3(1A) and the repeal
of s 3(1)(d) seek to address. That question was answered in Telkom . The next
question therefore is what mischief could the legislature have in mind in relation to
NERSAwhich differs from all other regulatory regimes affected bys 3(1A) that should
set it apart from them. Sasol did not suggest any.
54 PG Group at para 33
55 PG Group at para 54
40
The Commission and the Competition Act
68. In perform ing its investigative pow ers in relation to alleged prohibited practices the
C ommission must have regard to the ma tters set out in s 8(3) in order to determine if
a price is excessive. Section 8(3) provides:
8 (3) Any person determining whe ther a price is an excessive price must
determine if that price is higher than a competitive price and whether such
difference is unreasonable, determined by taking into account all relevant
factors, which may include-
( a) the respondent's price-cost margin, internal rate of return, return on
capital invested or profit history;
(b) the respondent's prices for the goods or services­
(i) in markets in which there are competing products;
(ii) to customers in other geographic markets;
(iii) for similar products in other markets; and
(iv) historically;
(c) relevant comparator firm's prices and level of profits for the goods or
services in a competitive market for those goods or services;
(d) the length of time the prices have been charged at that level;
(e) the structural characteristics of the relevant market, including the
extent of the respondent's market share, the degree of con testability
of the market, barriers to entry and past or current advantage that is
not due to the respondent's own commercial efficiency or investment,
such as direct or indirect state support for a firm or firms in the
market; and
( f) any regulations made by the Minister, in terms of section 78
regarding the calculation and determination of an excessive price.
41
Considerations differ
69. As pointed out by both Mr. Ngcukaitobi for the Commission and Mr Wilson for
IGUASA , the factors mentioned in s 8(3) of the Commission Act are not expressly to
be found in NERSA's discretionary remit.
Furthermore, the fact that the Gas Act has as its object the development of a
competitive market does not mean that NERSA has usurped the Commission's
powers and functions. On the contrary, a similar provision in the Telecommunications
Act did not dissuade the SCA from finding that the Competition Act still retained its
jurisdiction over that sector.
70. As already demonstrated in PG Group, the factors which NE RSA is obliged to take
into account differ from those which the Commission must consider in performing its
functions and exercising its powers
71. In addition, as Mr Ngcukaitobi pointed out, the powers enjoyed by the competition
authorities extend well beyond those of NERSA. They include the power to interdict
prohibited practices, declare agreements void and direct a firm to supply goods on
reasonable terms, while NERSA's remedies to regulate a market where there is
inadequate competition are limited. 56
Counsel pointedly referred to the power which the Tribunal has to declare conduct a
prohibited practice with the consequence that an affected party may claim damages
under s 65 of the Competition Act; a power absent under the Gas Act. 57
56 Compare Telkom at paras 31 and 35
57 Mr Ngcukaitobi also argued that as a matter of statutory interpretation an outcome which preserves access to a
civil court is to be preferred to one that does not and cited the Constitutional Court case of Competition
Commission of South Africa v Pickfords Removals SA (Pty) Limited 2021 (3) SA 1 (CC) at para 41 which is wholly
applicable:
" The interpretation of s 67(1) of the Competition Act as an absolute time bar would thus not only limit the
Commission's access to the Tribunal, but also access to a civil court for potential claimants seeking
42
72. Accordingly, the Gas Act and its Regulations require NE RSA to apply different
considerations when it exercises its discretionary powers to those which the
Commission is required to consider.
This also addresses Sasol's argument that ifs 3(1A) extended to the Gas Act then
the Commission wou ld be reviewing NE R SA's decision. This cannot be the case
because the factors each is required take into account differ. Furthermore, Mr. Wilson
who appeared with M r. Meiring for IGUASA correctly argues that if the Tribunal were
to find that the price charged by a producer is excessive this does not give it the power
to undo the licence wh ich NERSA issued even if it refers to a higher maximum price.
73. It is therefore evident that NERSA's functions, duties and powers under the Gas Act
are sufficiently different to those of the Commission, the Tribunal and this court under
the Competition Act. Moreover, considerations which NERSA is entitled to take into
account differ considerably from those to which institutions established under the
Competition Act must have regard. Even how NERSA gathers its data to determine a
maximum price initially takes into account the interests of the licensee.
