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[2021] ZASCA 37
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Competition Commission of South Africa v Group Five Construction Limited (195/20) [2021] ZASCA 37 (8 April 2021)
THE
SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Reportable
Case
no: 195/20
In the matter
between:
THE
COMPETITION COMMISSION
OF
SOUTH AFRICA
APPELLANT
and
GROUP FIVE
CONSTRUCTION LIMITED
RESPONDENT
Neutral citation:
The
Competition Commission of South Africa v Group Five Construction
Limited
(Case no
195/20)
[2021] ZASCA 37
(8 April 2021)
Coram:
NAVSA ADP and ZONDI and DAMBUZA JJA
and ROGERS and MABINDLA-BOQWANA AJJA
Heard
:
5 March 2021
Delivered
:
This judgment was handed down electronically by circulation to the
parties’ legal representatives by email,
publication on the
Supreme Court of Appeal website and release to SAFLII. The date and
time for hand-down is deemed to be 10h00
on 8 April 2021.
Summary:
Competition Act 89
of 1998
– interpretation and application of
s 62
–
whether the high court has jurisdiction to hear review application –
whether the Competition Tribunal has exclusive
jurisdiction.
ORDER
On
appeal from:
Gauteng
Division of the High Court, Pretoria (Mngqibisa- Thusi J,
sitting as a court of first instance):
The
appeal is dismissed with costs including costs occasioned by the
employment of two counsel.
JUDGMENT
Mabindla-Boqwana
AJA (Navsa ADP, Zondi and Dambuza JJA and Rogers AJA concurring)
[1]
This is an appeal
against a decision of the Gauteng Division of the High Court,
Pretoria (the high court), in terms of which it
dismissed an
application under rule 30 of the Uniform Rules
[1]
,
brought by the appellant, the Competition Commission (the Commission)
established in terms of s 19 of the Competition Act 89 of
1998 (the
Act). In that application the Commission challenged, inter alia, the
high court’s jurisdiction to determine a review
application
initiated by the respondent, Group Five Construction Ltd (Group
Five).
[2]
In the review
application before the high court Group Five sought the following
principal orders:
‘
1.
Declaring that the initiation of the complaint under CC case number
2009Feb279 in terms of
section 49B(1)
of the
Competition Act 89 of
1998
, by the respondent, as well as all steps taken by the respondent
pursuant thereto, were and are unlawful and invalid;
2. Declaring
that the respondent granted the applicant immunity from prosecution
of a contravention of the
Competition Act 89 of 1998
in respect of
the construction and refurbishment of stadia for the 2010 FIFA World
Cup;
3. Reviewing,
setting aside and declaring invalid the respondent’s decisions:
3.1 to refer
a complaint against the applicant to the Competition Tribunal in
respect of the construction and refurbishment of stadia
for the 2010
FIFA World Cup; and/or
3.2 in that
referral, to seek an administrative penalty against the applicant;
(collectively
referred to as decisions)’
[3]
The background leading
to proceedings in the high court and culminating in the present
appeal are set out hereafter. On 10 February
2009, the Commission
initiated a complaint in terms of
s 49B(1)
[2]
of the Act against various construction companies, including Group
Five, into conduct relating to the construction in South Africa
of
FIFA 2010 World Cup stadia. This followed a research project that was
conducted by the Commission in May 2008 prompted by an
escalation in
costs in the construction of the stadia. The Commission decided to
investigate possible collusive conduct between
various companies in
contravention of s 4(1) of the Act.
[4]
Section
4(1)
(b)
prohibits restrictive practices between firms in horizontal
relationships (competitors). Prohibited conduct involves
(i)
directly or indirectly fixing a purchase or selling price or any
other trading condition;
(ii)
dividing markets by allocating customers, suppliers, territories, or
specific types of goods or services; or
(iii)
collusive tendering.
[5]
Due to the secretive
nature of cartels involved in collusive dealings of the kind targeted
by the Act, the Commission had devised
a policy known as the
Corporate Leniency Policy (CLP), which is geared towards encouraging
those involved in cartels to disclose
to the Commission prohibited
practices in order to combat offensive conduct.
