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[2022] ZACAC 10
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Northam Platinum Holdings Limited v Impala Platinum Holdings Limited and Others ; Northam Platinum Holdings Limited v Carrim No and Others (202/CAC/Jul22 ; 203/CAC/Jul22) [2022] ZACAC 10; [2022] 2 CPLR 25 (CAC) (5 September 2022)
IN
THE COMPETITION APPEAL COURT OF SOUTH AFRICA
Reportable
Case
No: 202/CAC/Jul22 and
203/CAC/Jul22
In
the Appeal between:
NORTHAM
PLATINUM HOLDINGS LIMITED Appellant
and
IMPALA
PLATINUM HOLDINGS LIMITED First
Respondent
ROYAL
BAFOKENG PLATINUM LIMITED Second
Respondent
THE
COMPETITION COMMISSION Third
Respondent
THE
MINISTERM OF TRADE,
INDUSTRY
AND COMPETITION Fourth
Respondent
And
in the Review Application between:
NORTHAM
PLATINUM HOLDINGS LIMITED Applicant
And
YASMIN
CARRIM NO First
Respondent
ENVER
DANIELS Second
Respondent
IMRAAN
VALODIA NO Third
Respondent
IMPALA
PLATINUM HOLDINGS LIMITED Fourth
Respondent
ROYAL
BAFOKENG PLATINUM LIMITED Fifth
Respondent
THE
COMPETITION COMMISSION Sixth
Respondent
THE
MINISTER OF TRADE,
INDUSTRY
AND COMPETITION Seventh
Respondent
JUDGMENT
Davis
AJA
Introduction
[1]
This is an appeal and review against a decision of the Competition
Tribunal (‘The
Tribunal’) of 22June 2022 in which, in
terms of s53 (c) of the Competition Act 89 of 1998 (‘the Act‘),
it granted
appellant a restricted suite of rights of participation in
a large merger proceeding involving first and second respondent.
Dissatisfied
with the restrictive nature of the rights of
participation so granted, the appellant approaches this court for
relief in terms
of an appeal and review which it has launched against
the order of the Tribunal. It has been heard by this Court on an
expedited
basis; hence this judgment has unfortunately been prepared
under considerable pressure.
[2]
The disposition of these proceedings trigger a set of related legal
issues. In the first
place it concerns an enquiry as to the nature of
rights of participation as envisaged in terms of s53 of the Act and
what rights
flow therefrom. Coupled thereto is the question of the
nature and scope of merger proceedings to be conducted by the
Tribunal in
terms of sections 12 A and 14 of the Act. Finally, it
raises the question of the nature of the discretion exercised by the
Tribunal
when faced with an application by a party to be admitted as
a participant and the nature of its participation.
The
background
[3]
Briefly the background to this application can be summarised thus:
first respondent (Impala
Platinum Holdings Limited) intends to
acquire control over second respondent (Royal Bafokeng Platinum
Limited). That transaction
has been notified to the third respondent
which has recommended that the transaction be approved.
[4]
The merger relates to first respondent’s intention to acquire
37.83% of second respondent’s
issued share capital and seeks to
increase its shareholding beyond 50%. Appellant holds 34.5% of second
respondent’s issued
share capital.
[5]
First respondent is involved in the production and sale of the
platinum group metals (PGM)
It is vertically integrated with a
presence at each level of the PGM value chain. The PGM market has
three major participants Amplats,
Implats and Sibanye. The remaining
participants are referred to as junior members. Second respondent,
the target firm is also in
the PGM market upstream but not
downstream. There are three levels in the value chain. These are the
mining and concentration market,
the smelting and conversion market,
and the refining market. It is appellant’s case that the
Commission incorrectly dealt
with these three categories in the value
chain which it followed and would result in the Tribunal making a
finding based on incorrect
facts. In its view, the entire
foundational edifice of the merger would collapse if the merger were
to run its course without suspending
the process, enormous resources
would be lost.
[6]
The appellant brought an application to intervene in the merger
proceedings. In granting
the appellant the right to participate, the
Competition Tribunal found that;
"Northam
… could assist the Tribunal in gaining deeper insights."
It
granted the appellant participation rights specifically in respect
of,
"the
vertical effects of the proposed merger, including the effect on
competition in the local upstream market for the production
and sale
of primary concentrate" and "the extent to which the merger
effects could be prejudicial to junior miners in
South Africa."
[7]
Appellant is itself
not
a junior miner, which meant that in
order to properly exercise its participation rights, it contended
that it required certain procedural
rights, which the Tribunal denied
it. Appellant submits that the Tribunal erred in granting it
participation rights but then refused
it the procedural rights which
were inextricably linked to and necessary for appellant to properly
ventilate the theories of harm
identified by the Tribunal as relevant
to its consideration of the merger.
[8]
On the basis of its legal dissatisfaction with the order so granted,
appellant has launched
an appeal against part of the Tribunal's order
in the intervention application. In addition to that appeal,
appellant seeks to
review the Tribunal's decision on the basis that
the Tribunal made findings against appellant in circumstances where
the latter
argues it was refused a fair hearing on these issues.
[9]
Appellant submits that in order to show the vertical effects in the
local upstream market
for the production and sale of primary
concentrate and the extent to which the merger could be detrimental
in particular to junior
miners and the anticompetitive effects in the
market, it had to place sufficient evidence before the Tribunal.
[10]
In essence the appellant takes issue with the order of the Tribunal
which denied applicant the following
rights (i) to call for
discovery, (ii) to suggest names of witnesses that the Tribunal
should call to appear before it, (iii) to
request the Tribunal to
require production of certain relevant documents, (iv) to have access
to relevant portions of the merger
record. Appellant contends that
the refusal of these basic litigation rights is legally
unjustifiable.
