Competition Commission of South Africa v Irwin & Johnson and Another (188/CAC/SEP20; 196/CAC/NOV21) [2022] ZACAC 8; [2022] 2 CPLR 26 (CAC) (2 August 2022)

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[2022] ZACAC 8
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Competition Commission of South Africa v Irwin & Johnson and Another (188/CAC/SEP20; 196/CAC/NOV21) [2022] ZACAC 8; [2022] 2 CPLR 26 (CAC) (2 August 2022)

IN
THE COMPETITION APPEAL COURT OF SOUTH AFRICA
CAC
CASE NO: 188/CAC/SEP20
196/CAC/NOV21
In
the matter between:
THE
COMPETITION COMMISSION OF
SOUTH
AFRICA                                                                  APPELLANT
AND
IRWIN
&
JOHNSON                                                            FIRST

RESPONDENT
KARAN
BEEF PTY
LTD                                                      SECOND

RESPONDENT
Heard
virtually on 13 January 2022 by Judges Victor, Modiba and Manoim
concurring.
Date
judgment handed down electronically:      2
August 2022
ORDER
1.
Condonation is granted for the
late filing of the appeal.
2.
The appeal is dismissed.
3.
The Commission is ordered to pay
the first respondent’s costs
including the cost of two senior counsel.
4.
The Commission is ordered to pay
the costs of the postponement
including the cost of two counsel.
JUDGMENT
Victor
J
Introduction
[1]
At
the heart of this matter lies the proper approach to the
interpretation of s 4(1)
(b)
the Competition Act (the Act)
[1]
.
This appeal
concerns an agreement concluded between two parties involved in the
beef burger industry, and whether that agreement
constitutes
cartel
behaviour
that
divides
the
market
in
contravention
of s
4(1)(b)(ii) of
the Act.
[2]
Section
4(1) in relevant part provides:
“
4.
Restrictive horizontal practices prohibited
(1)
An
agreement
between, or
concerted practice
by,
firms,
or a decision by an association of
firms,
is prohibited if
it is between parties in a
horizontal relationship
and if—
(a)
…
(b)
it involves any of the following
restrictive horizontal practices—
(i)
directly or indirectly fixing a purchase or selling price or any
other trading condition;
(ii)
dividing markets by allocating customers, suppliers, territories, or
specific types
of
goods or services; “
[3]
A
Manufacturing Agreement was concluded between Irvin & Johnson
Limited (I&J) and Karan Beef (Pty) Limited (Karan). Alleging
that
the Manufacturing Agreement contravened s 4(1)(b)(ii), the
Competition Commission (the Commission) referred the matter to
the
Competition Tribunal (Tribunal). The question before theTribunal was,
and remains the same before this Court, whether the Manufacturing

Agreement between the parties is prohibited on the basis that it is
in contravention of s 4(1)(b)(ii). The parties have brought
to the
fore two diametrically opposed positions on the proper
approach
to the interpretation of the section.
According to the Commission, a
consideration of an agreement on its face suffices.
Accordingly, and because the
Manufacturing Agreement, on its face, amounted to prohibited conduct,
the Tribunal
wrongly dismissed the
complaint when it held that s 4(1)(b) requires a process of
“characterisation” of the conduct
prior to the
interpretation and application of the Act. The Commission submits
that the Tribunal should have held that on a proper
construction of s
4(1)(b), no characterisation process is mandated or permissible.
I&J’s primary submission was,
and remains, that an interpretative exercise is necessary to
ascertain
the true meaning of an
agreement, including its characterisation, before a contravention of
s 4(1)(b)(ii) can be found
.
I&J also submits that the principle
of characterisation has been correctly applied in respect of s
4(1)(b), and that this Court
ought thus to dismiss the Commission’s
appeal.
[4]
The
question is therefore whether the strict application of the
per se
rule (outright prohibition) in s 4(1)(b), requires strict
enforcement without regard to the true meaning of an agreement and
whether
this accords with a constitutional approach to statutory
interpretation.
[5]
A
further question that arises is whether the restricted scope of
presumptive illegality of the
per se
rule precludes a
consideration of the true agreement between the parties and a proper
interpretation of the context, language, purpose,
the undisputed
facts, and the conduct of the parties when implementing the impugned
agreement.
The
parties
[6]
The
appellant is the Competition Commission (the Commission) a statutory
body established in terms of the s 19(1) of the Act.
[7]
The
first respondent is Irvin & Johnson Ltd (I&J) a distributor
of inter alia beef burger patties.
[8]
Karan
Beef (Pty) Ltd (Karan) is the second respondent, a manufacturer of
frozen beef burger patties. Karan settled the Commission’s

claim against it and is not a litigant in these proceedings.
Factual
background and litigation history
[9]
On
18 February 2013 the Commission initiated a complaint against feedlot
owners
[2]
who were members of
the South African Feedlots Association.
The
Commission alleged that the Feedlots had entered into an agreement to
fix the price at which weaner calves are sold.
On 14 June
2017, during that investigation the Commission raided the offices of
Karan and discovered a written Manufacturing Agreement
concluded
between Karan and I&J in the year 2000. It also found an unsigned
Amending Agreement drafted in 2002.
It was on
the basis of these documents that the Commissioner proceeded to
initiate a complaint against the respondents for alleged
market
division in contravention of s 4(1)(b)(ii).
[10]
One of the core issues was that the Amending Agreement
introduced a non-compete clause. The relevant clauses in the
purported amended
Manufacturing Agreement read as follows:
“
4.  Amendment
of clause 3 of the Manufacturing Agreement
4.1
The parties agree to amend clause 3 of the Manufacturing Agreement by
deleting clause 3.12 therefrom and replacing it with the following
clause:
“
3.12. Karan shall
not manufacture, market or produce any products that are the same or
similar to the contract products or any other
processed beef products
other than those specifically provided for herein. Karan is permitted
to manufacture certain processed
beef products that are similar to
the contract products on behalf of customers in the Food Service
Trade provided that Karan enters
into separate manufacturing
agreements with each of such customers, which agreements shall
specifically provide for the manufacture
of such products in
accordance with such customer’s manufacturing specifications
and recipes and which recipes and specifications
shall not have been
developed by either Karan or I&J and such products shall be
packed under such customers’ own trademarks.”
[11]
The nub of the initiation statement concerned the following
particular portion of the above non-compete clause 3.12
“
Karan shall not
manufacture, market, or produce any products that are the same or
similar to the “contract products”
or any other processed
beef products that it manufactures for I&J.”
[12]
Contract products are defined as “the various products
listed in Annexure A and B attached to the Manufacturing Agreement,

to be produced by Karan for I&J in terms of this agreement.”
[13]
The Manufacturing Agreement also provides that Karan would
manufacture certain products that are similar to “contract
products”
but of different recipes which it will supply only to
restaurants, delicatessens, fast food outlets and caterers.
[14]
The other critical clause according to the Referral is clause
3.13 which reads as follows.
“
The parties record
that prior to the commencement of this agreement. Karan manufactured
and marketed the products referred to in
Annexure B for its own
account. Karan undertakes that with effect from the commencement of
this agreement or such later date as
I&J may advise Karan of
which shall not be later than the date of commencement of full
production as envisaged in clause 3.20,
it will cease to produce
and market the products referred to in Annexure B for its own account
and does hereby grant to I&J an exclusive fully paid up
licence to manufacture the products referred to in Annexure B and
their
specification and formulation referred in Annexure C for the
duration of this agreement. Karan undertakes that it shall only
manufacture
such products as and when requested thereto by I&J,
for and on behalf of I&J, in terms of this agreement for the
duration
of this agreement. At the termination of this agreement such
aforesaid licence shall immediately terminate, and Karan shall be
entitled to continue manufacturing the products referred to in
Annexure B for its own account and I&J shall have no right to
the
specification and formulations of such products.”
[15]
The Commission submitted that by allocating customers and
specific types of goods to themselves, the parties divided the
markets,
which contravenes s 4(1)(b)(ii). According to the
Commission, the Manufacturing Agreement, read together with the
Amending Agreement,
was plainly designed to eliminate competition
between Karan and I&J. The complaint was put in the following
terms:
“
It is alleged that
the respondents [I&J and Karan] have an agreement and/or are
engaged in a concerted practice to divide markets
by allocating
specific types of goods or services in the market for the supply of
processed beef products. The conduct amounts
to a contravention of
section 4(1)(b)(ii) of the Act.”
Referral
to the Competition Tribunal
[16]
On 24 October 2018, the Commission referred its complaint to
the Competition Tribunal. The issue before the Tribunal was the same

as that which is presently before this Court, namely whether the
Manufacturing Agreement concluded between Karan and I&J
contravened
s 4(1)(b)(ii) of the Competition Act. According to the
Commission, the respondents were competitors in the market for the
supply
of processed beef products, but by concluding the Agreement,
the respondents had agreed to not compete, that Karan would cease to

produce processed frozen beef products for its own account and would
instead utilise its capacity to produce products for I&J.
In
short, they had agreed to allocate the markets between them and the
Manufacturing Agreement, and subsequent Amended Agreement,
was the
conduit. Ultimately, the Commission complained that their conduct was
of a collusive nature in contravention of the Competition
Act.
[17]
Karan did not wish to oppose the relief sought by the Commission
and
concluded a consent agreement with the Commission in which it
admitted to contravening s 4(1)(b)(ii) and agreed to pay an
administrative penalty of R2,7 million. This
agreement was made an order of the Tribunal on 26 September
2018. I&J, however, opposed the alleged contravention, and
defended
the charges.
[18]
According to I&J, it was not in a horizontal relationship
with Karan but a vertical one and the Manufacturing Agreement was
simply a good faith commercial agreement. Karan had taken a
unilateral decision to refrain from the production of processed beef