[3]
Those who approach the Commission with the necessary information that
would result in institution of proceedings against a cartel
will not
be subjected to prosecution in relation to their involvement in or
with the alleged cartel.
[4]
They are initially granted conditional immunity, which is made final
when conditions set out in the CLP have been met.
[5]
Immunity is granted in return for full disclosure and full
co-operation in pursuing the other cartel members before the Tribunal
established in terms of s 26 of the Act.
[6]
[6]
Group Five alleges that
it sought to take advantage of the Commission’s CLP by
providing information that would assist to
uncover the prohibited
practices. It applied for immunity in respect of a cover price
[7]
it had sought from another firm; and in exchange for submitting a
cover bid in respect of the Greenpoint World cup stadium, among
others. Group Five alleges that the Commission gave it an unequivocal
undertaking to grant it the immunity, but later reneged on
its
earlier decision.
[7]
On 12 November 2014,
despite the alleged undertaking, the Commission referred a complaint
against Group Five and other construction
companies for contravening
s 4(1)
(b)
(i)
and (ii) of the Act to the Tribunal. The allegations were that Group
Five had engaged with other firms in pervasive, anti-competitive
conduct in the construction industry. It was alleged that the members
of the alleged cartel had agreed to: allocate between them
projects
for the construction of the various stadia; submit cover prices and
recover a net profit of 17.5% per project. The Commission
sought an
administrative penalty equal to 10% of Group Five’s total
turnover, which is the maximum penalty that could be
imposed under ss
58(1)
(a)
(iii)
and 59 of the Act.
[8]
Against this
background, Group Five, in its approach to the high court, submitted
that the decision by the Commission to refer the
complaint to the
Tribunal was reviewable: firstly, because the complaint and the
investigation were not underpinned by a valid
initiation; secondly,
the referral and the ordering of penalties were precluded by the
Commission’s grant of immunity to
it; and thirdly, the referral
was, in any event, oppressive, vexatious and motivated by bad faith.
[9]
In reaction to the
review application, the Commission did not file an answering
affidavit. Instead, it lodged a rule 30 application,
contending that
the high court lacked jurisdiction to adjudicate the matter as the
dispute between the parties fell within the
exclusive jurisdiction of
the Tribunal. It further submitted that litigation between the
parties was pending before the Tribunal
on the same cause of action
and in respect of the same subject matter.
[10]
The high court
dismissed the Commission’s application on the basis that the
Commission ought to have raised its objections
by way of a special
plea. It nevertheless proceeded to determine the merits of the rule
30 application. Relying on this Court’s
decision in
Agri
Wire (Pty) Ltd and Another v Commissioner of the Competition
Commission and Others
[8]
it dismissed the jurisdictional challenge. Furthermore, it found the
lis pendens
point to be without merit, as the issue before it was different to
that which the Tribunal had to determine. In this regard, it
said:
‘The Tribunal is expected to investigate the allegations made
by the Commission against the alleged unlawful conduct
of Group Five
in relation to the 2010 soccer World Cup. Whereas this court was to
determine the lawfulness of the Commission’s
initiation of a
referral and its withdrawal of the immunity granted to Group Five’.
The appeal to this Court is with the
leave of the high court.
[11]
At the hearing of
the appeal, counsel for both parties agreed that this Court need not
concern itself with whether the rule 30 procedure
was the proper one
to raise the jurisdictional issue, and that the appeal should be
decided on the question of whether the high
court had jurisdiction to
entertain the review application.
[12]
The Commission was
adamant that s 62 of the Act, dealt with hereunder, viewed
contextually, was the irrefutable basis for its contention
that the
review application fell within the exclusive jurisdiction of the
Tribunal and was not within the remit of the high court.
Counsel for
the Commission submitted that the
initiation and referral of a complaint as provided in ss 49B and
50
[9]
of the Act which are part of Chapter 5 were foundational, and that
they were matters that were undoubtedly within the exclusive
jurisdiction of the Commission, the Tribunal and the Competition
Appeal Court (CAC).