[11]
It is important at the outset to emphasise the following: this is not
a case where the applicant for intervention
as a participant has been
held not to have put up a case to justify participation. In the
context of the present merger proceedings,
the Tribunal was satisfied
that appellant has identified two credible theories of harm which may
flow from the merger and that
it must consider before approving the
transaction. The Tribunal confirms at paragraph 59, that:
"…
we do appreciate the fact that Northam … could assist the
Tribunal in gaining deeper insights."
[12]
In order, therefore, for appellant to properly ventilate these
theories of harm and present a complete picture
to the Tribunal
regarding them, it has contended that it was necessary to have sight
of the Commission’s report and that
it be afforded certain
procedural rights. In particular, appellant sought permission to:
12.1.
Call
for further and better discovery
[1]
- this was necessary because, as explained in Northam's intervention
application, the Commission appeared to have neglected to
call for
the agreements between junior miners and third party smelters or
Implats.
[2]
The
Commission, and in turn, the Tribunal, could only ever properly
interrogate the foreclosure effects of the merger on junior
miners if
it had these agreements before it. Clearly, in order to meaningfully
exercise its rights and complete the picture regarding
foreclosure to
junior miners, appellant considers that it is required the right to
call for further and better discovery regarding
these relationships.
12.2.
Subpoena
certain persons and/or documents
[3]
–
this was necessary to ensure that the Tribunal was presented with a
complete picture of the competitive dynamics in the
relevant markets.
12.3.
Adduce this evidence to the Tribunal for it to be tested through
cross- examination.8
[13]
The Tribunal denied Northam all of those procedural rights and the
record. As a result, the Tribunal identified
two credible theories of
harm for consideration but disabled appellant’s ability to
assist it in its consideration of each
as required by section 12A.
[14]
Appellant thus submits that the Tribunal erred in granting it
participation rights but then refusing it the
procedural rights
prayed for in its application which were inextricably linked to and
necessary for it to properly ventilate the
theories of harm
identified by the Tribunal as relevant to its consideration of the
merger.
[15]
On this basis, appellant appeals against parts of the Tribunal's
order in the intervention application. It
contends that the
Commission had failed to procure the necessary documents to properly
interrogate the vertical theories of harm
referred to above, and (ii)
those missing documents are not within appellant’s possession.
For the appellant, in order for
it to meaningfully exercise its
rights and to complete the picture, further and better discovery was
necessary. Thus it argued
15.1.
By denying appellant the right to require that certain persons appear
before the Tribunal and/or produce
documents, the Tribunal overlooked
the fact that the specific theories of harm in respect of which
appellant was granted intervener
status relate, first and foremost,
to firms other than appellant. Appellant argues that it is not itself
in possession of the information
necessary to properly ventilate the
identified theories of harm. Thus, it argues that if it was to
properly assist the Tribunal
in its statutorily mandated merger
assessment, it needed the right to require certain persons to appear
and/or produce documents.
15.2.
Having granted appellant intervener status, the Tribunal denied it
the right to adduce any oral or documentary
evidence. It contends
that it is artificial to admit someone in as an intervener but to
deny them the ability to adduce evidence.
That is particularly so
where in the appellant’s view the Commission’s merger
investigation was demonstrably deficient,
as was the case here.
15.3.
Having granted appellant intervener status, the Tribunal then
disallowed it access to the Commission’s
merger record. Absent
a full appreciation of what the Commission’s merger record
comprises, appellant – a successful
intervener – is left
in the dark. The Tribunal is also, in some respects, in the dark
because it is being called on to determine
a large merger based on an
incomplete investigation and insufficient evidence. And it will
remain in the dark because it has refused
to allow appellant to
supplement the evidence. In addition, appellant contends that the
bases on which the Tribunal disallowed
it all of those procedural
rights are also unsustainable, given procedural irregularities
committed by the Tribunal.
The
issue of participation: the relevant law
[16]
Section 53 of the Act provides thus: The following persons may
participate in a hearing contemplated in section
52, in person or
through a representative, and may put questions to witnesses and
inspect any books, documents or items presented
at the hearing: (a)
the Commissioner, or any person appointed by the Commissioner; (b)
the complainant; (c) the firm whose conduct
forms the basis of the
hearing; and (d)
any other person who has a material interest in
the hearing, unless, in the opinion of the presiding member of the
Competition Tribunal,
that interest is adequately represented by
another participant
. (my emphasis)
[17]
S 52 of the Act provides thus: (1) The Competition Tribunal must
conduct a hearing into every matter referred
to it in terms of
section 50(a) or section 51 (1), 15 (2) The Competition Tribunal must
conduct its hearings in public —
(a) in an inquisitorial
manner; (b) as expeditiously as possible; (c) as informally as
possible; and (d) in accordance with the
principles of natural
justice.
[18]
Rule 46 (2) of the Rules of the Tribunal also merits consideration in
the context of this case:
‘
No
more than 10 business days after receiving a motion to intervene, a
member of the Tribunal assigned by the Chairperson must either
(a)
make an order allowing the applicant to intervene, subject to any
limitations –
(i)
necessary to ensure that the proceedings will be orderly and
expeditious; or
(ii)
on the matters with respect to which the person may participate, or
the form of their participation; or
(b)
deny the application, if the member concludes that the interests of
the person are not within the scope of
the Act or are already
represented by another participant in the proceeding.’