THE UNIQUE NESS OF s 3(1A) AND CO NCURRENCY
7 4. Perhaps the most fundamental difficulty facing Sasol lies in both the unique provisions
of s 3(1A) and the general nature of legislation.
75. Unlike other legislation, s 3(1A) expressly recognises the existence of conflicting
statutes and intrudes on their jurisdiction by providing an over-arching mechanism to
address this very situation.
damages arising from a prohibited practice. The far-reaching impact of that interpretation is a further
reason for preferring the procedural time-bar interpretation."
43
The solution provided by s 3(1A) is to recognise in the first place that institutions
established under other statutes will enjoy concurrent jurisdiction and then to provide
a mechanism to manage such concurrency by way of individual agreements
concluded between the Commission on the one hand and the respective regulatory
authority on the other. Each therefore wou ld approach the subject matter from its own
unique legislative perspective.
76. In Wary Holdings (Pty) Ltd v Stalwo (Ply) Ltd and another 2009 (1) SA 337 (CC) the
Constitutional Court found no difficulty in one "sphere of controf' operating from its
own perspective while another sphere of control with its own legislative considerations
operates in respect of the same subject matter from a different perspective. The court
said at para 80:
"There is no reason why the two spheres of control cannot co-exist even if they
overlap and even if, in respect of the approval of subdivision of 'agricultural land',
the one may in effect veto the decision of the other. It should be borne in mind that
the one sphere of control operates from a municipal perspective and the other from
a national perspective, each having its own constitutional and policy
considerations."
Adv G Budlender SC on behalf of the Tribunal, when this case came before it for the
urgent interdict under Part A, applied Wary Holdings and said that:
"The Constitutional Court held that both authorities must exercise their powers,
even though they were dealing with a virtually identical matter, namely, the
desirabfllty or permissibility of the subdivision of agricultural land. The two
authorities would no doubt approach the matter from a slightly different
44
perspective - the national government from the perspective of national policies on
the preservation of agricultural land, and the municipal government from the
perspective of land use planning more generally. "58
77. By reason of the unique provisions of the Competition Act it is also difficult to apply
any sector specific considerations as an aid to interpretation.
While the Gas Act may be sector specific, s 3(1) read with 3(1A) of the Competition
Act is in turn specifically made to apply to all restrictive practice investigations
irrespective of the specific sector implicated-if one will, an umbrella provision
impacting all other statutes which fall within its purview.
This mechanism dovetails neatly with Constitutional requirements that all spheres of
government and all organs of State within such sphere must inter alia exercise their
powers and perform their functions in a way that does not encroach on the
"geographical, functional or institutional integrity of government in another sphere" but
facilitates cooperation with one another based on mutual trust and good faith. This
includes "co-ordinating their actions and legislation with one another ... adhering to
agreed procedures and ... avoiding legal proceedings against one another''. 59
78. In addition, as with all legislation, s 3{1A) is also forward looking.
Legislation is intended to deal not only with present exigencies but to regulate future
conduct and affairs in a changing world to the extent that they can be said to have
been contemplated or envisaged by the legislature.60
The introductory words of s 3(1A) are unambiguous:
58 lndustria/ Gas Users Association of Southern Africa v Sasol Gas (Proprietary} limited and Others [2023] ZACT 55
at para 43
59 See generally Chapter 3 of the Constitution and in particular ss 40(2) and 41(1)(g) and (h)(iv) to (vi)
60 Malcolm v Premier, Western Cape Government 2014 (3) SA 177 (SCA) at para 11
45
In so far as this Act applies to an industry, or sector of an industry, that is
subiect to the jurisdiction of another regulatory authority, .... this Act, this
Act must be construed as establishing concurrent jurisdiction in respect of
that conduct.
(emphasis added)
It did not limit the application of the Act to only an industry that was subject to the
jurisdiction of another regulator at the time of its introduction. If the legislature intended
that, then it wou ld have said so. The provision is intended to apply for as long as it
remains on the statute books. If at some date after its enactment the legislature wished
to exempt a regulator from the concurrent jurisdiction provisions of s 3(1A) then that
had to be expressed in the clearest terms to overcome its unique purpose and explicit
wording. This was recognised in Telkom. However s 21 (1 )(p) is not such a provision.