products for third parties even prior to the initial Manufacturing
Agreement. On the basis that Karan already sought to exit the
market
for the production and supply of beef products, the Manufacturing
Agreement and its subsequent amendment could not be said
to have had
the effect of dividing the market or precluding certain of Karan’s
operations. Insofar as the Amended Agreement
was concerned, this was
never implemented and was never signed, as such, it could not have
violated the section.
[19]
Finally, I&J submitted that even if any contravention of
the Act had taken place, the conduct would be time-barred in relation

to s 67(1) of the Act, because the Commission’s complaint was
initiated three years after the alleged conduct had ceased.
[20]
The Tribunal stated that what the Commission was asking it to
do was to look no further than the two agreements to arrive at a
conclusion
that Karan and I&J were competitors in a horizontal
relationship and were engaged in market division as prohibited by s
4(1)(b)(ii).
It disagreed with that contention. Whilst the Tribunal
found that Karan and I&J were in a horizontal relationship at the
time
the Manufacturing Agreement was concluded, it held that the
simple fact that two competitors conclude an agreement does not
necessarily,
without more, lead to a finding of collusion or
violation of s 4(1)(b).
[21]
The
Tribunal found that not all agreements between competitors
necessarily contravene s 4(1)(b), and there are many instances in

which competitors conclude
bona
fide
commercial
arrangements which may have the effect of impacting their commercial
activities.
In
particular
the
dicta
of the
Supreme
Court of
Appeal in
ANSAC
clearly
provides
that in alleging that conduct contravenes s 4(1)(b), the conduct must
be properly characterised to see if it falls within
the ambit of the
section.
[3]
[22]
On the basis of this, the Tribunal concluded that it was
obliged to look further than the Commission would have it. It found
that—
“
an agreement on
the face of it cannot, without more, propel mere suspicion into a
finding of collusion. What needs to be demonstrated
is whether the
agreements between the parties can be characterised as having as
their object or purpose participation in a cartel
to divide markets
as contemplated under section 4(1)(b)(ii).”
And
this, it found, involves asking whether the conduct of the parties,
properly
characterised
, is the kind of conduct that is
prohibited under the section. The Tribunal, therefore, approached the
Manufacturing Agreement through
a process of
characterisation
,
in terms of which it considered the nature of the agreement, the
context in which it was concluded, as well as the circumstances
and
past conduct of the parties.
[23]
The Tribunal noted that the “central piece of evidence
relied on by the Commission” to put the Manufacturing Agreement

in the category of practices prohibited outright under s 4(1)(b)(ii)
was clause 1.4:
“
Karan is desirous
to terminate the manufacturing of processed frozen beef products for
its own account and utilise its core skills
in feedlots, abattoirs
and processing of chilled and fresh beef and the processing of frozen
beef products to manufacture the contract
products for and on behalf
of I&J on the terms and conditions set out in this agreement.”
[24]
The Tribunal considered this clause through the lens of
characterisation, which meant it could take note of all the evidence
contextualising
it. Having characterised the agreement, the Tribunal
concluded that the conduct of the parties did not amount to the type
of conduct
prohibited by s 4(1)(b). The Tribunal emphasised that
cartel conduct is the most egregious form of conduct to competition
and consumers,
and the Commission had failed to demonstrate that the
Agreements met the required threshold. The Tribunal dismissed the
Commission’s
complaint.
[25]
The 2002 Unsigned Agreement provided that Karan was allowed to
sell beef burgers to food service customers. The relevant clauses
in
the purported amended Manufacturing Agreement read as follows:
“
4. Amendment of
clause 3 of the Manufacturing Agreement
4.1 The parties agree to
amend clause 3 of the Manufacturing Agreement by deleting clause 3.12
therefrom and replacing it with the
following clause:
“
3.12 Karan shall
not manufacture, market or produce any products that are the same or
similar to the contract products or any other
processed beef products
other than those specifically provided for herein. Karan is permitted
to manufacture certain processed
beef products that are similar to
the contract products on behalf of customers in the Food Service
Trade provided that Karan enters
into separate manufacturing
agreements with each of such customers, which agreements shall
specifically provide for the manufacture
of such products in
accordance with such customer’s manufacturing specifications
and recipes and which recipes and specifications
shall not have been
developed by either Karan or I&J and such products shall be
packed under such customers’ own trademarks.”
[26]
The Commission submits that the conduct referred to above,
amounts to dividing up the market and is alleged to have commenced in

2000 and was ongoing. In essence the allegation is that the parties
divided the markets by allocating customers and specific types
of
goods to themselves which contravenes s 4(1)(b)(ii) of the Act.
Parties’
submissions before this Court Commission’s submissions
[27]
Before this
Court, the Commission argues that the Tribunal got it wrong.
It avers
that the Tribunal erred in law and in fact, by characterising the
Manufacturing agreement and finding that it was not in
contravention
of s 4(1)(b).
The
Commission
emphasises
that when a trade practice undermines a competitive economy and
restricts the freedom of consumers to select the quality
and variety
of goods and services, then such an agreement is prohibited by s 4.
The
Commission submits that textually, once the feature of the
prohibition is found in the agreement, the operation of s 4(1)(b)
is
triggered, and no further enquiry is needed.
In this
case, because the wording of the Manufacturing Agreement amounted to
a
per se
contravention
of s 4(1)(b)(ii),
[4]
there was
no need to
characterise
the
Agreement.
Thus, the
Tribunal erred.
It also
erred in considering the intentions of the parties, as intention is
not applicable to circumstances where the plain text
and language of
the Manufacturing Agreement is unambiguous.
[28]
The Commission avers that the Tribunal ignored the fact that
the parties were in different segments of the market for the
manufacture
and supply of frozen beef products
by virtue of the
agreement
. The Commission submits that the Tribunal should have
found that,
but for
the Manufacturing Agreement, the
relationship between the parties was that of competitors in a
horizontal relationship. According
to the Commission, Karan did not
unilaterally elect to exit the market. The Manufacturing Agreement
made sure of it, which demonstrates
that the Manufacturing Agreement
egregiously contravenes s 4(1)(b) because it caused the market to be
divided. Thus, the Tribunal
erred when it concluded that the
Manufacturing Agreement did not breach s 4(1)(b): the parties were in
a horizontal relationship,
and together they made an agreement with
the effect that Karan exited the market in favour of its competitor,
I&J. In other
words, competition was eliminated, and market
allocation was evident.
[29]
The Commission also avers that there is an important
distinction between s 4(1)(a) and s 4(1)(b), which distinction was
elided in
the reasoning of the Tribunal. S 4(1)(a) of the Act
prohibits an agreement between firms in a horizontal relationship if
the agreement
“has the effect of substantially preventing or
lessening competition in a market, unless a party to the agreement,
concerted
practice or decision […] can prove that any
efficiency or other pro-competitive gain resulting from it outweighs
that effect.”
This means that, as distinct from s 4(1)(b), s
4(1)(a) is concerned with
effects
– it is about weighing
the anti-competitive effects of an agreement as against its pro-
competitive benefits. The Commission
emphasises that s 4(1)(b) is
concerned with whether or not an agreement between firms in a
horizontal relationship falls under
one of the sub-categories in s
4(1)(b). There is no reference to the word “characterisation”
in s 4(1)(b) and therefore,
the Tribunal should not have embarked on
a characterisation exercise. Accordingly, it was a waste of time and
resources to embark
upon an investigative process in order to make
any further determinations on reasonableness, efficiency or
pro-competitive gain.
What the Tribunal did, was to conflate the two
provisions. The Commission submits that the Tribunal conflated s
4(1)(a) and s 4(1)(b),
which constituted an error in law.
[30]
The Commission relies on
ANSAC
, in which the Supreme
Court of Appeal did not seek to change the provisions of s 4(1)(b) by
introducing a separate statutory test
on characterisation. The
Commission emphasises that
ANSAC
explained the clear
distinction between the prohibitions in s 4(1)(a) and those in s
4(1)(b):
“
It is clear from
its juxtaposition with section 4(1)(a) that section 4(1)(b) is aimed
at imposing a ‘
per
se’
prohibition:
(i) in other words, in which the efficiency defence expressly
contemplated by sub para (a) cannot be raised.
The reason
for the blunt terms of sub para (b) is plain.
Price
fixing is inimical to economic competition and has no place in a
sound economy. . . All countries with laws protecting economic

competition prohibit the practice without more. . . Once the conduct
complained of is found to fall within the scope of the prohibition,

that is the end of the enquiry.
There is no
potential for a further enquiry as to whether the conduct is
justified (an enquiry of the kind that is envisaged by

section4(1)(a), and evidence to that end is not relevant, and thus
inadmissible.
It is this
finding that the Competition Appeal Court upheld, and it is clearly
correct.”
[5]
[31]
The
Commission insists that following
ANSAC
,
and
Dawn
Consolidated Holdings,
[6]
the process of characterisation is unnecessary in our competition
jurisprudence
and
thus,
the
incompatibility
of
the
Manufacturing
Agreement
with
s 4(1)(b)
can be concluded without any characterisation enquiry.
In
particular, the Commission seeks to demonstrate that the thrust of
the Tribunal’s reasoning on characterisation was to
look at the
effect
of the
Manufacturing Agreement on competition and the subjective belief of
the parties to the Agreement.
This, of
course, was within the purview of s 4(1)(a),
not
s
4(1)(b).
[32]
In any event, the Commission continues, the Tribunal applied
the principle of characterisation incorrectly. The preamble to the
Act prescribes its purpose as being “to provide for markets in
which consumers have access to and can freely select, the quality
and
variety of goods and services they desire”, and to “restrain
particular trade practices which undermine a competitive
economy.”
The Commission submits that even if regard is paid to nature and
context, the Manufacturing and Amended Agreements
unequivocally fall
within that which is prohibited by the principles set out in the
preamble and s 4(1)(b). The Tribunal was wrong
in its evaluation of
the evidence: a correct evaluation of the evidence should have led
the Tribunal to conclude that the impugned
conduct was in breach of s
4(1)(b)(ii).
I&J’s
submissions
[33]
I&J submits that the central issue in this appeal is the
determination of the true meaning of the Manufacturing Agreement, and