[19]
These sections reveal the following: Once granted rights of
participation, than in terms of this decision
by the Tribunal, the
successful applicant becomes a party to proceedings and thus is in a
distinctively different legal position
to an amicus curiae. While the
participant such as the appellant is required to apply to assist the
Tribunal in its inquiry, once
admitted, it has the status of a party.
So much is clear from the underlined provision contained in s53 of
the Act; that is the
right to ask questions of witnesses and inspect
documents.
[20]
Rule 46(2) does qualify this right in that a right to participate can
be restricted by the Tribunal in order
to promote expedition of
decision. This balance between rights granted to a participant
against the need for expedition was confirmed
by this Court in
ADC
v Digital Titan
[2022] ZACAC 6
at para 17 where the Court held
that the decision by the Tribunal to admit a participant ‘entails
taking into account the
likelihood of assistance promised by the
prospective intervener, balanced against the consequences of the
intervention in terms
of the expedition and resolution of the
proceedings. If the likelihood of the prospective intervener
assisting the Tribunal's enquiry
is doubtful, while the impact of the
intervention is more than likely to impact on the expedition of the
proceedings, then the
Tribunal should decline the intervention or
curtail its extent’.
[21]
As s52 makes clear, the Tribunal is required to conduct proceedings
in an inquisitorial manner. This approach
is particularly important
in the case of merger control which, at root, is concerned with the
determination of how the structure
of the relevant market will be
affected by the proposed merger and where, when compared to the
counterfactual, will result in a
substantial preventing or lessening
of competition. Whereas a hearing which concerns a restrictive
practice or an abuse of dominance
by one dominant firm is concerned
to examine and determine whether an existing practice or form of
conduct infringes the relevant
section of the Act, merger control
looks into the future and compares an informed prediction with the
status quo in the relevant
market.
[22]
Two
consequences
follow.
Firstly,
the
inquisitorial
model
of
adjudication
as
provided
for in s52 of the Act is well suited to a merger hearing. Secondly,
this model mandates the Tribunal to act in a manner
in which it
conducts its hearing with an inquiring mind.
By
this,
is
meant
that
the
Tribunal
should
fulfil
its
inquisitorial
role
in
a
fashion
similar
to
that
laid
out
by
Nugent
JA
in
Public
Protector
v
Mail
and
Guardian
Ltd
and
others
2011
(4)
SA
420
(SCA)
where,
on
behalf
of
the
unanimous
court,
albeit
in
the
context of an inquiry conducted by the Public Protector, the learned
judge of appeal said: ‘A proper investigation might
take as
many forms as there are proper investigators.
It
is for the Public Protector to decide what is appropriate to each
case and not for this Court to
supplant
that
function…but
I
think
there
is
nonetheless
at
least
one
feature
of
an
investigation that must always exist – because it is one that
is universal and indispensable to an investigation of any
kind which
is that the investigation must have been conducted with an open and
inquiring mind.
An
investigation that has not conducting with an open and inquiring mind
is no investigation at all.‘
[4]
[23]
It is now possible to examine the present appeal through the prism of
this analysis of the relevant law.
To do so it is necessary to
examine the reasoning adopted by the Tribunal in order to justify its
order.
The
Tribunal’s determination
[24]
Regrettably the Tribunal’s reasoning is somewhat difficult to
follow and, in significant part, read
as a whole, the determination
appears to be at war with itself. This reluctantly expressed
criticism is based upon the initial
part of the Tribunal’s
reasoning that none of the theories of harm put up by appellant held
much weight. Nonetheless, it
found that the appellant had passed the
threshold for admission as a participant, reasoning thus:
‘
However,
it may be that Northam, from its own experiences and its unique
position in the market could assist the Tribunal in improving
its
understanding of the market dynamics at a local level. Recall that
Northam is a miner that straddles the gap between the junior
and the
major players. As a mid-sized miner, it is both a customer of the
larger players and a supplier to the smaller junior players.
In
balancing the potential delays that could occasion the expedition of
proceedings, especially in the context of a public offer,
were
Northam to be granted the full suite of procedural rights against the
degree of assistance that Northam as a mid-level miner,
who is both
customer of the larger players and supplier to the junior miners,
could provide us with, we have limited its participation
in such a
way as to grant it entry on the issues that will be of most
assistance to Tribunal’s deliberation, while limiting
Northam’s
access to the confidential recommendation. (paras 80-82) Accordingly,
we granted Northam limited rights to participate
in the large merger
proceedings ….’
[25]
The Tribunal’s reasoning is truly thin on justification for
admission of appellant as a participant.
As to the alleged vertical
theory of harm, it said that:
‘
Northam’s
foreclosure of capacity for third parties (junior miners) was
challenged by the Commission’s assessment that
capacity
arrangements were governed by contracts and the unlikelihood of
foreclosure. Its theory of foreclosure was further weakened
by
Implats’ evidence that any move away from Amplats could only
occur in 2027 (if at all) and of increased capacity in its
own
processor. Overall, we found that Northam’s horizontal effects
had little to offer. On the vertical, while its theory
was challenged
by both the Commission and Implats, we took cognisance of its unique
position as a mid-level miner and that it might
be able to provide.
Its central concern relates to the potential effects of the merger on
junior miners, including concerns related
to remaining smelting
capacity. As both customer of the larger players and supplier to the
junior miners, Northam presumably has
insights related to, in
particular, POC, offtake and smelting agreements. This could assist
the Tribunal in its deliberations.’
(para 83)
[26]
On the argument related to public interest grounds, it held:
‘
We
found that Northam has little to add. Northam as shareholder can
provide input into the ESOS process in that capacity if it so
wishes.