79. In this regard, Telkom did not only consider the object and purpose of s 3(1A) but
also considered the effect of the concurrent jurisdiction provision introduced by the
section and the memorandum of agreement concluded between the
telecommunication regulator and the Commission pursuant to it and as read with ss
82(1) and (2) .
In that agreement the Comm ission would deal inter alia with complaints of abuse of
dominance and that non-compliance with the procedures contemplated in its
provisions would not detract from the Commission's jurisdiction over the matter. 61
Once the SCA established that the conduct of Telkom concerned alleged
contraventions of s 8 and 9 of the Competition Act, including abuse of dominance62, it
confirmed that the Tribunal was the appropriate forum to decide the matter.
61 Telkom at para 21
62 Telkom at paras 30 and 35
46
Non-application of the interpretational aids relied on by Sasol
80.There is therefore no irresoluble conflict between the provisions of s 21(1)(p) of the
Gas Act and ss 3(1) and 3(1 A) of the Competition Act which would trigger an
application of the interpretational aid that a later enactment necessarily supersedes
earlier legislation or that specific legislation alters an existing general statute
(applications of the generalia specia/ibus non deroganf' and lex posterior derogant
priori maxims). 63
The two statutes are capable of being resolved on an application of Telkom, having
regard to the specialised nature of the institutions established by the Competition Act
in relation to abuse of dominance and the other conduct mentioned in Chapter 2 and
3 and the concurrent jurisdiction mechanism-unless that is otherwise resolved by the
conclusion of an agreement as contemplated by 3(1A) read with ss 8(1) and (2).
81. Perhaps a more important consideration, if aids to the interpretational process are
invoked, is that Sasol's argument would ouster this court's jurisdiction to finally
determine (subject to an appeal to the apex court) a restrictive practice or merger
case falling under Chapters 2 and 3 or to provide effective remedies. Howe ver, in our
law the ouster of a court's jurisdiction must be in unambiguous terms because there
is a strong presumption against it.64
82. This puts an end to Sasol's argument that NERSA enjoys exclusive jurisdiction. The
fact that the Commission may only enjoy concurrent jurisdiction remains destructive
of its case.
63 Devenish at p280 mentions that it is only where it is impossible to construe two statutory provisions together,
because of an inescapable inconsistency between them, that the later statute is usually regarded as impliedly
repealing the earlier one, or as amending it to the extent necessitated by the inconsistency. The two maxims
concerned in resolving a conflict are "generalia specialibus non derogant" (a general statute should not be
interpreted in such a way as to alter specific provisions of an earlier statute or of the common law) and lex
posterior derogant priori (a later statute amends an earlier one).
&1 Competition Commission of Sout Africa v Group Five Construction ltd (2022) ZACC 36 at para 115.
47
The Memorandum of Agreement
83. Once the primary legislation contained in both statutes is readily resoluble on the basis
that the Competition Act enjoys concurrent jurisdiction, it becomes permissible to have
regard to the terms of the memora ndum of agreeme nt ("MoA") between the
C om m ission and N ER SA contem plated by the C ompetition Act.
84. The agreement was signed in Pretoria and came into effect on 5 May 2021.65
The principal provisions in the agreement which deal with jurisdiction are to be found
under the sections headed Purpose of the Agreement, Legislative Framework,
Complaints and Legal effect.