[13]
The Commission’s
alternative argument was that if this Court did not accept its
submissions on the exclusive jurisdiction point, then the Tribunal
should be found to have concurrent jurisdiction with the high court
in terms of s 62(2) of the Act. The Commission contended that
the
high court should have declined to hear the matter and ought to have
deferred to the Tribunal for two reasons: firstly, because
the
Tribunal is a specialist structure designed to resolve these kinds of
matters and secondly, the dispute is already pending
before it. Thus,
Group Five ought to have raised the issue of the validity of the
referral at the Tribunal. In this regard the
Commission relied on a
passage in
The
Competition Commission of South Africa v Telkom SA Ltd and
Another
[10]
where the court stated that ‘[w]
here
structures have been designed for the effective and speedy resolution
of particular disputes it is preferable to use that system’.
[14]
In opposition, Group
Five’s contention, in short, was that the issues raised in the
review application are contemplated in
s 62(2)
(a)
of the Act, in respect of which the Tribunal has no jurisdiction.
[15]
Section 62 of the Act
provides:
‘
(1)
The Competition Tribunal and Competition Appeal Court share exclusive
jurisdiction in respect of the following matters —
(a
)
Interpretation and application of Chapters 2, 3 and 5, other than —
(i)
a question or matter
referred to in subsection (2); or
(ii)
a review of a
certificate issued by the Minister of Finance in terms of section
18(2); and
(b)
the functions
referred to in sections 21(1), 27(1) and 37, other than a question or
matter referred to in subsection (2).
(2) In addition to any other jurisdiction
granted in this Act to the Competition Appeal Court, the
Court has jurisdiction
over—
(a)
the question whether
an action taken or proposed to be taken by the Competition Commission
or the Competition Tribunal is within
their respective jurisdictions
in terms of this Act;
(b)
any constitutional
matter arising in terms of this Act; and
(c)
the question whether
a matter falls within the exclusive jurisdiction granted under
subsection (1).
(3) The jurisdiction of the Competition Appeal
Court—
(a)
is final over a
matter within its exclusive jurisdiction in terms of subsection (1);
and
(b) is neither exclusive nor final in respect
of a matter within its jurisdiction in terms of subsection (2).
(4) An appeal from a decision of the
Competition Appeal Court in respect of a matter within its
jurisdiction in terms of subsection
(2) lies to the Constitutional
Court, subject to section 63 and its respective rules.
(5)
For greater certainty, the Competition Tribunal and the Competition
Appeal Court have no jurisdiction over the assessment of
the amount,
and awarding, of damages arising out of a prohibited practice.’
[16]
Section 62(1)
confers exclusive jurisdiction on the Tribunal and the CAC in respect
of matters dealing with the interpretation and
application of
prohibited practices in Chapter 2, merger control in Chapter 3, and
investigation and adjudication procedures in
Chapter 5 of the Act.
Exclusive jurisdiction is also assigned to the Tribunal and CAC in
adjudicating on matters dealing with the
functions of the Commission,
the Tribunal and the CAC respectively referred, to in ss
21(1),
27(1) and s 37. In terms of s 27(1)
(c)
the
Tribunal ‘may hear appeals from, or review any decision of, the
Competition Commission that may in terms of this Act be
referred to
it’.
[17]
Section
62(1)
excludes
matters referred to in s 62(2), in regard to which the CAC has
additional jurisdiction. It should be noted that in terms
of
s 62(3)
(b)
the jurisdiction of the CAC ‘
is
neither exclusive nor final in respect of a matter within its
jurisdiction in terms of subsection (2)’
.
(My emphasis.) This
indicates that the jurisdiction of the high court is not excluded in
respect of matters listed under s 62(2),
since in the ordinary course
the high court would have jurisdiction over matters of the kind
specified in s 62(2) unless such
jurisdiction was specifically
and expressly ousted in a constitutionally compliant manner. The same
cannot be said of the Tribunal,
for two reasons: firstly, because the
provision expressly refers to the CAC as the court with the specified
additional jurisdiction
and secondly, unlike the high court, the
Tribunal is not possessed of inherent powers to hear matters listed
in s 62(2). The CAC,
on the other hand,
is
designated as a court with a status similar to that of a high
court.