once that is done there can be no presumption of illegality. I&J
argues that since
ANSAC,
conduct and agreements between
parties must be characterised to assess whether they truly fall
within the ambit of what the Legislature
intended to prohibit. This
is firmly entrenched in South African competition law jurisprudence,
and the Tribunal correctly characterised
the conduct to see if it
fell within the ambit of s 4(1)(b)(ii).
[34]
I&J
submits that clause 1.4 of the Manufacturing Agreement is
inconsistent with presumptive illegality.
Clause 1.4
must be interpreted objectively to determine its
sensible
meaning
in the context of the document as a whole and the circumstances
attendant upon its coming into existence.
In making
this submission, I&J refers to the proper interpretation of
contracts based on the well-known principles espoused
in
Natal
Joint Municipal Pension Fund
.
[7]
[35]
In
contradistinction to the Commission, I&J argues that the
jurisprudence, as set out by the Competition Appeal Court in
SAB
[8]
is
clear: there must be proper characterisation of agreements that have
both horizontal and vertical elements.
[9]
Similarly, it was recognised in
Dawn
Consolidated Holdings
that
commercially reasonable
ancillary
restraints
ought
not
be
treated
as
automatically
violating s
4(1)(b)(ii) without further enquiry.
[10]
[36]
I&J point out that where two competitors conclude an
agreement, this does not automatically mean that there is collusion,
or
a contravention of the absolute prohibitions listed in s 4(1)(b).
I&J points out that this is consistent with competition
jurisprudence
in United States antitrust law and the European Union’s
competition law. Consideration must be given to the distinction
between
agreements involving competitors that are so inimical to
competition that they cannot be justified on any basis, and those
where
pro-competitive justification is appropriately countenanced.
[37]
According
to I&J, upon properly characterising the Manufacturing Agreement,
which means looking to its context and nature, it
is clear that it
does not constitute collusive conduct.
Karan had
unilaterally evinced an intention to terminate manufacturing beef
patties for its own account because it had deemed that
doing so would
be unsustainable.
Thus, but
for the conclusion of the Manufacturing Agreement, Karan would have
ceased beef patty production altogether in the early
2000s,
[11]
I&J might have concluded a Manufacturing Agreement or, in the
absence of identifying a suitable contract manufacturer, might
have
exited the market for the supply of frozen beef burger patties.
I&J
argues that the true economic relationship between it and Karan was
that of a supplier and customer, being a vertical relationship
by
using the manufacturing services of Karan.
Karan, with
its access to raw product and with existing and installed production
equipment and capacity could produce products for
I&J, a company
that enjoyed excellent access and distribution capabilities to the
markets, an aspect not enjoyed by Karan.
The
Manufacturing Agreement constituted the combination of complementary
competencies of Karan and I&J respectively, and enabled
Karan to
stay in production.
The fact
that Karan could not have continued to manufacture products absent
the Manufacturing Agreement because it could not do
so profitably, is
key.
[38]
I&J submits that the Commission has not discharged the
burden of showing that the Manufacturing Agreement was so obviously a

collusive arrangement which harmed consumer welfare, such that it
warrants sanction as a prohibition in terms of s 4(1)(b)(ii).
I&J
argues that the Manufacturing Agreement was not an agreement of the
kind that competition law seeks to prohibit as a matter
of course.
And, the evidence of the Commission’s own witnesses contradicts
its argument that the Manufacturing Agreement
was the result of a
scheme between Karan and I&J.
[39]
I&J points out that the incorrect Annexure B was attached
to the Manufacturing Agreement and this created the incorrect
impression
that Karan could no longer supply beef patties in its own
name.
Analysis
of the evidence surrounding the conclusion of the Manufacturing
Agreement
[40]
The following excerpts are relevant in describing how the
commercial exigencies of the parties dovetailed and led to the
conclusion
of the Manufacturing Agreement and Karan’s decision
to exit the distribution market:
“
Mfundo (on
behalf of the Commission) :
okay so you agreed in 2000 with I&J
that you are going to cease doing the frozen?
Arnold Pretorius (of
Karan)
: correct, going to cease the supply of this particular
product to the retail chain stores because it doesn’t work out.
Arnold Pretorius:
(
quoted are various excerpts from his evidence at the
interrogation stage)
We were desirous to carry on only
with the business that we can do it by ourselves and handle properly.
Karan was sort of very anxious
to get out of that part of the
business because they couldn’t handle it themselves. They had
to handle it through a third
party and that didn’t work out at
all. That is the part that we know how to do. He stated that the only
thing he knew was
that Karan Beef decided to stop their business
through the chain stores because they couldn’t handle it
properly themselves.
They handled it through a third party, and it
was just a disaster, it was not an economical proposition. Can I tell
you in short
which I am telling you under oath? I am telling you what
the real intention was. Not whether we could do this or that, what
the
real intention was.
The real intention under oath, is that the
business did not work for us. We couldn’t do it.
Either
I&J had to take it from us if they are interested or we would
have stopped.
It didn’t work for us.”
[41]
It was clear from the various accounts of witnesses including
the version presented by Mr Simonsen of Karan, who was employed after

the commencement of the Manufacturing Agreement was concluded, that
Karan was going to exit the distribution market and retain
the
manufacturing side of the business. This was also consistent with the
version presented by Karan to the Commission when it
pleaded guilty
to contravening s 4(1)(b) (ii).
[42]
It could not be disputed by the Commission that both Karan and I&J

came to their decision independently. In particular, that Karan would
exit the distribution of its beef patties and I&J would
exit the
beef patty market unless it could find a manufacturer. From the
undisputed facts and based on what emerged from the
interrogation, the evidence presented and the
cross-examination it is clear that Karan did not exit the
distribution market because
it signed the Manufacturing Agreement.
[43]
A further chronological consideration in relation to the time
bar procedural issue is that it was common cause that by 2014 the
Manufacturing Agreement between I&J was terminated by Karan. It
repurposed its facility and I&J found a new manufacturer.
Issues
for determination
[44]
A central issue in this appeal is whether the Commission has
proved the s 4(1)(b)(ii) contravention based solely on the face of
the Manufacturing Agreement and the unsigned Amended Agreement.
Ancillary questions that arise include: whether it is possible to

look beyond the face of the Manufacturing Agreement and consider its
character, circumstances and nature to ascertain whether the

Manufacturing Agreement amounted to allocating customers and dividing
up the markets; whether the Tribunal erred in law and fact
in
characterising
the Manufacturing Agreement and the Amended
Agreement; and whether the Tribunal erred in its finding that the
Manufacturing and
Amended Agreements did not amount to a
contravention of s 4(1)(b). In sum: can a court look beyond the
agreement itself? Did the
Tribunal do so correctly? And is the
Manufacturing Agreement one that is prohibited by s 4(1)(b)(ii)?
[45]
A
final consideration is whether the Commission’s claim against
I&J exceeded the limitation of actions as provided for
in s 67(1)
of the Act, which is a procedural time bar provision.
A complaint
in respect of a prohibited practice may not be referred to the
Tribunal if the prohibited practice ceased more than
three years
before the complaint.
The
Commission did not seek condonation to extend the time bar which is
permissible under certain circumstances.
[12]
This issue
will be addressed in due course.
[46]
Before dealing with the merits of the appeal however, it is
necessary to deal with some preliminary issues raised by I&J.
Preliminary
issues
Condonation
[47]
I&J raised a point in limine and submitted that the late
filing of the complete record timeously by the Commission and the
heads
of argument should result in the matter being struck from the
roll. The Commission did not seek condonation when these documents

were filed late. We have considered the submissions and must note our
disproval of the cavalier manner in which the Commission
has dealt
with the procedural formalities required in processing an appeal.
This does unfortunately demonstrate a disregard for
the CAC court
rules. We take the view, however, that having regard to the issues
and the importance of finalising this appeal,
we do not strike the
appeal from the Roll.
Costs
for earlier postponement
[48]
The question of costs of an earlier postponement also loomed
large. Hundreds of pages were exchanged on this issue. In the end the

Commission conceded that it was liable to pay the costs of the
earlier postponement and tendered costs on the party and party scale

for the postponement. Clearly the costs must include that of two
counsel.
The
findings of the Tribunal
[49]
The Tribunal records, the ‘
central piece of evidence
relied on by the Commission’
to put the Manufacturing
Agreement in the category of practices prohibited outright under s
4(1)(b)(ii) was clause 1.4:
‘
Karan is
desirous to terminate the manufacturing of processed frozen beef
products for its own account and utilise its core skills
in feedlots,
abattoirs and processing of chilled and fresh beef and the processing
of frozen beef products to manufacture the contract
products for and
on behalf of I&J on the terms and conditions set out in this
agreement
.’
[13]
[50]
The Tribunal found in the light of the case law in
Ansac
that not all agreements between competitors would contravene s
4(1)(b) and there are many instances in which competitors conclude

bona fide commercial arrangements. In particular the dicta in
Ansac
clearly provides that in alleging that conduct contravenes s
4(1)(b), the conduct must be properly characterised to see if it
falls
within the ambit of the section.
Ansac
clearly sets out
the approach which ought to be followed.
[51]
The Tribunal applied the twofold enquiry to this case. This
enquiry can be pursued in any order. Firstly, there must be a
definition
of the scope of s 4(1)(b) which must be determined through
statutory interpretation. The other leg of the enquiry is a factual
enquiry to identify whether or not the conduct in issue falls within
the terms of the prohibition. It then went on to analyse in
great
detail the nature of the conduct and concluded that the conduct
properly characterised in the Manufacturing Agreement did
not divide
the market or its customers for anti-competitive reasons.
Competition
Jurisprudence and the proper approach to interpretation of the
Manufacturing Agreement
[52]
Prior to applying the law to the facts in this case, it is
important to consider the current jurisprudence relating to the
proper
application and interpretation of s 4(1)(b)(ii). This, because
a key question before this Court is whether it suffices to undertake