They are all to the effect that the Commiss ion enjoys jurisdiction to investigate and
evaluate alleged prohibited practices in respect of comp laints lodged with it so as to
give effect to the Competition Act. This is clear from the following clauses:
Purpose of the Agreement
2. 1 This agreement is entered into to establish the manner in which the Commission
and NERSA will interact with each other to enable both regulatory authorities 2,
inter alia;
2. 1.1 effectively coordinate the exercise of the commission's jurisdiction and
powers when taking decisions on competition matters within the energy
sector;
Legislative Framework
4. 1 The Commission has jurisdiction to investigate and evaluate alleged
prohibited practices within any industry or sector, to grant or refuse
65 See cl 16 of the agreement wh ich provides that the effective date is when the last party signs.
48
exemption applications, and to review mergers within any industry or sector
in terms of section 21 (1) of the Competition Act. Accordingly, NERSA agrees
that the Commission shall exercise its iurisdiction as provided for in terms
of section 21 (1 J of the Competition Act. to investigate and evaluate alleged
prohibited practices, to grant or refuse exemption applications, and to
review mergers within the energy sector
4.3 This agreement shall in no way affect the independence and exercise of
statutory powers by the two regulatory authorities in terms of their enabling
legislation
Complaints
8. 1 Where a complaint is lodged regarding a practice or conduct in respect of
which either the Commission and NERSA have iurisdiction and the other
one or either of the authorities has an interest in the complaint, the following
process will be followed to the extent possible:
8.1.1 the complaint may lodge with the regulator that has iurisdiction
("recipient regulator'?
8. 1. 5 if the Commission is the recipient regulator that has jurisdiction, it
may in its discretion liaise and consult with NERSA;
8. 1. 6. The Commission and NERSA may, upon request from each other,
participate in each other's proceedings in an advisory capacity;
8. 1. 7. 1 the Commission is to exercise primary authority to investigate and
evaluate alleged prohibited practices to give effect to the Competition
Act: and
49
8.1. 7.2 NERSA has primary authority to exercise powers and perform
functions assigned to it in terms of the energy act, the electricity act,
the gas act and the petroleum pipelines act in order to give effect to
its relevant objectives and provisions contained therein;
8.1.10 In the event that the matter is dealt with by the Commission,
representatives from NE RSA may, at the request of the Commission,
participate in the matter through, inter alia, attending meetings when
required, providing inputs during the case investigation and making
representations at the competition tribunal hearing, if necessary;
8. 1. 12Tthe decision by any of the parties to consult the other regulator shall
be discretionary and voluntary, and either party shall be entitled, with
or without consultation, to make its independent decision in respect
to the complaint in terms of its enabling legislation;
8. 1. 13 Nothing in the consultation procedures contemplated herein, should
detract from the jurisdiction of the Commission or the jurisdiction of
NERSA to receive and deal with complaints in terms of their enabling
statutes as they deem fit, or preclude the public from lodging
complaints with both the Commission and NERSA
Legal Effect
20. 1 This agreement is not intended to be a legally enforceable document
and intends to describe the nature and cooperative intentions of the
parties involved, and to suggest guidelines for cooperation. Nothing
therefore shall diminish the full autonomy of either party nor may
constrain either party from discharging its statutory functions.
(emphasis added)
so
85. It is therefore clear that the MoA does not resurrect N ERSA's exclusive jurisdiction.
Quite the contrary. It records NERSA 's agreement that any complaint lodged with the
Competition Tribunal involving an alleged prohibited practice will be dealt with by the
latter as it deems fit. There are other provisions (such as cl 8.1.1 OJ which enable
NERSA to participate in the Commission's proceedings and to co-operate with one
another.
86. A further aspect is that the MoA signed by NERSA and the Commission is not without
consequences.
While it is accepted that Clause 20 states that the MoA is not a legally enforceable
document (and accordingly Sasol would not have to apply to first set it aside), the
agreement does acknowledge that each authority has full autonomy in discharging its
statutory functions.
If Sasol's argument of exclusive jurisdiction was correct, then the co-operative
governance provisions of Chapter 3 of the Constitution would be triggered. The
inevitable outcome would be a resolution in accordance with s41 (3), an outcome
unlikely to be much different from the MoA placed before the court.
NERSA's concerns
87. NERSA filed papers to assist the court. One of the matters it raised was that legislation
dealing with concurrent jurisdiction could be improved by having regard to the United
Kingdom model which has developed a comprehensive concurrency regime through
Regulations and the publication of Guidelines. It however accepts that while our
legislation is not as streamlined, NE RSA adopts the terms of the MoA and in so doing
recognises that the Commission enjoys the jurisdiction to investigate and pursue the
complaints because they were lodged with it and not NERSA.
