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Sunrise Energy Proprietary Limited v Strategic Fuel Fund Association NPC and Others (211/CAC/Oct22) [2022] ZACAC 11; [2023] 1 CPLR 5 (CAC) (22 November 2022)

80 Reportability
Competition Law
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Brief Summary

Competition Law — Merger proceedings — Right to intervene — Appellant denied the right to lead evidence and make submissions on public interest concerns regarding a proposed merger — Appellant contended that the Competition Tribunal erred in limiting its participation and access to confidential merger records — Respondents did not oppose the appeal but filed a cross-appeal against the Tribunal's decision to allow the appellant to intervene — Court held that the Tribunal's restrictions on the appellant's participation were unjustified, impacting its ability to address public interest issues effectively.

Comprehensive Summary

Summary of Judgment


Introduction


The proceedings were an appeal to the Competition Appeal Court against parts of an interlocutory decision and order of the Competition Tribunal in a large merger matter. The appeal concerned the scope of participation rights granted to a non-merging third party that had been recognised as a participant in the merger proceedings.


The appellant was Sunrise Energy Proprietary Limited (“Sunrise”), an LPG import terminal operator in the Western Cape. The respondents were Strategic Fuel Fund Association NPC (the “Strategic Fuel Fund”, cited as the first respondent), Avedia Energy Proprietary Limited (in business rescue) (“Avedia”, second respondent), and the Competition Commission of South Africa (third respondent). The first and second respondents did not oppose the appeal; however, they delivered a cross-appeal against the portion of the Tribunal order that had allowed Sunrise to intervene at all.


The procedural history was that the Tribunal, on 20 September 2022, recognised Sunrise as a merger participant but limited its participation. In particular, the Tribunal refused to allow Sunrise to lead evidence, question witnesses, or make written and oral submissions on the public interest concerns Sunrise raised, and it restricted access to the confidential merger record to Sunrise’s legal advisers only (excluding its economic advisers). Sunrise appealed those limitations. Separately, Sunrise brought a suspension application under section 38(2A)(d) of the Competition Act to suspend the operation of the Tribunal’s order (including the timetable attached to it). That suspension application was argued separately and adjourned pending the appeal.


The dispute’s subject matter was thus not the substantive merits of merger approval, but rather the extent of intervention rights, including participation on public interest issues and access to the confidential merger record, in the context of impending merger hearing dates set by the Tribunal.


Material Facts


Sunrise was, on the papers before the court, the only operator of an LPG import terminal in the Western Cape. Sunrise contended that it held an exclusive right granted by the Transnet National Ports Authority to operate as the only LPG terminal in Saldanha Bay, which it said was intended to enable it to recoup capital investment in LPG import infrastructure, including a multi-buoy mooring (MBM) system, pipeline, and storage and blending facilities. Sunrise alleged it had preferred a less expensive terminal system (a jetty offloading system), but that TNPA insisted on the MBM system. Sunrise’s contention was that the proposed merger would undermine that exclusivity and impair its ability to recoup its investment.


The Strategic Fuel Fund was a wholly owned subsidiary of the Central Energy Fund SOC Limited, with the State as ultimate shareholder. Avedia operated as an aggregator, importer, storer, and wholesaler of LPG in the Western Cape and was in business rescue by court order dated 25 February 2020. After entering business rescue, Avedia ceased importing bulk LPG and procured supplies from South African wholesalers. The proposed merger entailed the Strategic Fuel Fund subscribing for shares in Avedia to acquire a controlling interest. Avedia contended that exiting business rescue depended on merger approval and that the matter was urgent given the duration of the business rescue.


Certain facts and characterisations were disputed. Sunrise’s claim to an exclusive right was disputed by the merging parties. In addition, the Competition Commission’s confidential report characterised Sunrise’s asserted exclusivity concern as not being a competition concern, describing it instead as self-preserving resistance to increased competition in the Western Cape LPG market. The Commission considered Sunrise’s foreclosure theory not to warrant further investigation and recommended approval with conditions. The merging parties, for their part, characterised Sunrise’s public interest concerns (including regional/sector effects, employment effects, and effects on HDP ownership) as speculative and unsupported.