Northam could not point to any other public interest concerns which
were not adequately addressed by the proposed conditions
to the
merger. It was not clear in which way Northam could meaningfully
contribute to this process as an intervenor in these proceedings.
The
fact that Northam is a rival bidder, is relevant to the exercise of
our discretion in this matter, balanced against the possible
assistance an intervenor could provide us with.’ (paras 84-85)
[27]
Notwithstanding its tepid response to appellant’s case, the
Tribunal granted an order in favour of
appellant’s
participation in the merger and which provided rights which allowed
appellant’s legal and economic legal
advisors access to the
confidential version of the Commission’s recommendations
subject to the appropriate confidentiality
undertakings been given.
It permitted the making of written submissions to the Tribunal within
15 business days of its order and
further permitted the appellant to
make oral submissions subject to a maximum provision of one hour to
at the merger hearing.
[28]
In terms of this order, the Tribunal denied to appellant rights which
it requested, including access to the
Commission’s record, a
call for discovery of further relevant documents from the merging
parties, the right to request the
Tribunal to summon third parties to
produce relevant documents at the merger hearings and to call and to
cross examine witnesses.
The
appellant’s case
[29]
In arguing that the Tribunal had committed both appealable and
reviewable errors in how it decided to conduct
the hearing of the
proposed merger as a result of its restriction of rights of
participation to the appellant, Ms Le Roux, who
appeared together
with Mr Quinn, Ms Williams and Ms Chanza on behalf of the appellant,
contended that the order issued by the Tribunal
hollowed out
appellant’s participation in the merger proceedings to the
extent that the Tribunal would not be able to properly
assess the
proposed merger and the competition and public interest effects
thereof or, alternatively whether conditions were required
to remedy
these effects. In particular, Ms Le Roux contended that by making
this order, the Tribunal had effectively ensured that
it would not be
able to properly assess the two vertical theories of harm raised by
appellant and whether its overall assessment
of the merger would
undoubtedly benefit from obtaining further facts given the incomplete
picture which it had before it.
[30]
Ms Le Roux contended further that, by way of its restricted order,
the Tribunal had ensured that it remained
ignorant of these key facts
which could only be found by the merging parties disclosing further
documents, particularly respondents’
POC / off take agreements
with junior miners and the considering of further documents which
were required from third party junior
miners, particularly the junior
miners’ POC / off take agreements with Sibanye, and Amplats as
well as Amplats, Implats,
Sibanye as well as enabling appellant to
provide the relevant smelting and base metal removal capacity and
utilisation information.
[31]
Ms Le Roux further submitted that the errors committed by the
Tribunal in refusing to grant appellant meaningful
rights of
participation meant that the entire merger was now based on the
Commission’s flawed report. Appellant’s case
was directed
to what it considered were various material errors in the
Commission’s analysis, including in respect of junior
miner
foreclosure. In particular, Ms Le Roux contended that the
Commission’s assessment of the implications for junior miners
had been premised on a misunderstanding of the operation of junior
miners. Further, there was insufficient evidence for the Tribunal
to
make its own informed determination and in more general terms, by
refusing to lift its gaze and enquire into the complete picture
which
was triggered by appellant’s contention in respect of its
vertical theory of harm. It needed to deal with the argument
of the
extent to which the effects of merger could be prejudicial to junior
miners in South Africa. Thus, the Tribunal by relying
almost
exclusively on the Commission’s report would fail to meet the
standard required of it in terms of the inquisitorial
process which
it was mandated to conduct, particularly with regard to a merger
hearing.
[32]
Mr Wilson, who appeared together with Mr Ngcukaitobi, Mr Marriott and
Ms Pudifin-Jones on behalf of first
and second respondents, submitted
that the appeal had no merit. In the first place an appeal of this
nature had to fail because
the grant of intervention was
discretionary and accordingly a court would not interfere because it
might have reached a different
decision. In Mr Wilson’s view,
the appellant was required to show that the Tribunal had misdirected
itself and this he contended
it plainly failed to do.
[33]
The core of Mr Wilson’s argument was in effect that appellant
had sought to intervene in the Tribunal
process on the basis that it
had unique inside knowledge and possession of facts which it could
place before the Tribunal and which
would assist the latter in its
determination of the merger. Thus, appellant’s case for
intervention was based on the strength
of claims that it had made
regarding its ability to assist the Tribunal based on its own
experience in the market; in particular
insofar as market definition
and the understanding of purchase – of – concentrate
(POC) agreements were concerned.
It therefore did not behove the
appellant to now argue that, notwithstanding its claim to extensive
personal knowledge and evidence
necessary to sustain its theories of
harm, it, without the further procedural rights of access to the
record, discovery and the
ability to call the evidence of third
parties, including junior miners, would not be able to contribute
significantly to the overall
assessment, or as appellant claimed its
participation was now ‘illusory at best’.
[34]
In support of this submission, Mr Wilson referred extensively to the
founding affidavit of Ms Beale in support
of appellant’s
application for participation in which she claimed that appellant:
1.
“is a mid-tier mining company which also understands the
challenges faced by junior miners
– especially when it comes to
the challenges in securing capacity for the processing of primary
concentrate from the aforementioned
“Big 3”. Northam has
knowledge and facts that straddle the divide between being a junior
miner and major – knowledge
and facts that will be useful to
the Tribunal.
2.