51
88. NE RSA did however submit that its Maximum Pricing Directive and presumably its
Max imum Pricing Methodology constitute "the structural characteristics of the relevant
market". Firstly this assumes that they accord with the ratio in PG Group66. However
nothing further needs to be said about it as these matters are not before us.
CONCLUSION
89. A unitary interpretation of the two statutes does not produce any anomalies but
rather reveals a consistent understanding of the intention of the legislature in
introducing s 21 (1 )(p) of the Gas Act and in introducing 3(1A) while at the same time
repealing s 3(1 )(d) of the Competition Act. And in doing so, the legislature did not
reverse its position in respect of NERSA but maintained the consistent approach
whereby the Commission and regulators in a sector which exercised jurisdiction in
respect of conduct regulated under Chapters 2 and 3 of the Competition Act would
both enjoy concurrent jurisdiction, the mechanism of which would be set out in an MoA
between them.
ORDER
90. In the result the following order is made
"1. The application is dismissed.
2. The decision of the Competition Commission to investigate the complaints
lodged by IGUASA and Egoli Gas as well as the issuing of the summons
stands.
66 In an earlier footnote mention was made that Sasol did not apply NERSA's maximum rate because it claimed that
N ERSA's adjustment would negatively impact Sasol customers "as well as the rationality test methodology".
52
3. The applicant is ordered to pay the costs of the first and second
respondents, including the costs of two counsel where applicable
SP ILGAJA
DAVIS AJA (POTTERILL AJJA concurring)
[1] I have had the distinct pleasure of reading the judgment of my brother Spilg AJA.
I agree with the order which he has proposed but, as I have arrived at my conclusion for
different reasons, I hereby set out my justification for concurring with his order.
[2] The facts have been set out carefully and comprehensively in Spilg AJA 's
judgment. Hence I merely set out those facts which are relevant to the understanding of
the reasons that I have employed for the conclusions to which I have arrived.
[3] The fourth respondent ('NERSA') is mandated in terms of s 21 (1) (p) of the Gas
Act 48 of 2001 ('the Gas Act') to determine the maximum price that licensees which sell
pipe gas such as the applicant ('Sasol Gas') can charge to consumers. On 21 March
2001 NERSA determined the max imum gas price for the period 1 July 2021 to 30 June
2022 mat Sasol Gas could charge to its customers which included the members of the
second respondent ('IGUASA') and the third respondent ('Egoli Gas'). Dissatisfied with
53
this determination, IGAUSA and Ego li Gas lodged complaints in terms of s 49 B (3) of
the Competition Act 48 of 1998 of ('the Competition Act'). They alleged that the gas price
charged to them by Sasol Gas constituted an excessive price in breach of as 8 (1) (a) of
the Competition Act. Following these complaints, the Competition Commission ('the
Commission') commenced an investigation of the prices charged by Sasol Gas and
requested information from the latter which the Commission considered to be relevant as
to the determination whether the complaints of excessive pricing could be justified.
[4] Sasol Gas refused to provide this information and contended that the Commission
had no jurisdiction to investigate Sasol Gas' prices in the light of the determination that
had been made by NERSA. As set out in the judgement of Spilg AJA the dispute which
arose resulted in a transfer of the review application brought by Sasol Gas from the
Competition Tribunal to this Court. In terms of its review application, Sasol Gas seeks to
set aside the Commission's decision to investigate the complaint which was lodged. It
argued that it is not competent for a NERSA regulated price to be investigated in terms of
the prohibited practice provisions of s 8 of the Competition Act and that, in any event, the
only regulator that is possessed with jurisdiction over gas prices is NERSA and not the
Commission.
The relevant legislation
[5] Section 4 (g) of the Gas Act provides that the Gas Regulator must regulate prices
in terms of s 21 (1) (p) in the described manner. Section 21 (1) (p) of the Gas Act provides:
'The Gas Regulator may impose licence conditions within the following
framework of the requirements and limitation:
(a) ...