[11]
[18]
It is not difficult to
discern why exclusive jurisdiction would be granted to the CAC and
the Tribunal in relation to interpretation
and application of matters
in Chapters 2, 3 and 5. These are
matters related to the investigation, control and evaluation of
alleged restrictive practices, the abuse of dominant positions
and
mergers. They involve matters of a
specialist
nature,
which
require
technical
expertise, and which
lie
at the complex
intersection
between law and economics.
The Act
has been very careful in assigning these functions to the
institutions best equipped to deal with them.
[12]
[19]
Referring
to the exclusive jurisdiction of the Labour Court and the Labour
Appeal Court, the
Constitutional
Court, in the recent decision of
Baloyi
v Public Protector and Others
,
[13]
had this
to say
:
‘
The
reason for this delineation is that the Labour Court and the
Labour Appeal Court were “designed as specialist
courts that would be steeped in workplace issues and be best able to
deal with complaints relating to labour practices and collective
bargaining”. While accepting that section 157(1) does not
confer exclusive jurisdiction on the Labour Court in every
employment-related
matter, this Court, in
Chirwa
,
made it clear that the Labour Court and other specialist tribunals
created under the LRA are uniquely qualified to handle labour-related
disputes.’
(Footnotes
omitted.)
[20]
As
to concurrent jurisdiction it made the following observations:
‘
The
concurrent jurisdiction afforded to the Labour Court and the High
Court in terms of section 77(3) of the Employment Act and
section
157(2) of the LRA adds to, rather than diminishes, their
jurisdiction. In doing so, it affords litigants an additional
right
to approach either court where a dispute falls within the ambit of
those sections.’
[14]
[21]
The
question in this case is whether the issues raised by Group Five are
those in respect of which the Tribunal and the CAC have
exclusive
jurisdiction, or, whether they are within the
contemplation
of s 62(2). The grounds for review raised by Group Five, as already
mentioned in para 8, relate to the validity and
lawfulness of the
initiation and subsequent referral to the Tribunal. Simply put, they
are questions of
vires
or
of legality, quintessentially issues within the jurisdiction of our
Superior Courts.
[22]
In
Agri
Wire
,
this Court dealt with a similar challenge to jurisdiction, which was
also raised there by the Commission. Agri Wire had launched
a review
application for the setting aside of conditional immunity granted to
another firm, Consolidated Wire Industries (Pty)
Ltd (CWI), in terms
of the CLP, on the basis that it was unlawfully obtained. The
Commission contended that s 27(1)
(c)
conferred a general power on the Tribunal to review any decision of
the Commission taken in terms of the Act that fell within its
jurisdiction. The Court dismissed that argument on the basis that the
Act limited the decisions that can be reviewed by the Tribunal.
It
referred to provisions o
f
the Act
which
provide
for the Commission to take decisions
.
[15]
The Commission has not relied on that provision in this case, but
instead on s 62(1)
(a)
.
It is thus not necessary to discuss it any further.
[23]
As
regards s 62 this court held:
‘
Whilst
there would be no difficulty in recognising an exclusive jurisdiction
vested in the Tribunal and the Competition Appeal Court
if s 27(1)
(c)
is confined to the situations
referred to in paragraph 13, supra, it becomes problematic when it is
extended to a challenge to the
validity of a referral, because that
is a question whether the referral is an action within the
jurisdiction of the Commission.
Unlawful
actions are not within its jurisdiction and an unlawful referral
would accordingly not be within its jurisdiction. But,
whether an act
by the Commission is within its jurisdiction is a matter within s
62(2)(a) of the Act and is therefore not within
the exclusive
jurisdiction conferred by s 62(1)(b) of the Act.