“understands the unique and complex dynamics of the PGM
industry. It is a customer when it
comes to selling primary
concentrate to Implats and it is further a provider of smelting
facilities for primary concentrate to
junior miners. It accordingly
has experience in implementing off – take agreements for the
sale of primary concentrate (vis-à-vis
Implats) and it has
experience negotiating off – take / purchase of concentrate
agreements for the junior miners it services”.
3.
“understands and appreciates the challenges junior miners face
in South Africa … The
aforementioned features of Northam’
s business mean that it has knowledge and facts that straddle the
divide between being
a junior miner and a major”.
4.
“has extensive experience operative as a junior miner,
implementing its off – take
agreements, occasionally
negotiating sales of primary concentrate agreements when these are
necessary, negotiating refining agreements,
and developing and
operating smelting, converting and base metals removal facilities.
Northam is also a substantial employer in
the PGM industry, with
extensive practical experience in the realities of large scale labour
negotiations, community engagement
and regional development.
5.
“will be able to assist the Tribunal in its analysis of the
relevant market. If Northam’s
application to intervene is
granted, it intends to place evidence before the Tribunal to
demonstrate that the PGM industry should
be divided into three
functional markets that each comprise one of the different levels of
the PGM supply chain”.
6.
“its factual input will be helpful as it is a market
participant and operator of its own
smelting, converting and base
metal removal facilities that processes primary concentrate. It
sometime enters into POC agreements
with junior miners which require
its services”.
7.
“…Northam can assist the Tribunal in assessing whether
the proposed merger gives rise
to a substantial lessening of
competition in the downstream market for the smelting of primary
concentrate. As explained above,
Northam is uniquely positioned to do
so as it straddles the divide between junior miner and major. Northam
can assist the Tribunal
by providing and electing facts which will
demonstrate at least three possible anti-competitive effects”.
8.
“Northam can also give nuanced evidence on the incentives for
both junior miners and major
– the former will be particularly
helpful as it may be that junior miners are unable or unwilling to
speak frankly in relation
to some of the issues being considered by
the Tribunal”.
9.
“Due to Northam’s extensive experience in the PGM
industry, operating in the Bushveld
Complex, having operated as a
junior miner and now as a mid-tier miner, implementing off –
take agreements, occasionally
concluding POC agreements, negotiating
refining agreements, developing and operating the necessary
facilities… Northam is
uniquely placed to assist the Tribunal
in its consideration of proposed merger”, and
10.
“has insight into the experiences of junior miners …
Northam is uniquely placed as a mid-tier miner
to give this input to
the Tribunal … Northam also has the benefit of being on
multiple sides of the negotiations between
miner / concentrator and
smelter / converter / BMR and refinery and is able to assist the
Tribunal’s consideration of these
valuable and relevant
perspectives on the proposed transaction”.
[35]
Having been granted the right to participate on the basis of its
claim that its specialised inside knowledge
would assist the Tribunal
in the overall assessment of the merger, its belated attempt at
broadening its rights of participation
represented no more than a
fishing expedition to try to find some evidence to support a theory
of harm which had already considered
and dismissed by the Commission.
Mr Wilson contended, in a theme which ran through much of the
respondents’ argument, that
appellant’s objective was to
delay the determination of the merger given that it was a rival
bidder.
[36]
Ms Le Roux countered by submitting that the respondents had only
relied on part of Ms Beale’s affidavit
and that there were
further passages which clearly indicated to the Tribunal that
appellant required a broadening of its rights
beyond those which were
granted in the order.
[37]
In dealing with the question of assistance to the Tribunal, Ms Beale
in her affidavit went on to say, after
the passages cited by Mr
Wilson:
‘
Northam
intends to call its own witnesses who can explain the PGM industry,
the three functional stages in the PGM production cycle
and the
negotiation and contracting dynamic associated with agreements that
regulate the sale of primary concentrate. Northam can
also give
nuanced evidence on the incentives for both junior miners and majors
– the former will be particularly helpful
as it may be that
junior miners are unable or unwilling to speak frankly in relation to
some of the issues being considered by
the Tribunal. Northam was not
asked by the Commission to supply its agreements with Implats whereby
Implats smelt the Everest mines
primary concentrate. Further, Northam
was not required to provide the Commission with any of the POC
agreements, off – take
agreements and return of metal
agreements it has concluded with junior miners for the smelting of
primary concentrate. If Northam
was not asked for its POC agreements
off – take agreement and return of metal agreements the
Commission probably did not
ask any other customers for these
agreements. Without an analysis of these POC agreements off –
take agreements it is impossible
to understand the market’s
competitors dynamics and relationships for the smelting of primary
concentrate. Northam accordingly
would want to ensure that the merger
parties discover such agreements and further the Tribunal consider
subpoenaing these agreements
from customers or Amplats and Sibanye so
that the Tribunal can understand the competitors dynamics when these
agreements are negotiated
and concluded.’
[38]
Ms Beale stated further that:
‘
To
vindicate its interest and render full assistance to the Tribunal
Northam’s external representatives should (subject to
providing
appropriate confidentiality undertakings) be granted access to all
documents while in the merger proceedings under the
claim of
confidentiality. Northam should also be permitted to call witnesses
at the hearing; to cross examine any witnesses called
by the merging
party, the Commission, or any other parties, to seek discovery
concerning specific concerns raised in this affidavit
and to adduce
argument at the hearing. It is submitted that Northam should also be
permitted to participate in all prehearing procedures
before the
Tribunal including applications for further discovery and access
confidential information and all other interlocutory
proceedings
before the Tribunal. Northam accordingly seeks full procedural rights
should have been granted an entitlement to participate
in the merger
proceeding requested in their company notice of motion.’