a simple face-value assessment of the Manufacturing Agreement when
determining whether it violates s 4(1)(b)(ii), or whether it
can go
beyond the text of the Manufacturing Agreement and “characterise
it” – consider context and character
– as the
Tribunal did.
[53]
S
4(1)(b)(ii) places an outright, or
per
se
,
prohibition on market division.
And for
good reason.
As
described in the book,
Principles
of Competition Law in South Africa
,
the authors referred to work of Neuhoff,
[14]
cartel conduct occurs when competitors decide to co-operate or
collude with one another rather than to compete.
[15]
“
Cartels harm other
businesses and consumers by artificially raising prices and reducing
output and choice.”
[16]
Cartel
conduct is therefore the antithesis of a healthy and competitive
market which renders it deserving of strict censure.
[54]
Bearing this in mind, it is not surprising that
per se
offences refer to those agreements which do not require any
adverse competitive effects to actually be established for the
offence
to be proved. And, on this basis, the Commission correctly
argues that s 4(1)(b) does not require any enquiry into the effects
on the market, the implementation of the Manufacturing Agreement or
anything more. According to the Commission, however, s 4(1)(b)

entrenches the
per se
rule,
without more
. Yet, on a
proper construction, it must be so that the Legislative intent behind
s 4(1)(b) is that it is only where the impugned
agreement is so clear
in its offence as to be unambiguous, that no further enquiry will be
necessary.
[55]
When
construing agreements, there is not always a bright line demarcating
where the boundaries of hardcore cartel conduct ends and
legitimate
horizontal commercial arrangements begin.
Explicit
horizontal cartel agreements are obviously looked at unfavourably,
and the prohibition against them must be enforced with
vigour.
However, there is much debate between legal and economic commentators
about the boundary between hardcore cartels and horizontal

agreements.
Niels et
al
[17]
emphasise that the line
between hardcore cartels and other horizontal agreements must be
drawn carefully, lest competitive commercial
conduct be inadvertently
squashed.
Ultimately,
what is important is that in making a
per
se
assessment,
one must not lose sight of the substance and purpose of competition
law.
[56]
The
idea that a court can look to the context of the agreement to
properly construe it, is not as outrageous as the Commission
suggests.
Even in the
determination of what constitutes
an
agreement,
South
African
competition
law
provides
for
a
degree
of
flexibility and contextualisation.
In
Netstar
,
this Court explained that in terms of the Competition Act the term
“agreement” is wide.
[18]
This Court
stated that an agreement arises from the
actions
and discussions of parties
directed
at arriving at an agreement that will bind them either contractually
or by virtue of moral persuasion or commercial interest.
The
agreement can be in the form of a contract, which is legally binding,
or an arrangement or understanding that is not,
but
the parties must regard it as binding upon them
for
it to fall within the contemplation of the Competition Act.
There has
to be some consensus, and the statute requires a “form of
arrangement that the parties regard as binding upon both
themselves
and other parties to the agreement.”
[19]
And in the
absence of such an arrangement, “there is no agreement even in
the more extended sense embodied in the definition.”
[20]
[57]
It is evident from the wide ambit given to interpretations of
what constitutes an agreement, that a purely textual, or face-value,

analysis is not the proper approach. A facial analysis only continues
to be applicable in cases of hardcore cartelism where the
wording of
the agreement is so clear as to bring it unambiguously, within the
ambit of the s 4(1)(b) prohibitions. Ultimately,
agreements are
conceived within a specific context and it would be relevant to take
that context into account when applying the
presumption of illegality
test where the situation is not one of hardcore and unambiguous
cartelism.
[58]
On
this score, I&J urged this Court to take into account accepted
legal principles of rectification in the law of Contract.
This is the
principle that where parties have reduced their contract to writing
but the writing does not accurately reflect the
agreement between
them or what they intended, either party may approach the court for
rectification of the written instrument.
[21]
If
rectification is recognised in contract law, there is no reason why
this principle cannot apply in the context of Competition
Law. It
follows therefore, that a mere consideration of the face of the
agreement is insufficient.
I&J
points to the further principle accepted in our law of rectification
that it is possible to construe the agreement even
when the document
accurately reflects the words chosen by the parties but the effect of
those words is not what they intended.
[22]
All this to say that consideration must be given to the incorrect
attachment to the Manufacturing Agreement: Annexure B.
[59]
This
Court in
Stuttafords
,
[23]
held that one can look beyond the wording of a minute recording
agreement and also consider the intentions and conduct of the parties

to establish whether there was an agreement within the meaning of s
4(1)(b). Accordingly, this Court has passed the mark of mere
facial
analysis as being sufficient when considering the
per
se
prohibition.
It follows
therefore that, where I& J contends that the incorrect Annexure B
was attached to the Manufacturing Agreement and
this was not what was
intended, it would be irrational to simply press ahead and ignore
relevant facts.
[60]
I&J
referred this Court to the trite principle recognised by this Court
in
Gold
Fields
[24]
that
the law should give effect to substance over form and that the
intention of the parties to a transaction will be determinative
of
its nature.
As already
stated, the meaning of an agreement is wider than the literal meaning
of the language of the contract.
The CAC has
confirmed that the “
test
therefore is not what the contract purports to arrange but what
constitutes the intention of the parties to the agreements
in
question
.”
[25]
Already,
this Court has accepted the assessment of an intention in a contract
and this opens an enquiry into an assessment of a
per
se
contravention.
This
approach must be viewed in the context of where the terms of the
agreement are not a glaringly obvious contravention.
[61]
So,
can we consider the context and nature of the Manufacturing Agreement
when measuring it against s 4(1)(b)(ii), as the Tribunal
did?
When
interpreting contracts, the starting point is always to consider the
plain, ordinary, grammatical meaning of the words in question.
[26]
However,
the
locus
classicus
on
legal interpretation,
Endumeni
,
explains that we must go further:
“
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 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.”
[27]
[62]
The irrefutable import of
Endumeni
is that a solely
literal approach to legal interpretation has been emphatically
rejected. Likewise,
Capitec
emphasised that we are enjoined to
consider context, language and purpose together, and to avoid a
mechanical approach to interpretation:
“
It is the
relationship between the words used, the concepts expressed by those
words and the place of the contested provision within
the scheme of
the agreement (or instrument) as a whole that constitutes the
enterprise by recourse to which a coherent and salient
interpretation
is determined.”
[28]
[63]
The
rules of interpretation, which have now crystallised, demonstrate
that a purely textual approach has been jettisoned.
In other
words, we have moved from a textual to a contextual approach to
interpretation.
This has
been confirmed most recently by the Constitutional Court, which
stated that interpretation is a “unitary” exercise
to be
approached holistically: simultaneously considering the text, context
and purpose.
[29]
It is a
legal craft which entails giving meaning to an agreement whilst
applying judicial logic.
[30]
These are
the principles that must be adopted to ensure that the end result of
the assessment of an agreement upholds the rule of
law.
It follows
therefore, that the context in which the Manufacturing Agreement was
concluded is essential to a proper assessment of
whether it
contravenes s 4(1)(b)(ii).
On the
basis of
Endumeni
,
the Manufacturing Agreement must be interpreted
objectively
to determine its sensible and business-like meaning within the
context of the document as a whole and the context in
which it came
into existence.
[64]
Other jurisdictions that do have the per se rule but do not
have a similar s 4(1)(b) provision, such as the United States of
America,
have developed a body of Judge made law referred to as the
rule of reason when interpreting an impugned agreement in order to
mitigate
the harsh effects of section 1 of the Sherman Act 1890. The
rule of reason involves a comprehensive consideration of the nature

and scope of the impugned agreement, and essentially, it means that
the courts have to test the legality of the agreement by means
of an
enquiry.
[65]
A
solely literal approach to legal interpretation has been emphatically
rejected in United States anti-trust law jurisprudence.
[31]
A strict
literal reading could lead to false positive of a contravention and
would result in virtually every agreement being a contravention.
The
U S anti-trust law has accepted the rule of reason test which takes
into account a number factors and it is only in the most
obvious
per
se
contravention
that there is no further enquiry.
[32]
It must’
lack …any redeeming value’.
[33]
This approach correlates with the proper interpretation of s 4(1)(b)
of the Act.
Whilst the
majority in recent Supreme Court favour the rule of reason test the
interpretation of the per se rule continues to elicit
dissonance.
[34]
[66]
Again turning to another example of an absolute prohibition in
international competition law is that of the European Union. Section