[16]
Those
considerations led counsel for the Commission to abandon the argument
based on s 27(1)
(c)
in
favour of one based on s 62(1)
(a)
of the Act. However, that argument foundered on two points. The first
was that the section confers exclusive jurisdiction only
in respect
of matters arising under Chapters 2, 3 and 5 of the Act. Agri
Wire’s objections were advanced on the basis
that the
Commission’s powers are set out in Chapter 4 of the Act and,
properly construed, those provisions do not permit
the Commission to
adopt the CLP in its present form. The second was that in any event
the challenge was one under s 62(2)
(a)
of the Act where there is no
exclusive jurisdiction.’
[17]
(Emphasis added.)
[24]
A question whether the
referral by the Commission is valid or unlawful, or whether the
Commission acted beyond the scope of the
Act and accordingly ultra
vires the powers conferred on it, is a jurisdictional question which
falls within the purview of s 62(2)
(a)
as stated in
Agri
Wire
. The legality
of a public body’s conduct is also a constitutional matter (s
62(2)
(b)
).
The Constitutional Court has repeatedly said so in relation to the
Biowatch
[18]
principle
.
It stated the following in
Justice
Alliance of South
Africa v Minister for Safety and Security and Others
:
[19]
‘
The
Minister contends that because there was no challenge to the
constitutional validity of any of the provisions of the Act, no
constitutional issue in the
Biowatch
sense was raised. That is not, without more, a proper basis for
finding that no constitutional issue was raised.
The
attack on the validity of the guidelines as being
ultra vires
section 137 of the Act is based on
the principle of legality. Legality is decidedly a constitutional
issue.
The interpretation of the
provisions of the Act in order to decide whether the guidelines fell
within their ambit is also a constitutional
issue because statutory
interpretation must be done in accordance with the dictates of the
Constitution. In addition it is clear
that the original order forcing
the Minister for Police to promulgate guidelines was founded on his
failure to comply with the
provisions of the Constitution.’ (My
emphasis.)
[25]
Also in
Harrielall v University of
KwaZulu-Natal
the
Constitutional Court stated the following
:
[20]
‘
The
constitutional issues raised by the case are two-fold. First, a
review of administrative action under PAJA constitutes
a
constitutional issue. This is so because PAJA was passed
specifically to give effect to administrative justice rights
guaranteed by section 33 of the Constitution. Moreover, when
the University determined the application for admission, it exercised
a public power.
According to
jurisprudence of this Court, the review of the exercise of public
power is now controlled by the Constitution and legislation
enacted
to give effect to it.
It is not controversial that a review of
administrative action amounts to a constitutional issue
. . . .’
[26]
For this kind of review
the Tribunal’s jurisdiction is not mentioned in s 62(2).
Only
the
CAC is, and its powers are not exclusive either. The jurisdiction of
the high court is not excluded under that section in terms
of s
62(3)
(b)
.
Accordingly,
this means that the Commission’s alternative argument in
relation to concurrent jurisdiction must also fail.
In any event,
Telkom
is
no authority for the proposition advanced by counsel for the
Commission, regarding concurrent jurisdiction. That case dealt with
concurrent jurisdiction between the Commission and another regulatory
body, ICASA. In that case Telkom had instituted review proceedings
in
the high court to set aside the Commission’s decision to refer
a complaint to the Tribunal in terms of s 8 of the Act.
It argued
that the issue initiated and referred to the Commission and the
Tribunal fell outside the powers of the competition authorities
but
was a matter for ICASA to deal with. The Tribunal was held to be an
appropriate forum to determine whether the provisions in
Chapter 2 of
the Act were contravened.
[27]
In conclusion,
the issues raised on review by Group Five are not of a specialist
nature which s 62(1) exclusively reserves for the
CAC and the
Tribunal. They do not pertain to the interpretation of issues in
Chapters 2, 3 and 5 of the Act which are pending before
the Tribunal.
Instead, they relate to questions of legality concerning the validity
and lawfulness of the initiation and the referral
of the complaint.
Notably, the Commission’s powers are set out in Chapter 4,
which is not mentioned among the Chapters in
s 62(1)
(a)
.
In the circumstances, the high court was correct in its finding that
the challenge of jurisdiction had no merit.
[28]
For these
reasons, the appeal is dismissed with costs, including costs
occasioned by the employment of two counsel.