The Tribunal granted Sunrise limited intervention rights, coupled to a Tribunal timetable for procedural steps leading to a merger hearing scheduled for 24 and 25 November 2022. The timetable required Sunrise to file written submissions by 13 October 2022. It was common cause that Sunrise did not file submissions on that date and instead filed a suspension application seeking leave to suspend the Tribunal’s order and timetable.


Legal Issues


The central legal questions were whether the Tribunal, having recognised Sunrise as a participant, lawfully and rationally exercised its discretion to curtail Sunrise’s participation by excluding Sunrise from making written and oral submissions on public interest effects, and by restricting access to the confidential merger record to Sunrise’s legal advisers but not its expert economic advisers.


The appeal primarily concerned the application of law to facts, in that the court had to assess whether the Tribunal’s exercise of discretion under the Competition Act was consistent with the governing legal standard for recognising participants and structuring participation in merger proceedings. It also involved an evaluative enquiry into whether the Tribunal’s limitations were justified in light of the Tribunal’s own acceptance that Sunrise could assist it on certain issues, balanced against the need for expedition in merger proceedings.


A further issue raised (particularly in the cross-appeal and in argument) concerned whether Sunrise’s intervention should have been granted at all, including whether the alleged harm was merger-specific and whether Sunrise had adduced evidence for its claimed interest and theory of harm. In addition, the merging parties argued that Sunrise’s non-compliance with the Tribunal timetable had the effect that it had lost intervention rights, which raised a procedural fairness and case-management question.


Court’s Reasoning


The court located the relevant starting point in section 53(c) of the Competition Act, which identifies those entitled to participate in merger hearings and empowers the Tribunal, in section 53(c)(v), to recognise “any other person” as a participant. The court treated the Tribunal’s power as discretionary but not unfettered. Relying on authority of the Competition Appeal Court, the discretion must be exercised judicially and in accordance with the rules of reason and justice.


The court endorsed and applied the approach stated in Anglo South Africa Capital (Pty) Ltd and Others v Industrial Development Corporation of South Africa and Another [2003] 1 CPLR 10 (CAC) and Community Health Holdings (Pty) Ltd and Another v Competition Tribunal 2005 (5) SA 175 (CAC). The court understood these cases to require that the Tribunal ask whether the prospective participant is likely to assist the Tribunal in its merger enquiry (including the enquiry mandated by section 12A), and to balance that likely assistance against the consequences for the expedition and resolution of the proceedings. If assistance is doubtful and delay likely, curtailment or refusal may be warranted; if the party can genuinely assist, that tends to support allowing participation, though the ultimate decision remains within the Tribunal’s discretion provided it is exercised properly.


Applying these principles, the court held that the Tribunal’s refusal to permit Sunrise to make submissions on public interest effects was not justified on the basis advanced. The Tribunal had reasoned that the facts regarding employment and ownership spread were “clear” and that the Commission adequately represented those interests, with a possibility that the Tribunal might direct the Commission to investigate regional impact. The appeal court considered that the Tribunal’s reasons did not indicate what it intended to do with the public interest facts already on record, and accepted the practical concern that, if Sunrise was not permitted to present the case on public interest, then such argument and supporting evidence might not be advanced at all, given the Commission’s and merging parties’ stance that no public interest concerns arose.


The court also treated the public interest enquiry as one the Tribunal is required to undertake under the Act. It referred to the record that Sunrise was said to be majority black-owned (60%), that the Strategic Fuel Fund was a state-owned entity, and that Avedia had no black ownership, and concluded that these ownership demographics made it apparent that the merger was likely to have a significant impact on the promotion of a greater spread of ownership by historically disadvantaged persons in the relevant region. On that basis, the court considered that the public interest effects should be carefully considered at the merger hearing and that Sunrise should be allowed to raise them, with the merging parties’ denial of public interest harm to be dealt with through evidence and argument at the hearing.