[39]
In Ms Le Roux’s view, read as a whole, Ms Beale’s
affidavit, while clearly asserting that ‘Northam
is uniquely
placed to assist the Tribunal in its consideration of the proposed
merger’ (para 123 of the founding affidavit),
sought the grant
of extensive rights to gain further information so that it could
contribute meaningfully to the proceedings. And
Ms Beale said so in
her affidavit. Therefore, its argument for participation was not
based on exclusive knowledge alone but exclusive
knowledge which
through the prism of further documents and evidence would be
extremely helpful to the Tribunal in the overall assessment
of the
merger.
[40]
Ms Le Roux submitted that once the Tribunal had admitted the
appellant as a participant in terms of s 53
(c) of the Act, it had
effectively decided that further input was needed in respect of
vertical effects of the proposed merger,
including the effects of
competition in the local upstream market for the production and sale
of primary concentrate and specifically
the effects of the merger on
junior miners; hence the grant to appellant of the status of a
participant. In her view, since these
effects had not been properly
considered by the Commission in its recommendations to the Tribunal,
a body such as the Tribunal,
which was required to approach the
merger hearing with an independent investigative mind, would have
surely crafted an order to
ensure that further input, which it
acknowledged were required by it in order to come to a proper
determination of the merger,
could be presented to it. By ‘hobbling’
appellant’s participation in the merger proceedings, it had
acted in
a manner which would undermine the Tribunal’s ability
to investigate and enquire into the proposed merger as required in
terms of s 12 A of the Act.
[41]
By contrast, Mr Wilson submitted that the Tribunal had exercised its
discretion in a perfectly justifiable
manner as reflected in the
following passage from its determination: ‘In balancing the
potential delays that could occasion
the expedition of proceedings
especially in the context of a public offer, were Northam to be
granted the full suite of procedural
rights against the degree of
assistance that Northam is midlevel miner, who is both customer of
the larger players in supply to
the junior miners, could provide us
with, we have limited participation in such a way as to granted entry
on the issues that will
be of most assistance to Tribunal’s
deliberations (sic) while limiting Northam’s access to the
confidential recommendation.’
(para 90)
[42]
Mr Wilson further submitted that, were appellant to be granted the
full suite of rights which it demanded
in terms of its notice of
motion, it would in effect have unnecessarily replicated the
functions of the Commission and would open
the door to any admitted
participant invariably enjoying such wide rights of participation
that the necessity of balancing enquiry
against expedition would be
tilted in an unfair manner in favour of the former and against the
latter objective.
Evaluation
[43]
In
turn to evaluate the core arguments raised by counsel.
[5]
The
first key issue is the context of the judgment in
Africa
Data Centre SA Development (Pty) Ltd v Digital Titan (Pty) Ltd
[2022]
ZACAC 6
relied upon by Mr Wilson.
This
recent judgment of the Court confirmed the need to balance enquiry
against expedition.
The
Court in that case was required to determine whether the Tribunal had
been correct in denying a party rights of participation
in terms of s
53 (c) of the Act.
In
the present case, notwithstanding the equivocal and somewhat
contradictory language employed in the determination by the Tribunal,
appellant has been admitted as a participant.
[44]
It follows therefrom that a range of arguments presented about the
rights of the appellant to participate
in the light of alleged
improper motives and the desire to delay are irrelevant. This Court
is not concerned with whether the appellant
should be admitted as a
participant. Simply put, the only question for determination is the
content of the participation which
has been granted to it on the
basis that it can assist the Tribunal in respect of the possible
vertical effects of the proposed
merger and the extent to which the
merger effects could be prejudicial to junior miners in South Africa.
Accordingly, arguments
with regard to the reasons for why junior
miners have absented themselves from the merger proceedings and the
invitation to this
court to involve itself in the merits of the
arguments are not relevant to the disposition of this case. To this
extent the judgment
of this Court in
ADC supra
must be
analysed accordingly.
[45]
A further important preliminary consideration in the evaluation of
the arguments of counsel, was a submission
correctly made by Ms Le
Roux that each of the rights of participation sought by the appellant
in terms of the appeal and/or review
before this Court needs to be
analysed separately. Each requires assessment on its own merits; that
is the extent to which each
such right should have been granted by
the Tribunal to the appellant, having granted the latter rights of
participation.
[46]
Accepting therefore the invitation to examine each of the rights on
their own, this Court was confronted
with varying degrees of
opposition or justification to the granting or denying of these
rights. The test to be employed in assessing
the order of the
Tribunal is that the decision to restrict rights granted to a
participant must be based on rational grounds. The
approach adopted
by the Constitutional Court to the importance of a hearing and the
need for a rational justification for a limitation
thereof in
Albutt
v Centre for the Study of Violence and Reconciliation
2010(3)SA
293(CC) at para 51, albeit within a different context is equally
applicable to the merger proceedings before the Tribunal
. Mr Wilson
was forced to concede that to grant the appellant an hour to make
submissions was hardly justifiable. As indicated,
the appellant is
not an amicus; it is a participant. In turn, this means that, if it
were dissatisfied with the final decision
taken by the Tribunal, it
would have a right to appeal in terms of s 58 (1) of the Act, which
right in itself marks it out as a
completely distinct party from an
amicus. By the grant of a maximum of an hour, the Tribunal appears to
have equated a participant
with an amicus.
[47]
The Tribunal is manifestly entitled to exercise a discretion to run
the proceedings as it deems fit. Needless
to say this is a trite
proposition. However, to employ the guillotine of a one hour argument
does not appear to have any justification
nor could Mr Wilson find
any. The Tribunal should exercise its discretion in a reasonable
fashion in order to ensure that the appellant
is able to contribute
constructively to the two theories of harm which have been accepted
as the basis of its rights of participation.