(p) maximum prices for distributors, reticulators and all classes of consumers must
be approved by the Gas Regulator where there is inadequate competition as
contemplated in Chapters 2 and 3 of [the Competition Act].' (my emphasis)
54
[6] The manner in which NERSA is required to determine gas prices is set out in
Regulation 4 of the Pipe Gas Regulations. In particular, Regulation 4 (4) sets out the
maximum prices that must enable licensees to recover all efficient and prudently incurred
investments and operational costs and make a profit commensurate with its risk.
[7] Turning to the Competition Act, s 8 (1) provides that it is prohibited for a dominant
firm to charge an excessive price to the detriment of consumers or customers. Section
8(3) provides that any person determining whether a price is an excessive price must
determine if that price is higher than a competitive price and whether such difference is
unreasonable by taking into account all relevant factors. Section 8 (2) (a) - (f) then sets
out a number of factors which should be considered by the Commission in the
assessment of a complaint relating to an excessive pricing brought in terms of s 8 (1) (a)
of the Act.
The question of concurrent jurisdiction
[8] It is apparent from this brief description of the relevant legislation that both
regulators have a power to investigate the question of prices relating to gas. The Gas
Act specifically empowers NERSA to do so. Section 3 (1) of Competition Act provides
that the Act applies to all economic activity within or having an effect within the Republic.
Manifestly, this provides the requirements for subject matter jurisdiction relating to
complaints brought before it. The setting of gas prices within South Africa clearly falls
within the scope of s 3 (1) of the Competition Act.
[9] It is for this precise reason that the Competition Act sought to reconcile the problem
of potential competing jurisdictions by way of s 3 (1) A of the Competition Act which
provides:
(a) in so far as this Act applies to an industry, or sector of an industry, that is subject
to the jurisdiction of another regulator, which authority has jurisdiction in respect of
conduct regulated in terms of chapter 2 or chapter 3 of this Act, this Act must be
construed as establishing concurrent jurisdiction in respect of that conduct.
55
(b) The manner in which the concurrent jurisdiction is exercised in terms of this Act
and any other public regulation, must be managed, to the extent possible, in
accordance with any applicable agreement concluded in terms of s 21 (1) (h) and
82 (1) and (2).
[1 O] It should also be noted that in terms of s 21 (1) (h) of the Competition Act, the
Commission is empowered to enter into a Memorandum of Agreement with another
regulator such as NE RSA in order to 'negotiate agreements with any regulatory authority
to coordinate and harmonise the exercise of jurisdiction over competition matters within
the industry or sector and to ensure the consistent application of the principles of this Act.
[11] An agreement pursuant thereto has been concluded between the Commission and
NERSA; in particular clause 2.1.1 of the Memorandum of Agreement provides:
'That the Commission and NERSA 'will interact with each other to enable both
authorities to, inter alia, effectively coordinate the exercise of the Commission's
jurisdiction and powers when taking decisions on competition matters within the
energy sector.'
[12] Read together these sections are evidence that the Memorandum of Agreement
between NE RSA and the Competition Commission endorsed a co-ordinated response to
the relevant exercise of their respective jurisdictions.
The issue in dispute
[13] The crisp question for determination by this Court is whether, notwithstanding the
recognition of concurrent jurisdiction and hence the provisions of s 3 (1) A of the
Competition Act, NERSA has exclusive jurisdiction to determine the maximum price which
Sasol Gas charge for its gas product.
56
[14) On behalf of ·sasol Gas, Mr Snyckers who appeared together with Mr Quilliam,
submitted thats 21 (1) (1) (p) of the Gas Act intended N ER SA to have sovereignty over
competitive gas prices. In his view, for another body, such as the Commission, to have
the power to determine whether a price charged consistent with the N ERSA determined
maximum price was excessive, as understood in terms of the Competition Act, would
'undeniably legally' have the effect of undoing the legal consequences of NERSA's
determination. Following the NE RSA determination, charging its price is lawful in addition
to it being a competitive price. In other words, for Sasol Gas to be confronted with this
situation whereby a price sanctioned by NE RSA could still be considered to be excessive
by the Commission was to produce a consequence which undermined the very purpose
of s 21 (1 )(p) of the Gas Act.
(15] Two significant judgments shaped the entire debate concerning the outcome of
this dispute. Accordingly, Mr Snyckers was constrained to contend that both judgments
were in favour of the submissions which he had made. It is to these that I must turn.