On confidential record access, the court reasoned that the Tribunal had itself accepted that Sunrise could assist in assessing potential market harm arising from changes in market structure and in evaluating short- and long-term post-merger competitive dynamics. The court considered that, in those circumstances, it followed that Sunrise’s economic advisers required access to confidential information to fulfil that assistance. It further held that providing confidential access to legal advisers while denying it to economic advisers lacked rational justification, particularly given the nature of the issues Sunrise was permitted to address.


As to the argument that Sunrise’s failure to comply with the Tribunal timetable resulted in loss of intervention rights, the court treated this as a matter for the Tribunal, given that it concerned compliance with the Tribunal’s own case-management order and the Tribunal’s control of its processes. The appeal court did not determine that issue as a basis to refuse relief in the appeal.


Finally, the court dismissed the cross-appeal. It did so in the context of upholding Sunrise’s appeal against the limitations on participation and confidential access, and it amended the Tribunal’s order to expand the scope of Sunrise’s permitted participation.


Outcome and Relief


The Competition Appeal Court upheld the appeal and dismissed the cross-appeal.


The court amended paragraphs 2, 3, and 4 of the Tribunal’s order so as to permit Sunrise to make written and oral submissions not only on delineated competition issues (including market delineation, market concentration, foreclosure incentives/ability, and remedies), but also on the public interest effects of the proposed merger.


The amended order required the Competition Commission, subject to appropriate confidentiality undertakings, to provide Sunrise’s legal and expert economic advisers with the confidential merger record within specified time periods, including a mechanism for obtaining third-party permissions and limiting Sunrise’s submissions to what is available if permission is refused.


The amended order confirmed Sunrise’s entitlement to attend pre-hearing conferences, access the confidential record on the stated basis, file written submissions within ten business days after receipt of the confidential record (including any third-party confidential information provided after permission), and make oral submissions subject to reasonable time limits. It also expressly permitted Sunrise to lead factual and expert witnesses and to cross-examine the merging parties’ witnesses, if any.


No order as to costs was made.


Cases Cited


Anglo South Africa Capital (Pty) Ltd and Others v Industrial Development Corporation of South Africa and Another [2003] 1 CPLR 10 (CAC).


Community Health Holdings (Pty) Ltd and Another v Competition Tribunal 2005 (5) SA 175 (CAC).


Legislation Cited


Competition Act 89 of 1998, including section 12A, section 12A(1A), section 13A(2), section 38(2A)(d), and section 53(c).


Rules of Court Cited


Rule 46(1) of the Rules of the Competition Tribunal.


Held


The court held that the Tribunal’s discretion to recognise and regulate participation in merger proceedings under section 53(c)(v) must be exercised judicially and rationally, with due regard to whether the participant is likely to assist the Tribunal in its section 12A enquiry and to the need for expedition.


It held that, in the circumstances of this case, the Tribunal’s limitation excluding Sunrise from making submissions on public interest issues was not justified, given the statutory obligation to consider public interest factors and the likelihood that those issues would not otherwise be advanced at the hearing.


It held further that restricting access to the confidential merger record to Sunrise’s legal advisers while denying access to its economic experts was irrational in circumstances where the Tribunal accepted that Sunrise could assist on market structure and competitive dynamics, for which expert economic analysis would be relevant.


LEGAL PRINCIPLES


The Tribunal’s power to recognise “any other person” as a participant in merger proceedings under section 53(c)(v) is a discretionary power that must be exercised judicially, consistently with the rules of reason and justice, and is not unfettered.


In deciding whether to permit intervention (and the scope of that intervention), the Tribunal must consider whether the prospective participant demonstrates a genuine ability to assist the Tribunal in carrying out its statutory mandate, including the enquiry required by section 12A, and must balance the likely assistance against the consequences for the expedition and resolution of the merger proceedings.


Where public interest issues fall within the Tribunal’s statutory enquiry, participation limitations that effectively prevent those issues from being meaningfully raised and tested may be inconsistent with the proper exercise of the Tribunal’s discretion, particularly where the Commission and merging parties take the position that no such concerns arise.