It is not however for
this Court to determine the timetable to be adopted by the Tribunal.
For this reason an order in favour of
the appellant needs to be
carefully crafted.
[48]
Mr Wilson experienced difficulty in justifying why, having granted
the appellant access to the Commission’s
report there was a
rational basis for it to have denied the appellant access to the
Commission’s record, subject to two important
caveats. Mr
Wilson correctly proposed that only that section of the record
relevant to the theories of harm for which the appellant
has been
admitted should be provided to the appellant and, secondly, this
should be done on a confidential basis, namely that access
should be
restricted to appellant’s legal representatives. On these
conditions, there was agreement between the parties.
[49]
By contrast, there does not appear to be any justification to
interfere with the Tribunal’s decision
to deny appellant wide
discovery and subpoena powers which it seeks. Mr Wilson is correct to
note in this connection that such
a right would ignore the requisite
balancing exercise and would result in an inevitable delay in the
merger proceedings to the
extent that the balance would be tilted
significantly against the legitimate objective of expedition of a
merger hearing. These
requested rights would thus expand the scope of
participation which, as the relevant law suggests, is subject to
reasonable curtailment.
[50]
That leaves two issues which require more anxious consideration
namely; appellant’s argument that it
should be entitled to
request the Tribunal to summons third parties to produce relevant
documents at the merger hearing and the
right to call or cross
examine witnesses.
[51]
These rights need to be evaluated in terms of a series of further
considerations. Section 55 (1) of the Act
provides that, subject to
the Tribunal’s rules of procedure, the Tribunal member
presiding at the hearing may determine any
matter of procedure for
that hearing with due regard to the circumstances of the case and the
requirements of s 52 (2). Section
52 (2), as indicated, provides that
the Tribunal must conduct its hearing in public as expeditiously as
possible and in accordance
with the principles of natural justice.
Furthermore, Rule 46 (2) (a) provides that a member of the Tribunal,
assigned by the chairperson,
can make an order allowing the applicant
to intervene subject to any limitations (2) on the matters with
respect to which the person
may participate or the form of
participation and in particular in an orderly and expeditious manner.
[52]
These provisions caution against this Court interfering in the manner
in which the Tribunal conducts its
proceedings. Clearly the Tribunal
is entitled to make its own judgment call in order to consider the
consequences of intervention
and to ensure that steps are taken to
avoid a hearing from becoming unduly delayed. To the extent relevant,
the judgment in
AVC
at para 17 accepted that, where a
perspective intervenor’s assistance to the Tribunal is
doubtful, the Tribunal should at
the very least curtail its extent.
The Tribunal itself said in
Mihevc Commerce Holdings (Pty) Ltd t/a
LLX South Africa and We Buy Cars (Pty) Ltd
Case Number:
LM183Sep18 at para 22:
‘
A
potential intervenor’s probable contribution to merger
proceedings must be weighed up against the foreseeable consequence
of
intervention in terms of the expedition and resolution of the
proceedings.’
[53]
This
dictum
has however to be considered in terms of the
mandate of the Tribunal to conduct its hearings in an inquisitorial
way and, more so,
in the case of a merger, which, as set out above,
entails a prospective inquiry into the effect on the market of the
proposed merger
as compared to the counterfactual; that is the
existing structure of the relevant market absent the merger. While
the Tribunal
must ensure that a merger hearing is conducted
expeditiously as a result of which the decision whether to approve or
disallow the
merger is made timeously within the context of the
inherent urgency of mergers, once it grants a right to participate,
as it did
in this case, on the basis of two distinct theories of
harm, it must exercise an independent investigative mind regarding
the merits
thereof. It must ensure that the admitted party is able to
provide it with the assistance which in the first place justified the
right of participation and where it so limits rights of participation
it does so on a clearly justifiable basis.
[54]
While granting the appellant the right to summons third parties to
produce relevant documents and to call
for discover of further
relevant documents from the merging parties and affording it a
blanket right to call witnesses at its discretion
will inevitably
result in considerable delays in the completion of the hearing, care
must be taken to ensure that the participant
is able to exercise the
rights which it has been granted in a meaningful fashion.
[55]
In this case, on the basis of the conclusion to which I have arrived,
the appellant should be entitled to
examine the relevant portions of
the Commission’s record. Including the report on the basis set
out earlier. It would then
be placed in a situation whereby it would
be able to argue that certain contracts have not been properly
examined, as it has already
submitted to this Court. It could be
justified in requiring the Tribunal to hear from a witness who could
provide suitably relevant
tailored evidence to the Tribunal which
would be helpful in its overall assessment. To exclude the
possibility of a participant
making an application for a document to
be produced which has been improperly ignored by the Commission,
after a careful examination
of the relevant portions of the record,
or to refuse to hear a witness who may provide testimony which is
material to the overall
assessment of the merger would not be
compatible with an independent investigation conducted in terms of an
inquisitorial procedure.
Manifestly a participant in the position of
appellant needs to make out a proper case why an document additional
to the existing
record placed before the Tribunal should be produced
or a witness should be called. This application should be properly
considered
by the Tribunal which will decide thereon. In summary the
ultimate decision is subject to the discretionary powers of the
Tribunal
but, at this stage, it would be wrong to conclude that there
can be no basis to exclude such an application from being brought and
considered
[56]
It appears that the appellant should be entitled to apply on the
basis of a clear justification to call for
certain further
documentary evidence to be placed before the Tribunal.