101(1) of the TFEU (Treaty of the Functioning of the European Union)
prohibits certain agreements akin to the per se rule but on
the other
hand in terms of s101(3) it exempts certain agreements. Therefore,
looking at international competition law it is clear
that upon a
proper reading of section 101(1) read together with section 101(3) of
the TFEU there is no room for a literalist approach
to the what our
jurisprudence defines as the per se rule. Section 101 contains both a
prohibition and an explicit basis for exemption.
The per se rule in
the European Union is dealt with very differently but it is
noteworthy that the strict interpretation of the
per se rule is
mitigated by s 101(3) of the TFEU.
[67]
The
rigidity of a purely textual approach might lead to perverse
consequences for the Commission. Colluding parties might draft

clauses that sanitize their real collusive
arrangement.
The
concept
of
an
agreement
in
the
Act
is
widely
defined
suggesting it goes much further than the purely textual to the
substance of the relationship between the parties.
Rigidity in
interpreting agreements would also lead to the exclusion of new
methodologies in economic science.
[35]
[68]
I find that the Manufacturing Agreement is replete with
clauses that are sensible and business-like having regard to the
nature
of the relationship the parties contracted for. Interbrand
competition remained as will be seen from a proper interpretation of

the Manufacturing Agreement and confirmed in the email exchanges
referred to below. The relationship in this case really demonstrated

that the parties were in a vertical relationship of manufacturer and
distributor and remained competitive at Interbrand level.
[69]
It
would be artificial to interpret the Manufacturing Agreement as being
a per se contravention because of administrative convenience,
meaning
that the evidential enquiry ends once a literal application of the
per se
rule
takes places.
A purely
literal approach to save on the administrative costs and resources of
an enquiry for the Competition Commission in not
having to prove a
contravention is not sufficient of itself to justify the
implementation of the per se rule.
[36]
This would
lead to overlooking our stringent application of our constitutional
approach to make sure that our important standards
of competition law
are applied.
Whilst the
per se test arising from s 4(1)(b) might suggest of an inflexible
approach, in the light of ever changing ways of doing
business this
would be an incorrect statutory interpretation.
A strict
per se interpretation means inflexibility which quickly leads to
absurd competition outcomes in the dynamic world of business.
The US
anti-trust jurisprudence sets a high standard when applying the per
se rule such as stating a court must have considerable
experience
with the type of restraint in issue rather than ‘formalistic
line drawing’.
[37]
[70]
In this appeal therefore, it is important to properly
understand the true economic relationship between Karan and I&J
if the
Manufacturing Agreement is to be properly construed. The
synergies between them at the time of concluding the Manufacturing
Agreement
and the fact that it was the product of the parties
bringing their respective capacities together must not be overlooked.
To ignore
these aspects of the Manufacturing Agreement would be to
misconstrue the true nature of the parties’ relationship and
the
subsequent Manufacturing Agreement. Indeed, I&J contends that
if the purpose for concluding the Manufacturing Agreement is ignored

then “the entire architectural edifice of the Agreement would
be something which it isn’t.” The relationship
between
Karan and I&J is one of supplier and customer, where I&J
acquired the manufacturing services of Karan.
[71]
Considering several of the relevant clauses of the Manufacturing

Agreement through the lens of an interpretative approach demonstrates
that the Manufacturing Agreement does not amount to a division
of the
market contrary to s 4(1)(b)(ii). These clauses, which are outlined
below, describe how I&J would work together with
Karan to develop
new products and packaging methods; that the product packaging would
reflect both the I&J and Karan brand
names; and that I&J was
to hold the intellectual property (IP) rights to its own branded
products and acquire the intellectual
property rights to the Karan
branded products. These clauses demonstrate the true nature of the
economic relationship between Karan
and I&J. There is another
consideration. If no well-considered analysis of the Manufacturing
Agreement is undertaken, it would
misapply the true economic
relationship between Karan and I&J – that of a supplier and
customer, where I&J acquired
the manufacturing services of Karan.
A counterfactual analysis will question what the outcome would be
having concluded the Manufacturing
Agreement compared with the
outcomes that would have been achieved if the Manufacturing Agreement
had not been concluded. The answer
is clear Karan would have exited
the market and I&J might have found another manufacturer for the
beef patties.
[72]
For example, clause 1.3 of the Manufacturing Agreement
provides that—
“
I&J is
desirous to utilise the skills of Karan in the processing of chilled
and fresh beef and the manufacture of frozen beef
products to have
the contract products manufactured by Karan for and on behalf of I&J
on the terms and conditions set out in
this agreement.”
This
clause describes the purpose of the Manufacturing Agreement and does
not suggest a division of the market. The restraint in
clause 3.12
operated no wider than the “contract products”. It is not
overinclusive, as the Commission asserts.
[73]
Clause 3.1 records that I&J appoints Karan as its
manufacturer on an exclusive basis in respect of—
“
Such of the
contract products stated in Annexure A and B in accordance with the
specifications set out in Annexure C, as amended
from time to time.
[and]
Such further contract
products as Karan may manufacture for I&J pursuant to the
provisions of 3.2.”
Again,
this clause cannot be interpreted as amounting to collusive conduct
or dividing up the market.
[74]
Clause 3.15 of the Manufacturing Agreement provides that—
“
Insofar as Karan
may have contractual commitments to customers to supply the products
referred to in Annexure B for a period after
the commencement date of
this agreement, Karan cedes, makes over and transfers to I&J all
its rights and obligations in terms
of such agreements. Karan
undertakes to produce such quantities of the products listed in
Annexure B as it may be called upon by
I&J to enable I&J to
honour its obligations in terms of such ceded and assigned
agreements.”
[75]
In terms of clause 3.18, Karan granted I&J exclusive
rights to use its brands, except for the Karan logo.
[76]
Clause 10 provides that—
“
The marketing of
all contract products shall be the sole responsibility of I&J,
and the nature and extent thereof shall be within
the sole discretion
of I&J.”
[77]
I&J explains that Clause 9.9 of the Manufacturing
Agreement provides that Karan will cease to produce and market
products referred
to in Annexure B. It provides expressly that Karan
“shall be entitled to continue manufacturing the products
referred to
in Annexure B for its account and I&J shall have no
right to the specifications and formulations of such products.”
Again
the spectre of the incorrect Annexure B arises.
[78]
Clause 1.4 must be interpreted in such a way as to determine
its sensible and business-like meaning. The Tribunal found that the

clause plainly records Karan’s unilateral intention to
terminate manufacturing for its own account, and to focus on its core

business. The Tribunal correctly found that its decision was achieved
when it terminated the Manufacturing Agreement with I&J,
and
exited the market.
[79]
These clauses, when read holistically, expose the true
economic relationship between Karan and I&J as one of supplier
and customer.
According to I&J, the Commission argued the
relationship was horizontal in nature, but loses sight of the true
economic relationship
between the parties as that of manufacturer and
distributor.
Annexure
B
[80]
The incorrect Annexure B was attached to the Manufacturing Agreement

when it was signed. This gave rise to the problem of interpreting the
Manufacturing Agreement by distorting the true agreement
between the
parties. The import of the incorrect Annexure B means that, if read
literally, Karan could not supply house branded
products to the
retail trade and no-name burger patties to the food services sector.
However, the correct and true agreement was
that Karan was not
restricted from supplying all the products listed in Annexure B. This
mistake led to the Commission relying
on its understanding that
Annexure B listed house brands meaning that the
restriction on Karan was manifest. This was the basis of the
submission that the restraint on house brand products meant that
Karan
exited the market. It is clear from the case presented by I&J
that it was not overinclusive and disproportionate because the

parties did not intend to include the house brand products of Karan.
That was a mistake.
[81]
It is I&J’s case that the essence of the
Manufacturing Agreement was that Karan gave I&J an exclusive
licence to produce
Karan branded products; Karan undertook to
manufacture for I&J all the I&J products, as well as any of
the Karan branded
products that I&J elected for manufacture;
Karan would not produce and supply those products (I&J products
and Karan branded
products) to any third parties; and Karan could
continue with the manufacture and supply of house branded products.
[82]
I&J point out that there are further clauses in the
Manufacturing Agreement which are relevant and point away from a
per
se
contravention. This includes clause 3.12. That
was the undisputed evidence in the cross examination of Mr Schoeman
of I&J. Mr
Schoeman testified that the ‘house brands’
listed in Annexure B were not meant to have been included. His
evidence
in this regard was as follows:
“
MR
TRENGOVE
: Was there any intention to restrain [Karan] in their
supply of house branded products to outsiders?
MR SCHOEMAN
: No.
MR TRENGOVE
: So
was the agreement intended to apply to house branded product at all?
MR SCHOEMAN
: No.
MR TRENGOVE
: And
in fact it is only because of [Annexure] B that the agreement at
least purports to apply to house branded product as well.
There’s
nothing else in the Agreement that makes it applicable to house
branded products, is that correct?
MR SCHOEMAN
: No.”
[83]
Firstly, the Tribunal’s stance in not accepting the evidence
of
Mr Schoeman is incorrect. Having drafted the Manufacturing Agreement,
he was well placed to testify on the proper interpretation
of the
Manufacturing Agreement and in particular that
Annexure B was not the correct annexure. It was a product
list. There was no evidence to gainsay this.
[84]
Secondly, Mr Simonsen, the Commission’s witness, also
confirmed that Annexure B was a product list and was incorrectly
attached.
When he was questioned about I&J’s position that
some of the products were included in error, he agreed with it and
stated
that “there are errors here.” I& J drew
attention to the error confirmed in the evidence of Mr Simonsen. He
gave
an example in Annexure B where he explained that the product
“Maxi’s” ought to have been listed as a Karan
product,
not an I&J one. That there were errors appears also from
the inclusion in Annexure B of a chicken schnitzel even though clause

13.6 expressly records that the Manufacturing Agreement “did
not relate to any chicken based products.” A glaring example
of
why an interpretative approach is necessary and would otherwise
result in an injustice is the fact that Annexure B, to the
Manufacturing Agreement, was the incorrect annexure. It would be an
absurdity to find a contravention on a clearly incorrect document.