N P MABINDLA-BOQWANA
ACTING JUDGE OF APPEAL
Appearances
For
the appellant: V Notshe SC (with him K K
Maputla)
Instructed
by: Bopape
Inc, Hatfield
Maponya Inc, Bloemfontein
For
the respondent: A R Bhana SC (with him A Gotz SC)
Instructed
by: Allen
& Overy, Johannesburg
Lovius
Block, Bloemfontein
[1]
The relevant part of rule 30 reads as follows:
‘
(1) A party to a cause in
which an irregular step has been taken by any other party may apply
to court to set it aside’.
[2]
In terms of s 49B (1) ‘
The
Commissioner may initiate a complaint against an alleged
prohibited
practice’.
[3]
C
lause 3 of the
Corporate Leniency Policy (CLP) - GN 195
GG
25963 of 6 February 2004 and GN 31064
of 23 May 2008.
[4]
Clause 3.4 of the CLP. See also
Agri
Wire (Pty) Ltd and Another v Commissioner of the Competition
Commission and Others
[2012] ZASCA
134
;
[2012] 4 All SA 365
(SCA);
2013 (5) SA 484
(SCA) paras 6-10.
[5]
Clause 9 of the CLP.
[6]
See para 7 of
Agri
Wire
.
[7]
Cover pricing entails submitting a tender price
higher than the cover price (obtained from a competitor) so as to
increase the
chances of the competitor winning the bid.
[8]
Agri Wire (Pty) Ltd and Another v Commissioner
of the Competition Commission and Others
[2012] ZASCA 134; [2012] 4 All SA 365 (SCA); 2013 (5) SA 484 (SCA).
[9]
In terms of section 50(1)
of the Competition Act 89 of 1998 (the Act) ‘At any time after
initiating a complaint, the Competition Commission may refer
the
complaint to the Competition Tribunal’.
[10]
The
Competition Commission of South Africa v Telkom SA Ltd and Another
[2009]
ZASCA 155
;
[2010] 2 All SA 433
(SCA) para 36.
[11]
Section 36(1) of the Act.
[12]
See
Competition
Commission of South Africa v Media 24 (Pty) Limited
[2019] ZACC 26
;
2019 (9) BCLR 1049
(CC);
2019 (5)
SA 598
(CC),
where the Constitutional
Court, inter alia, stated at para 136: ‘. . .
The
adjudicative institutions under the
Competition
Act are
expert bodies and due recognition must be given to
this . . . ’.
[13]
Baloyi v Public Protector and Others
[2020]
ZACC 27
;
2021 (2) BCLR 101
(CC) para 30.
[14]
Ibid fn 11.
[15]
See paras
13- 15 of
Agri Wire
.
At para 13, the court, inter alia, said
that the language of
s 27(1)
(c)
‘refers to appeals against
and reviews of decisions by the Competition Commission. In
determining the scope of this provision
it is best to start with
those provisions of the Act that, in terms, provide for the
Commission to take decisions. These are
s 10(2), under which
the Commission grants exemptions; s 13(5)
(b)
dealing with the approval or prohibition of small mergers;
s 14(1)
(b)
dealing with the approval or prohibition of intermediate mergers;
and s 15 dealing with the revocation of merger approval’.
[16]
See
para 17 of
Agri
Wire
.
[17]
See
para 18 of
Agri
Wire
.
[18]
Biowatch Trust v
Registrar Genetic Resources and Others
[2009] ZACC 14
;
2009 (6) SA 232
(CC);
2009 (10) BCLR 1014
(CC) para
56.
[19]
Justice
Alliance
of South Africa v Minister for Safety and Security and
Others
[2013] ZACC 12
;
2013 (7) BCLR 785
(CC) para 10.
[20]
Harrielall v University of KwaZulu-Natal
[2017] ZACC 38
paras 17 and 18.
See
also
Johnnic Holdings Limited and
Another v Competition Tribunal and Others in re: Mercanto (Pty) Ltd
v Johnnic Holdings Ltd
[2008] ZACAC 2
para 35.2.