[57]
In the ordinary course this Court should not deal with the
possibility of such an application. The Tribunal
must be allowed to
craft its own procedure in terms of the relevant provisions of the
Act. However, this Court is faced with a
difficulty. It is anxious
not trench upon the discretion of the Tribunal in the conduct of its
hearing .However, he manner in which
the Tribunal has crafted its
order in this case could be construed as sufficiently restrictive so
as to prevent even the making
of an application to ensure that a
relevant document is made available to the Tribunal or that a witness
should be called who could
provide vital information which is
relevant to the mandated enquiry.
[58]
This, conclusion is strengthened by the fact that an examination of
the Commissions record could justify
such an application. By
contrast, that determination depends upon the record which is not
before this Court. Hence, we take the
unusual step of confirming a
procedural right of the applicant, to bring an application subject to
the determination of the outcome
of the relevant application by the
Tribunal.
[59]
Let me emphasise: This Court should refuse the invitation to impose a
rigid procedure upon the Tribunal in
the conduct of its hearings, by
permitting the appellant to make a suitable application for the
hearing of additional evidence
and/or a witness this court. It must
leave the ultimate decision to the Tribunal, which upon an
application being made would be
in the best position to balance the
competing interests of a comprehensive investigation and the need for
expedition of the hearing.
[60]
In the light of the conclusions to which I have arrived with regard
to the appeal, there is no need to traverse
the further grounds which
were raised in respect of the review application.
Costs
[61]
The appellant has not been successful in its attempt to expand its
right and obtain a right to call for discovery
of further relevant
documents or to call or cross examine witnesses. It has however been
successful in terms of the time limits
imposed upon it, the right of
access to the relevant portion of the Commission’s record and,
to the extent that it should
be entitled to make an application for
the consideration of additional documentary evidence and/or the
calling of a witness, even
though the outcome of this application is
solely within the province of the Tribunal’s discretion. In
this sense appellant
has been substantively successful and should be
awarded its costs of this hearing. This is particularly so in the
light of the
very tepid opposition offered by respondents to at least
two of the requested rights which required litigation.
Order
[62]
The following order is therefore made:
1.
The appeal of the appellant succeeds in part.
2.
The order of the Tribunal of 22 June 2022 is set aside and replaced
as follows:
2.1.
The applicant, Northam Platinum Holdings Limited (Northam) is
permitted to participate
in the large merger proceedings before the
Tribunal in terms of
s 53
(c) of the
Competition Act 89 of 1998
.
2.2.
Northam’s participation in the aforementioned large proceedings
shall be limited
to making written and oral submissions on the
following potential theories of harm:
2.2.1.
the vertical effects of the proposed merger including the effect on
competition in the local upstream market
from the production and sale
of primary concentrate;
2.2.2.
the extent to which the merger effects could be prejudicial to junior
miners in South Africa.
2.3.
Northam’s participation in the merger hearing before the
Tribunal shall include the right
2.3.1.
of Northam’s independent legal representatives and economic
advisors (Northam’s advisors) to
access the confidential
version of the Competition Commission of South Africa’s large
merger report and record in respect
of the sections dealing with the
two potential theories of harm set out in paragraph 2 of this order,
subject to Northam’s
advisors furnishing the appropriate
confidentiality undertakings;
2.3.2.
to make written submissions within ten (10) business days of this
order;
2.3.3.
to make oral submissions at the merger hearing subject to reasonable
time limitations being imposed by
the Tribunal;
2.3.4.
to make an application for the calling of any witness / witnesses and
or the production of relevant documents
at the merger hearing which
application shall be determined by the Tribunal.
2.3.5.
any party who wishes to respond to Northam’s written
submissions must do so within ten (10) business
days of receipt of
Northam’s submissions.
3.
First and second respondents are ordered to pay appellant’s
costs, the one paying the other to
be absolved and such costs to
include the costs of two counsel.
DAVIS
AJA
VICTOR
and
SAVAGE AJJA
concurred
Counsel
for Applicant: Adv
Michelle Le Roux SC Adv Shannon Quinn
Adv
Kerry Williams Adv Jabu Chanza
Instructed
by: Webber
Wentzel
Counsel
for First Respondent: Adv
Jerome Wilson SC
Adv
Tembeka Ngcukaitobi SC Adv Gavin Marriott
Adv
Sarah Pudifin-Jones
Instructed
by: Nortons
Inc
Date
of hearing: 25
August 2022
Date
of judgment: 5
September 2022
[1]
Prayer 5.3 in appellant’s notice of motion in the intervention
application at page 40 of the Bundle.
[2]
Intervention application para 116 – 117 at page 297 of the
Bundle.
[3]
Prayer 5.4 in appellant’s notice of motion in the intervention
application at page 40 of the Bundle. Prayers 5.6 and 5.7
of
appellant’s notice of motion in the intervention application
at page 40 of the Bundle
[4]
This test was confirmed by the Constitutional Court in
The
Public Protector v The President of the Republic of South Africa and
Others
2021(9)
BCLR 929(CC) at para 139
[5]
There were numerous ancillary arguments concerning the motives of
the appellant, the merits of the Competition Commission’s
recommendations and its analysis of the market the possible,
application of the doctrine of peremption and the question of
confidentiality which was triggered by overlapping legal teams from
the same firm of attorneys acting on behalf of the appellant.
None
of these interesting issues require assessment in that, in my view,
they are irrelevant to the ultimate determination of
the appeal and
the review which turns, as indicated on a narrow set of questions.