Anything short of an interpretive approach would result in a grave
injustice in interpreting the Manufacturing Agreement.
[85]
I&J correctly submits that the Manufacturing Agreement as
a whole shows that there was never an agreement to divide the market

into house brands and supply to the food services trade. I&J
correctly submit that if an interpretive approach is not adopted
in
respect of the Manufacturing Agreement, the conduct of the parties
and the purpose of the agreement will be lost in its entirety.
If
this happens, it will be impossible to interpret the Manufacturing
Agreement objectively in a business-like manner, as we are
enjoined
to do.
[86]
Competition
jurisprudence is evolving constantly and so are market conditions
changing. Consequently, a more nuanced approach is
required.
Based on
our constitutionally
mandated
authority
to
approach
the
interpretation
of
statutory
provisions
more
widely,
courts
have
the
interpretative
authority
to
avoid
a
literalist
approach or an interpretation based purely on the face of an
agreement.
[38]
The
2002 unsigned amending agreement
[87]
Mr Simonsen of Karan testified that after the amending
agreement, Karan began to sell beef burgers to food service
customers.
[88]
But it is clear that even prior to the Unsigned Agreement I&J
and Karan supplied processed beef products to retail customers
such
as Hyperama, Spar and Pick n’ Pay. They also sold the processed
beef products to food services customers such as restaurants,

delicatessens, fast food outlets, and caterers. The series of emails
referred to below corroborate this. It is therefore undisputed
that
Karan sold its beef burgers to retail chain stores and independent
retailers. Mr Pretorius of Karan was clear that it was
Karan’s
intention to increase its volumes at their burger plant. It needed a
volume of 300 tonnes per month. I&J could
not place sufficient
orders to reach that tonnage. It is undisputed that Karan continued
its relationship with Pick n’ Pay
throughout. The evidence also
points to the fact that I&J demonstrated that it attended to the
distribution of the Karan products
and its own products
simultaneously and in competition with one another’s products
at the same time. This points away from
any possible egregious
conduct impairing competition and dividing the market.
[89]
I&J also argues that the very
raison d’etre
of
the Manufacturing Agreement was undisputed in the evidence led. The
series of emails exchanged between the parties which formed
part of
the record, confirm this, and clearly reflect that the parties were
in healthy competition with each other.
[90]
Although Mr Simonsen of Karan testified that after the
Amending Agreement was drafted, Karan began to sell beef burgers to
food
service customers, this was not correct, because it is clear
that even prior to the unsigned agreement, I&J and Karan both
supplied processed beef products to retail customers such as
Hyperama, Spar and Pick n Pay. They also sold the processed beef
products
to food services customers such as restaurants,
delicatessens, fast food outlets, and caterers. The series of emails
and the evidence
corroborate this.
[91]
In assessing whether the conduct of Karan and I&J actually
contravened the prohibition, the email exchanges are relevant because

they reflect intense competition between Karan and I&J to the
extent that Karan could not meet supply demands. For example,
in an
email from Ms Mandy Murphy of I&J dated 8 October 2009, it was
stated that:
“
regarding your
request to pack and supply a beefburger directly to and under the PNP
brand you have put I&J in a very difficult
situation. . . I would
like to remind you that when both I& J and Karan supplied PNP
with the PnP no-name brand as well as
the PNP choice brand there was
direct negative interaction between the products.
When PNP no name
brand was on promotion, the volumes of I&J beefers declined and
the same occurred between PnP choice and the
I&J homestyle
range.”
[92]
Ms Murphy also stated in the same email demonstrating intense
level of competition between Karan and I&J in its own branded
beefburger.
“
As mentioned you
have put I&J in a difficult situation with PnP as such assuming
the product concept range is as above, and
that you can address and
provide solutions for the above issues
then we not in a
position to stop you”
[93]
This, and other emails, confirm that the competition between
Karan and I&J was such that I&J lost out on sales. And Mr
Simonsen
of Karan repeatedly confirmed the mutual understanding that
I&J could not stop Karan from supplying Pick n’ Pay, in
other
words that I&J could not stop Karan in its trading. These
emails clearly demonstrate that the conduct of I&J and Karan was

inconsistent with collusion and cartel behaviour.
[94]
Further analysis of the email exchanges demonstrates that the actual

conduct between the parties was not a
per se
contravention.
The evidence points to Karan and
I&J
promoting their own brands in competition with each other. In an
email from Mr Graham Simonsen (Karan) to Ms Jann Lurie
(I&J) (16
November 2010 at 12h13) he says:
“
Karan beef
shipments to I&J are down by 249 tonnes (-12.1%) January to
October year-on- year. This has had a negative effect
on our own
overhead recovery at the burger plant, which
we are hoping to make
up by taking on the Pick n Pay range
. As you guys are well aware,
this is a factor of the economic environment as well as competitive
pricing in the market.”
[95]
These emails indicate that there was no restriction on Karan
on supplying Pick n Pay. Again, it is only by considering the true
meaning of the impugned agreement that a court can properly construe
its true meaning in order to be in a position to weigh it against
s
4(1)(b)(ii).
[96]
In assessing whether the conduct of Karan and I&J actually
contravened the prohibition, the email exchanges referred to reflect

intense competition between the Karan and I&J to the extent that
Karan could not meet supply demands. There is an express reference
in
the email to the effect that I&J could not stop Karan in its
trading. The emails confirm that the competition between Karan
and
I&J was such that I&J lost out on sales. This is inconsistent
with collusion and cartel conduct. An analysis of the
email exchanges
demonstrates that the actual conduct between the parties was not a
per se
contravention.
[97]
There are further examples of the intense level of competition
between Karan and I&J in its own branded beefburger. The evidence

clearly depicted the relationship between I&J and Karan. Mr
Simonsen repeatedly confirmed the understanding that I&J could

not stop Karan from supplying Pick n’ Pay:
“
MR
TRENGROVE:
In other words, in part they concede
that they can't stop you supplying Pick n Pay branded burgers to Pick
n Pay.
MR
SIMONSEN
:
We went back as I’ve said, Pick n Pay approached after I&J.
. . (intervention)
MR TRENGOVE
: Will
you just answer the question? She concedes...
MR SIMONSEN
:
Yes.
MR TRENGOVE
:
...that you’re entitled to do that?
MR SIMONSEN
:
Absolutely.
MR TRENGOVE
: Under
the manufacturing agreement?
MR SIMONSEN
: I would assume so
yes.”
and
“
Again the detail
is not important but the principle is clear that they accept that you
are entitled to supply Pick n Pay branded
burgers in Pick n Pay. MR
SIMONSEN: Absolutely.”
and
“
MR TRENGOVE:
No but the important point Mr Simonsen is that both sides accept...
MR SIMONSEN
: Absolutely.
MR TRENGOVE
:
...that you are entitled to supply Pick n Pay burgers to Pick n Pay.
MR SIMONSEN:
Yes.”
and
“
MR
TRENGOVE
: But again the whole premise of the argument is,
‘we are fully entitled to do what we do’.
MR SIMONSEN:
Absolutely.”
and
“
But again it’s
a debate about your supply of house branded beef burgers to Pick n
Pay, on the premise that you are fully entitled
to do so correct?
MR SIMONSEN
: Uhm.
MR TRENGOVE:
Your
answer, your nod doesn’t record will you just answer audibly.
MR SIMONSEN
: Yes.
MR
TRENGOVE
:
So doesn’t that illustrate that Mr Pretorius was correct that
you continued throughout to supply the house branded products
to the
chain stores?
MR
SIMONSEN
:
We came back into house brands to build volumes. That wasn't
throughout.
MR
TRENGOVE
:
Well and you came back because both sides interpreted the
manufacturing agreement to allow you to do so?
MR SIMONSEN
: Well
I&J could’ve terminated the agreement if they thought their
contribution ... (intervention)
MR TRENGOVE
: They
could’ve but they didn't.
MR SIMONSEN
: No.
MR TRENGOVE
: Just
answer the question.
MR SIMONSEN:
So that ... (intervention)
MR TRENGOVE
: Just answer the question.
MR SIMONSEN
:
Yes.
MR TRENGOVE
: Both
sides interpreted the manufacturing agreement to allow you to supply
house branded products to the chain stores?
MR SIMONSEN
: I
would say yes.”
[98]
A
further aspect of the evidence shows that there was no division of
the market. In response to a question from the Chairperson
of the
Tribunal, ‘So, irrespective of what I&J had to say, you
would’ve built up the volumes using the Pick ‘n
Pay house
brand?’, he said ‘ and consequently dividing up of the
markets.’.
[99]
Consequently,
the evidence clearly points to Karan and I&J promoting their own
brands in competition with each other. There
was no restriction.
Evaluation
of the legal argument on characterisation
[100]
I now deal with the assertion by the Commission that the
Tribunal should not have considered the principle of
characterisation.
I have already referred to the Commission’s
arguments on characterisation. It is clear that the Commission failed
to consider
the full finding in
Ansac
on which the Tribunal
based its finding. The case law is clear on the application of the
principles of characterisation even in
s 4(1)(b) alleged
contraventions. There is no confusion in the Tribunal’s finding
about the ambit of s 4(1)(b). In paragraphs
45 and 46 the Tribunal’s
finding specifically relies on the ratio in
Ansac
and that the
enquiry involves two legs. The Tribunal correctly applied the two leg
approach as set out above. One leg requires the
definition of the
scope of s 4(1)(b) the answer to which must be determined through
statutory interpretation. The other leg of
the enquiry asks whether
or not the conduct in issue falls within the terms of the
prohibition. This is a fact based enquiry that
must be answered by
recourse to the relevant evidence. Put another way, the question must
be asked whether the conduct, properly
characterised, is the kind of
conduct that is to be prohibited under s 4(1)(b)(ii). The Tribunal
goes on to explain the issue of
characterisation by looking at the
true nature of the Manufacturing Agreement to see if it falls within
the scope of s 4(1)(b)(ii)
as stated by the CAC.
[101]
This is how characterisation was explained in
Ansac
:
“
[41] The
Tribunal’s ruling, particularly in the context of the reasons
it gave, is open to the construction that (perhaps
inadvertently) it
has precluded evidence even if the object of advancing it is to
demonstrate that Ansac’s conduct does not
fall within the
prohibition in s 4(1)(b) at all. To that extent its ruling was in our
view premature and therefore incorrect. This
ruling the CAC endorsed.
In this in our view it fell into the same error.
[42]
But even if the ruling is no more than ambiguous, and was not
intended to have that effect, it is clearly
desirable that there
should be clarity on the issue, bearing in mind the uncertainty that
clearly exists, and the enormous expense
this uncertainty has already
entailed.
[43]
We pointed
out earlier that an agreement that involves, amongst other things,
price-fixing, is prohibited by s 4(1)(b), and nothing
can be advanced
to justify it.
But when
has prohibited price-fixing occurred?
This is not
always simple to determine.
In the
United States the condemnation of price-fixing arises from judicial
interpretation of s 1 of the Sherman Act.
[39]
In the
European Union, in Australia, and in this country it is decreed by
legislation.
[44]    In
the United States the enquiry is approached by ‘characterising’
the conduct complained of
to determine whether it constitutes that
form of conduct that the courts have through case precedents labelled
‘price-fixing’
but have not comprehensively defined. In
this country, where the prohibition is decreed by legislation rather
than by judicial
intervention, the prohibited form of conduct must be
established by construing s 4(1)(b).
[45]
Once the ambit of sub-para (b)’s prohibition has been
established the enquiry can move to whether or
not the conduct in
issue falls within the terms of the prohibition. That is a factual
question that must be answered by recourse
to relevant evidence.
[46]
There is in principle no reason why the enquiry should not be
conducted in reverse. The enquirer might choose
first to identify the
true character of the conduct that is the subject of the complaint,
and only then turn to whether the conduct
(so characterised)
constitutes price-fixing as contemplated by s 4(1)(b). (This is how
the enquiry is conducted in the United States,
though there the two
elements tend to be elided, because the scope of the prohibition is
itself a matter of judicial rather than
legislative determination.)
[47]
Whichever approach is adopted; the essential enquiry remains the
same. It is to establish whether the character
of the conduct
complained of coincides with the character of the prohibited conduct:
and this process necessarily embodies two
elements. One is the scope
of the prohibition: a matter of statutory construction. The other is
the nature of the conduct complained
of this is a factual enquiry. In
ordinary language this can be termed ‘characterising’ the
conduct – the term
used in the United States, which Ansac has
adopted.”
[102]
It is clear that the Commission’s submission that
characterisation has no place in s 4 (1) (b) of the Act and seeks to
bolster
this approach by reliance on
Ansac
must fail in the
light of the above mentioned paragraphs in
Ansac
. Contrary to
what the Commission argues, the findings of the Tribunal do not deal
with justification. The Tribunal’s reasoning
amounts to an
analysis to see whether the Manufacturing Agreement and the conduct
falls within the ambit of s 4(1)(b) (ii).
[103]
In
particular, the application of the characterisation principle in
Ansac
[40]
,
A’Africa,
[41]
Aranda
[42]
and
Dawn
Holdings
[43]
could
not be clearer.
[104]
In my view the Commission is plainly wrong when it argues that
the characterisation of conduct should not be conflated with judge