Where a participant is permitted (or recognised as able) to assist on issues involving market structure and competitive dynamics, restricting confidential record access in a manner that prevents the participant’s economic experts from analysing relevant information may lack rational justification, especially where the participant’s legal advisers are granted such access.

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Sunrise Energy Proprietary Limited v Strategic Fuel Fund Association NPC and Others (211/CAC/Oct22) [2022] ZACAC 11; [2023] 1 CPLR 5 (CAC) (22 November 2022)

REPUBLIC
OF SOUTH AFRICA
IN
THE COMPETITION APPEAL COURT OF SOUTH AFRICA HELD IN CAPE TOWN
Case
NO: 211/CAC/Oct22
(1)
REPORT ABLE: YES /
NO
(2)
OF INTEREST TO OTHER JUDGES: YES / NO
(3)
REVISED
(4)
DATE: 22 November 2022
In
the matter between
SUNRISE
ENERGY PROPRIETARY LIMITED                          Appellant
and
STRATEGIC
FUEL FUND ASSOCIATION NPC                        First

Respondent
AVEDIA
ENERGY PROPRIERARY LIMITED
(IN
BUSINESS
RESCUE)                                                           Second

Respondent
COMPETITION
COMMISSION OF SOUTH AFRICA                 Third

Respondent
This
judgment was handed down electronically by circulation to the
parties' and/or parties' representatives by email and by being