The Telkom Case
(16] In Competition Commission of South Africa v Telkom SA Ltd and others [2009]
ZASCA 155 the question of the relationship between the Commission and lcasa had to
be considered by the Supreme Court of Appeal. It had been suggested that the subject
matter of the dispute which related to Telkom's licenses and Telkom's powers in terms of
the Telecommunications Act was the sole responsibility of lcasa. The argument was
summarised thus by the Court:
'Because of its specialised expertise in the field of telecommunications, expertise
both the Commission and the Tribunal lack. It was submitted that a mandatory
and material procedure or condition of the Competition Act was not complied with,
which rendered the decision to refer and the referral ultra vires, tainted by an error
of law or otherwise unconstitutional or unlawful.' (para 28)
[17] Ma lan JA, on behalf of a unanimous court, held as follows at para 35:
57
'Both the repeal of s 3 (1) (d) and the introduction of s 3 (1A) (a) brought about a
complete change from the earlier position. They are general provisions intended
to regulate the subject matter comprehensively and intended to establish the
general jurisdiction of the competition authorities in all competition matters. The
Competition Act applies to all economic activity within or having an effect within
South Africa. It provides for wide powers and general remedies more effective
than the limited ones given by the Telecommunication Act. There is no room for
the implication of exclusive jurisdiction vested in ICASA contended for. The
authorising legislative and other provisions Telkom relied upon did not oust the
jurisdiction of the Commission and the Tribunal but could well give rise to defences
of the complaints referred. The competition authorities not only have the required
jurisdiction but are also the appropriate authorities to deal with the complaint
referred.'
[18] Mr Snyckers sought to circumscribe the implications of these dicta and interpret
them in a manner which supported his case. In particular, he contended that the
judgement had emphasised that the sector specific legislation in question expressly
reserved the jurisdiction of the competition authorities in the Telkom case and further that
the competition specific jurisdiction conferred on the sector specific regulator in relation
to the conduct in question was limited. The Court had thus left open the possibility of an
inference that the Commission's jurisdiction could be excluded, depending on the facts of
the case.
[19] By contrast, Ms Le Roux, who appeared together with Mr Marolen and Mr
Chavalala on behalf of NERSA , which significantly opposed the review application
brought by Sasol Gas, submitted that the key implication of the judgment in Telkom was
to suggest that the Commission may honour the powers it enjoys in terms of the
Competition Act to entertain any complaint that is brought under the Competition Act, even
one that concerns subject matter failing under the jurisdiction of another regulator. The
critical question was whether the conduct could be considered to constitute economic
activity within or having an effect within the Repub lic (that is in terms of s 3 (1) of the
58
Competition Act) and a complaint concerning that activity had been lodged before the
Commission in which case the wide general powers of the Commission could be invoked.
National Energy Regulator of South Africa and others v PG Group (Pty) Limited
[20] The dispute with regard to the judgment in Telkom has to be read within the prism
of the judgment of the Constitutional Court in National Energy Regulator of South Africa
and another v PG Group (Pty) Limited and others [2019] ZACC 28. The dispute here
concerned a review application to set aside the decision of NERSA to approve Sasol Gas'
maximum gas price and transmission tariff applications on the dual basis of irrationality
and unreasonableness. The dispute did not require the Constitutional Court to examine
the concurrent jurisdictions of the two regulatory authorities. But it did make some
important observations regarding the approach that NE RSA is required to adopt pursuant
to its obligations under the Gas Act. Considering the concession made by NERSA in
this case that it was mandated to mimic a competitive market, a point strenuously
emphasised by Mr Snyckers as providing a justification for the implication that the Gas
Act provided exclusive jurisdiction to determine pricing in the gas market. Khampepe J,
on behalf of the majority of the Constitutional Court, said at para 61:
'The basket of alternatives approach is a practical attempt at selecting a proxy for
the upper bound of a competitive supply-constrained market and not the actual
price of a competitive market. The basket of alternatives approach that NERSA
chose is intended to stop the worst discriminatory pricing while attempting not to
regulate the actual price of piped-gas where it is not necessary to do so.