made law to insert such a requirement into the structure of the
section. Competition law jurisprudence as currently considered
calls
for a factual enquiry into the nature of the prohibited conduct as
being essential and this does not translate into justification
for
the conduct.
[105]
The Commission also argued that the
Ansac
decision is
not authority for the proposition that an analysis of s 4(1)(b) of
the Act is incomplete without ‘
characterizing
’ the
conduct as the Tribunal had found. The Commission submits that the
word characterisation does not appear in the section
and therefore it
is wrong to embark on a characterisation exercise. But it would be
far too simplistic to undertake a facial analysis
of the
Manufacturing Agreement and without more conclude that the words in
the agreement per se amount to prohibited conduct. Theories
of
Competition law are characterised by uncertainty, ambiguity and
complex economic theory and there is a considerable blur between
what
is lawful and unlawful conduct. Sometimes the conduct is overtly
pernicious and sometimes not. In the absence of the process
of
characterisation the correct analysis of the conduct will result in
legal uncertainty. Characterisation is not only logical
but a fair
process to assess whether the conduct falls within the per se
prohibition.
[106]
The
Commission errs when it says characterisation is simply not part and
parcel of the Act.
On the
contrary,
Ansac
is
clear authority for the proposition that
the conduct
must be characterised to see if it falls with the ambit of s 4(1)(b)
of the Act.
Dawn
Holdings
also
finds the same.
[44]
The
Tribunal is correct when it found that looking at the face of the
Manufacturing Agreement without more is incorrect.
[107]
The Commission argues that the Tribunal ruling is emblematic
of a deeper problematic approach by the Tribunal and that by
characterising
the conduct it had closed off any possibility of
reaching a conclusion that an agreement,
per se
, violates s
4(1)(b) of the Act. This argument is flawed. The purpose of
characterisation is merely to consider whether the conduct
complained
of falls within the purview of s 4(1) (b). That is precisely what
this section is intended for. Although there will
be occasions where
the conduct is clearly so pernicious that it clearly falls within the
ambit of the per se prohibition and will
not have redeeming
characteristics. In those circumstances there is no need for
characterisation.
[108]
In
Dawn Holdings
Rogers J said this:
“
This test is an
objective one. The fact that the parties subjectively believed that a
restraint was reasonably required does not
suffice. Since the burden
of proof in a s 4(1)(b) case rests on the referring party, it is for
the Commission or private complainant
to prove that these
requirements are not met. In other words, where the
characterisation
of an
agreement is in issue, the burden of proof is on the Commission or
complainant to establish that the agreement,
properly
characterised
,
falls within the prohibition. Depending on the circumstances, there
may be an evidentiary burden on the respondents to raise the
issue of
characterisation
but it
is unnecessary to go into this question because characterisation was
squarely raised. “
[45]
[109]
It follows therefore that the principle of characterisation
from the case of
Ansac, A’Africa, Aranda and Dawn Holdings
characterisation is an entrenched principle in South African
competition jurisprudence. This is also consistent with international

competition jurisprudence.
Is
implementation
of the Manufacturing Agreement a consideration?
[110]
I&J
have submitted that the Manufacturing Agreement was never actually
implemented.
Some
authors suggest that it is unnecessary to show that the agreement was
actually implemented or effective in order to establish
a
contravention.
MacNeil
makes
it clear that implementation is an unnecessary requisite to establish
a contravention.
[46]
It
suffices to establish that some level of understanding was reached
between the competitors that replaced independent action.
I&J
submit the evidence is clear that the parties understood and
implemented the Manufacturing Agreement, if not from the outset,
then
in any event from about 2002, to mean that Karan was only precluded
from selling I&J and Karan branded products.
Following
upon
MacNeil
actual
implementation of the Manufacturing Agreement is not a consideration.
It is clear, however, that the parties pursuant to
their common
understanding of the Manufacturing Agreement simply remained at
liberty to sell house branded products to the retail
trade and
no-name to the food sector.
[111]
I&J
also referred the Court to a number of authorities on the conduct of
parties in relation to the agreement.
In
Stuttafords
[47]
this Court
explained that, where the conduct complained of
‘
is not expressly
confirmed by the parties concerned, an inference may be drawn from
the discussion itself where one of the parties
commits to act in a
particular way and the conduct of the other parties demonstrates an
agreement to be bound. The proved facts
from which the inference is
to be drawn must objectively establish that at least one party
assumes an obligation or gives an undertaking
or assurance that it
will act in accordance with what was discussed at the meeting. A mere
expectation that a party will act in
that way is insufficient. As
contemplated in section 4(1)(b)(i) of the Act,
conduct that
conforms with a binding
arrangement must be shown to exist
.’
[112]
In
Competition
Commission of SA v NPC-Cimpor (Pty) Ltd and others,
[48]
this
Court
held:
‘
That cartel
activity represents the very worst strain of anti-competitive conduct
is surely trite. Courts need to be vigilant in
ensuring the
prohibition of this conduct. This again is manifestly obvious. Indeed
this Court … has developed a responsive
jurisprudence for the
curbing of cartel activity. But this does not mean that the rule of
law does not apply to cartel cases and
can be elided over in favour
of a result.
That the
Commission must discharge the burden
that the Act imposes upon it to produce
relevant evidence that
shows the nature of the conduct of the impugned party is such
that it justifies a finding that the conduct so proved falls
within the scope of section
4(1)(b) of the Act
.’
[113]
I&J urged this Court to consider the fact that the
Manufacturing Agreement was not implemented and this evidenced the
parties’
common understanding and intention that there was no
prohibited restriction in the Manufacturing Agreement. It submitted
that the
intention and understanding of the parties’ agreement,
and the manner in which they “implemented it is vital”
to
the inquiry.
[114]
Based on
MacNeil
it is clear, that proof of the actual
implementation of an agreement is unnecessary to prove prohibited
conduct. The relevance of
the nature of the conduct and whether it
conforms with a binding prohibited agreement goes to assess whether
it falls within the
ambit of s 4(1)(b).
[115]
In considering how I&J and Karan conducted themselves in
relation to the Manufacturing Agreement, conduct is relevant to the

intention of the parties and whether that was within the ambit of the
prohibition. The conduct of the parties goes no further than
that. In
this appeal therefore the conduct of the parties insofar as what they
supplied and to whom is relevant to the
true meaning
of the
Manufacturing and Amending Agreements. The actual implementation is
not a decisive factor.
Time
bar
[116]
I&J submit that if the parties indeed amended the
Manufacturing Agreement in 2002, then the important enquiry in this
case is
no longer what their original agreement might have meant, but
how they understood and implemented their Amended Agreement from 2002

onwards. Accordingly the alleged practice would have ceased three
years later in June 2005. Any possible contravention of s 4(1)(b)(ii)

prior to that date would be time-barred under s 67(1) of the
Competition Act which provides that a “complaint in respect
of
a prohibited practice may not be initiated more than three years
after the practice has cease”.
[117]
Insofar as it may be necessary to deal with the time bar in
relation to the Amending Agreement, if it indeed was concluded, it is

common cause that it was concluded in June 2002. An analysis of Mr
Simonsen’s evidence that Karan was fully engaged in the
food
services market by 2002, bearing in mind he was not in the employ of
Karan when the Manufacturing Agreement was signed. This
date could
therefore not be disputed by the Commission. On the Commission’s
own version, therefore, any purported ‘
allocation
’
to I&J of food services customers therefore ceased by 2002, and
Karan was supplying house brands up to the time Mr Simonsen
left the
employ of Karan in 2012.
[118]
If is accepted that that Amending Agreement came into
existence in 2002 then I&J correctly submits on that version, the
parties’
conduct since 2002 has not been in contravention of s
4(1)(b)(ii). The alleged market division conduct on which the
Commission
relies accordingly became time barred by June 2005 in
terms of s 67(1) of the Act, when the complaint was not initiated
within
three years after the practice had ceased.
[119]
The complaint on which the referral was based originated in
February 2013, when the Commission initiated a complaint against
several
feedlots. The Commission took more than four years after
initiation of that complaint to conduct a dawn raid, during which it
found
the Manufacturing Agreement. It took another three months to
initiate the present complaint being June 2017. By then, almost three