Conceivably, it may (to a reasonable degree for an imaginary market) accurately
replicate the upper bound of a South African competitive gas market that is still
experiencing supply constraints. Under market value pricing, Sasol was able to
discriminate between consumers based on their individual next best alternative,
but under the Maximum Pricie Decision, that outcome may no longer be the reality
for consumers with the most expensive alternatives.'
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[21] By contrast, s 8 (3) of the Compet ition Act clearly mandates the Comm ission
authority to determine whether the price charged is higher than the competitive price.
This is the first stage of the enquiry. Un like a N ERSA determination, the Competition Act
mandates the Commission in a case which is a pure monopolistic situation, absent import
substitutes, to mimic a competitive price. This comp letes the first stage of the statutory
inquiry. This indicates clearly that different approaches are required by the two regulators
if the National Energy Regulator of South Africa judgment is to be followed. Mr Snyckers'
foundational argument was that, as NERSA is required to mimic a competitive price, that
price can never be excessive. But the Court's judgment provides no support for this
premise. By contrast, the role of a competitive price (which requires it to be mimicked)
is vital to the Commiss ion's ultimate determination.
[22] In addition, as Mr Ngcukaitobi, who appeared together with Ms Zikalala and Mr
Quinn on behalf of the Commission, submitted, exempting Sasol from the Competition
Act would erode the enforcement of the latter Act and in particular the remedial powers
of the Tribunal would not be available to a comp lainant: The Tribunal's power to interdict
prohibited practices and direct a firm to supply goods on more reasonable terms and to
declare agreements void could not then apply. The Tribunal's, power to declare conduct
to be a prohibited practice which would enable a 'follow on' damages claim wou ld also
not be available in respect of a justified complainant. No victim of Sasol's abuse could
pursue a damages claim in terms of s 65 of the Act.
Rationality
[23] Sasol Gas also challenged the Commission's decision on the grounds of rationality.
Given the finding to which I have arrived, the Commission could not have acted irrationally
in the sense that it improperly exercised jurisdiction in circumstances where NERSA had
performed its function. The argument that the Commission failed to take account of the
fact that Sasol Gas may ultimately have a defence to an abuse of dominance referral,
once the jurisdictional argument is dismissed also has no merit. The defence on the
merits is clearly not a matter which has to be considered by this Court and Sasol Gas
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can, when appropriate rely on any defence in terms of s 8 of the Competition Act; that is
when the merits of the s 8 (1) (a) complaint are heard.
Conclusion
[24] One consequence which emerges from this dispute is the important submission
made by Ms Le Roux on behalf of NERSA that his court should provide some guidance
as to the resolution of a dispute concerning concurrent jurisdiction. Going forward it
appears to me that once NERSA has considered the existence of a maximum gas price
in terms of the Gas Act, the Commission, confronted with a determination as to whether
the price charged is excessive in terms of s 8 (1) (a) of the Competition Act, should take
account of NERSA 's considerations and its determination in the setting of a maximum gas
price. Thus, the NERSA determination wou ld form part of the broad set of considerations
undertaken by the Commission to determine whether the price charged is in breach of s
8 {1) (a) of the Compet ition Act. In this determination an argument which could be raised
by Sasol Gas, namely that it followed the price adopted by NERSA, would constitute a
weighty consideration in the ultimate determination, to be made by the Competition
Tribunal, in the event of a referral.
[25] In the result, I concur with the order which is proposed by my brother Spilg AJA.
Ff
DAVIS AJA
I concur with DAVIS AJA
/ / POTTERIL/
DATE OF HEARING:
DATE OF JUDGMENT:
FOR APPLICANT:
FOR FIRST RESPONDENT:
FOR SECOND RESPONDENT:
FOR FOURTH RESPONDENT:
30 November 2023
5 March 2024
Adv F Snyckers SC
Adv L Quilliam
Adv T Ngcukaitobi SC
Adv L Zikalala
Adv S Quinn
Adv J Wilson SC
Adv JJ Meiring
Adv L Phaladi
Adv M Le Roux SC
Adv T Chavalala
Adv T Marolen
(Heads of argument prepared by
Adv P Ellis SC and Adv Chavalala)
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