years had lapsed since Karan had ceased production of burgers patties
for I&J because of the termination letter which is in
2014. The
Commission argues that the offending conduct persisted from 2000
until the termination of the Manufacturing Agreement
in 2014. The
facts do not support this interpretation.
[120]
In the light of the undisputed evidence that as from 2002 there was
no restriction so the 2014
date as date of cessation of the
prohibited practice is clearly wrong. In this case the complaint was
out of time as there was
no Manufacturing and Amending
Agreement in place. In addition this was not a situation where
there was a secretive agreement incapable of detection. The
Commission
despite being in possession of the Manufacturing and
Amended Agreement did not act timeously.
[121]
Pickfords
[49]
allows for the Commission to seek condonation where it initiates a
referral outside the time period contemplated in s 67(1) of
the Act.
The
Commission did not seek condonation.
Pickfords
provides
that time bars are important mechanisms to prevent inordinate delays
that may be detrimental to the interests of justice,
[50]
and that the societal interest in certainty and quality of
adjudication and for disputes to be ‘
finalised
timeously’
,
requires that ‘
disputes
be brought before a court as soon as reasonably possible’.
[51]
[122]
Clearly based on the undisputed evidence, any ‘
market
allocation
’ which is alleged by the Commission was not
given effect to within three years prior to the initiation of the
Commission’s
complaint and the complaint must therefore be
dismissed on this basis alone.
Conclusion
[123]
On a proper analysis of the evidence and the law, Karan was
only precluded from supplying I&J and Karan branded burgers.
Karan
continued to sell house branded products to the retail trade
and no-name to the food sector. The Manufacturing Agreement is,
therefore,
not the type of limitation that is envisaged as a
per
se
contravention. These are perfectly permissible commercial
restraints as described in
SAB
. This restraint does not reach
the threshold of a cartel agreement in contravention of s
4(1)(b)(ii). The evidence also did not
show that Karan exited the
market because of the Manufacturing Agreement, another feature
pointing way from a s 4(1)(b) (ii) contravention.
[124]
Cartel conduct is among the most egregious of disruptions to
the competitive market, and something more than the present
Manufacturing
and Amending Agreement would be required before the
line between legitimate commercial agreements and cartelism is
crossed. The
Manufacturing Agreement, construed in its true sense and
together with the evidence, does not demonstrate that the
relationship
between I&J and Karan divided the market in
contravention of the Competition Act.
[125]
For these reasons, the appeal must dismissed with costs.
Order
1.
Condonation is granted for the late filing of the appeal.
2.
The appeal is dismissed.
3.
The Commission is ordered to pay the first respondent’s costs
including the cost
of two senior counsel.
4.
The Commission is ordered to pay the costs of the postponement
including the cost of
two counsel.
M
Victor
Judge
of Appeal
Competition
Appeal Court
of
South Africa
I
concur
pp
N Manoim
N
Manoim
Judge
of Appeal Competition Appeal Court
Of
South Africa
I
concur
pp
L Modiba
L
Modiba Acting
Judge
of Appeal Competition Appeal Court
of
South Africa
Counsel
for Appellant:                            Adv

T Ngcukaitobi SC
Adv Mahlape Sello SC
Adv Katlego Monareng
Instructed
by:                                          Ndzabandzaba

Attorneys Inc
Counsel
for First Respondent:               Adv
W Trengrove
SC
Adv M Engelbrecht SC
Instructed
by:                                         Herbert

Smith Freehills Inc
[1]
No 89 of 1998 as amended
[2]
Th
e
main purpose of feedlots is to help the animal reach a certain
weight as efficiently as possible.
[3]
American
Natural Soda Ash v Competition Commission
[2005]
ZASCA 421
(SCA) (
ANSAC
).
[4]
Under
the
per
se
rule,
the wording of an agreement is presumed to violate competition law,
regardless of any other factor such as an explanation
of a
competitive benefit.
[5]
ANSAC
above
id 3 at para 37.
[6]
Dawn
Consolidated Holdings (Pty) Ltd v Competition Commission
[2018]
ZACAC 2.
[7]
Natal
Joint Municipal Pension Fund v Endumeni Municipality
[2012]
ZASCA 13
;
2012 (4) SA 593
(SCA) (
Endumeni
).
[8]
Competition
Commission v South African Breweries
[2014]
CPLR 339
(CAC) (
SAB
).
[9]
Id at para 38.
[10]
Dawn
Consolidated Holdings
above
n 6 at para 28.
[11]
This was confirmed by Mr Pretorius during his testimony.
[12]
Competition
Commission of South Africa v Pickfords Removals SA (Pty) Limited
[2020]
ZACC 14
;
2020 (10) BCLR 1204
(CC);
2021 (3) SA 1
(CC) (
Pickfords
).
[13]
See
Tribunal decision Vol 1 p24 para 98.
[14]
Neuhof M et al,
A
Practical Guide to the South African Competition Act
(2006)
at 62.
[15]
Luke Kelly, David Unterhalter, Isabel Goodman, Patrick Smith and
Paula Youens ,
Principles
of Competition Law in South Africa
(Oxford
University Press, 2016).
[16]
Id at 85.
[17]
Niels et al,
Economics
for Competition Lawyers
(2
ed, Oxford University Press, 2016) at 235.
[18]
Netstar
(Pty) Ltd v Competition Commission South Africa
[2011]
ZACAC 1
;
2011 (3) SA 171
(CAC) at para
25.
[19]
Id.
[20]
Id.
[21]
Dormell
Properties 282 CC v Renasa Insurance Company Ltd
[2010]
ZASCA 137
;
2011 (1) SA 70
(SCA) at
para
52.
[22]
Milner
Street Properties (Pty) Ltd v Eckstein Properties (Pty) Ltd
[2001]
ZASCA 95
;
2001 (4) SA 1315
(SCA) at 1328.
[23]
Competition
Commission v Stuttafords Van Lines Gauteng Hub (Pty) Ltd
[2020]
2 CPLR 548
(CAC) (
Stuttafords
).
[24]
Gold
Fields Ltd v Harmony Gold Mining Co Ltd
[2005]
1 CPLR 74
(CAC) at para 88.
[25]
Id.
[26]
Chisuse
v Director-General, Department of Home Affairs
[2020]
ZACC 20
;
2020 (6) SA 14
(CC);
2020 (10) BCLR 1173
(CC) at para 47.
[27]
Endumeni
above
n 7 at para 18.
[28]
Capitec
Bank Holdings Limited v Coral Lagoon Investments 194 (Pty) Ltd
[2021]
ZASCA 99
;
2022 (1) SA 100
(SCA) (
Capitec
)
at para 25.
[29]
See
Chisuse
above
n 25 as cited in
University
of Johannesburg v Auckland Park Theological Seminary
[2021]
ZACC 13
;
2021 (6) SA 1
(CC);
2021 (8) BCLR 807
(CC) at fn 45.
[30]
Moosa Fareed, ‘Understanding the “Spirit, Purport and
Objects” of South Africa’s Bill of Rights’
(2018)
4
Journal
of Forensic Legal & Investigative Sciences Category: Forensic
science
1
.
[31]
This literalist approach to language has never been part
of US
anti-trust law see
Texaco
Inc v Dagher
U.S.
1,5 (2006)
[32]
Leegin
Creative Leather Products Inc. PSKS Inc
.No
06480. June 28,2007 majority opinion
[33]
Northwest
Wholesale Stationery Inc. Pacific Stationary &Printing Co
472
US284,289 (1985).
[34]
National
Collegiate Athletic Association v. Alston
,
2021 and
Ohio
v. American Express Co.
138
S.Ct. 2274
(2018.) In considering a contravention of the Sherman Act
in both cases,
the
majority in the Supreme Court favoured the Rule of Reason approach
rather than a per se approach. Commentators opine that
the Court
continues to be willing to recognise and apply well-attested and
accepted new methodologies in economic science to
enrich antitrust
law.
In
the latter case Justice Breyer in a dissent concurred in by inter
alia Justices Ginsberg and Sotomeyer preferred to keep closer
to the
application of the per se rule.
[35]
id
[36]
GTE
Sylvania
,433
U.S. at 50 dealing with vertical price restraints.
[37]
Leegin
Creative Leather Products Inc. PSKS Inc
.551
U.S. 877,887 2007 majority opinion
[38]
Per se Rules in US and EU Antitrust. Competition Law
[39]
Quoted in note 2 above.
[40]
American
Natural Soda Ash Corporation and Another v Competition Commission of
South Africa
(554/2003)
[2005] ZASCA 42
;
[2005] 1 CPLR 1
(SCA) ;
[2005] 3 All SA 1
(SCA) (13
May 2005)
[41]
A'Africa
Pest Prevention CC and Another v Competition Commission of South
Africa.
(168/CAC/Oct18)
[2019] ZACAC 2
(2 July 2019)
[42]
Aranda
Textiles (Pty) Ltd and Another v The Competition Commission of South
Africa
(190/CAC/Dec20)
[2021] ZACAC 1.
[43]
id 7
[44]
Id 7
[45]
Id 7 at para 33
[46]
MacNeil
Agencies Pty Ltd vs Competition Commission (
121/CAC/Jul12
[2013] ZACAC 3918
November 2013) at para 63
[47]
Id 46.
[48]
Competition
Commission of SA v NPC-Cimpor (Pty) Ltd and others
[2020]
2 CPLR 524 (CAC).
[49]
Id note 3 at para 14.
[50]
Id
at
para 44.
[51]
Id
at
para 43.