uploaded to CaseLines. The date and time for hand-down is deemed to
be 10h00 on [22 November 2022]
JUDGMENT
Nkosi
AJA (Vally JA and Potterill AJA concurring)
Introduction
[1]
This is an appeal by Sunrise Energy Proprietary Limited ('the
appellant') against parts
of the decision and order of the
Competition Tribunal ('the Tribunal') that were issued on 20
September 2022, in terms of which
the appellant was recognised as a
participant in the large merger proceeding before the Tribunal
involving the Strategic Fuel Fund
Association NPC ('the first
respondent') and Avedia Energy Proprietary Limited (In business
rescue) ('the second respondent').
The parts of the decision and
order appealed against are those in which the Tribunal denied the
appellant the right to lead evidence
on, question witnesses and make
written and oral submissions in respect of, the public interest
concerns raised by it in respect
of the proposed merger between the
first and second respondents. It also limited the right of access to
the confidential merger
record to the appellant's legal advisors,
thus denying its economic advisors access thereto. The first and
second respondents elected
not to oppose the appeal. Instead, they
filed a notice of cross-appeal against the part of the decision and
order that granted
the appellant leave to intervene.
Factual
background
[2]
The factual background to the matter, briefly stated, is that the
appellant is currently
the only Liquid Petroleum Gas ('LPG') import
terminal operator in the Western Cape. It contended that the Transnet
National Ports
Authority ('TNPA') gave it an exclusive right to
operate as the only LPG terminal in Saldanha Bay in order to recoup
its capital
investment in the construction of the LPG import
infrastructure, including a multi-buoy mooring ('MBM') system
comprising a subsea
and overland pipeline, as well as the storage and
blending facilities. Apparently, an MBM system is more expensive to
construct
than some other terminal systems, such as the jetty
offloading systems. The appellant's contention was that it favoured
and requested
permission to construct a jetty offloading system, but
the TNPA insisted on the MBM system as the only acceptable system. It
argued
that the proposed merger would circumvent its exclusivity and
prevent it from recouping its investment.
[3]
The first respondent is a wholly owned subsidiary of the Central
Energy Fund SOC Limited
('CEF'), which reports to the Department of
Mineral Resources and Energy. All of the shares in the CEF are held
by the State. The
second respondent is an aggregator, importer,
storer and wholesaler of LPG in the Western Cape. It is currently in
business rescue
pursuant to a court order that was granted on 25
February 2020. After being placed in business rescue it stopped
importing bulk
LPG and now procures its LPG supplies from the South
African wholesalers. The first respondent intends to subscribe for an
undisclosed
number of shares in the second respondent that will
result in it acquiring a controlling interest in the second
respondent. The
second respondent contends that its exit from
business rescue is wholly dependent on the approval of the proposed
merger between
itself and the first respondent, and that the time is
of the essence as it had been in business rescue for 22 months as at
the
date of the hearing of this appeal.
[4]
The appellant's alleged right of exclusivity to operate the LPG
terminal in the Western
Cape was disputed by the first and second
respondents, while the view expressed by the Competition Commission
('the Commission')
in its confidential report to the Tribunal was
that such concern was not a competition concern. Instead, the
Commission characterised
the appellant's claim of exclusivity as a
self-serving and self-preserving concern against the introduction of
the much-needed
competition in the LPG market, particularly, in the
Western Cape and the neighbouring coastal areas. In conclusion, the
Commission
opined that the foreclosure theory of harm alleged by the
appellant did not warrant any further investigation.
[5]
Regarding the public interest concerns raised by the appellant, which
included the effects
of the merger on the LPG industrial sector or
region, employment, and the promotion of ownership by the
historically disadvantaged
persons (HDPs), the first and second
respondents were dismissive of them as speculative and
unsubstantiated. They argued that such
concerns were premised on the
appellant and the downstream rivals of the second respondent exiting
the relevant market, which was
not supported by any evidence. The
view expressed by the Commission, on the other hand, was that the
merger would result in the
preservation of employment of the
remaining employees of the second respondent. It concluded its report
by recommending that the
proposed transaction be approved with
conditions.
[6]
Taking into account the Commission's recommendations, the Tribunal
granted the appellant
a more limited scope of intervention rights
than that which it sought in its intervention application. It ordered
that the appellant
could not make written and oral submissions on the
public interest concerns it raised in its intervention application,
and that
access to the confidential parts of the merger record would
be limited to the appellant's legal advisors. It also ordered that
the intervention rights granted to the appellant would be subject to,
inter alia,
adherence by it to the timetable set by the
Tribunal for the merger proceedings, a copy of which was attached to
the relevant order
marked Annexure 'A', and any subsequent timetable
dete1mined by the Tribunal. Listed in the timetable were various
procedural steps
to be taken by the Commission and the parties
leading up to the merger hearing on 24 and 25 November 2022,
including the making
of written submissions by the appellant on 13
October 2022.
[7]
It is common cause that the appellant did not deliver its written
submissions by 13 October
2022 as directed by the Tribunal in
Annexure 'A' to the relevant order. Instead, it filed on the same
date (13 October 2022) an
application in terms of section 38(2A)(d)
of the Competition Act ('the suspension application') for leave to
suspend the operation
of the Tribunal's order dated 20 September
2022, including the Annexure 'A' thereto. On 18 October 2022 the
first and second respondents
filed a notice to oppose the appellant's
suspension application. By agreement between the parties, the
suspension application was
argued separately on 28 October 2022
before my brother, Vally JA, but was adjourned
sine
die
on that date pending the hearing of this appeal on 1 November
2022.
Grounds
of appeal and cross-appeal
[8]
The appellant's appeal was based primarily on two grounds. The first
ground was that the
Tribunal denied the appellant the right to
intervene on public interest grounds, but nonetheless accepted its
submissions on public
interest harm, stating that the 'facts are
clear' in relation to both employment and the historic spread of
ownership; that 'the
Commission already represents these interests
sufficiently'; and that 'the Tribunal may, if warranted, direct the
Commission to
investigate the impact on the region.' The appellant
contended that the Tribunal had, in so doing, erred and failed to
appreciate
that: the Commission had failed to consider the public
interest aspect of the proposed transaction and the deleterious spill
over
effects that the proposed transaction would have on employment,
the LPG industry and a greater spread of ownership, and enabling

firms owned by the HDPs to become competitive; to the extent that the
proposed transaction could result in the appellant and the
second
respondent's downstream competitors exiting the LPG market, the
proposed transaction raised a number of public interest
concerns,
and; the appellant was better placed to assist the Tribunal in
relation to a holistic public interest analysis.
[9]
The second ground was that the Tribunal erred in denying the
appellant's legal and economic
advisors access to all of the relevant
documents filed in the merger proceedings for the following reasons:
Firstly, its reasons
for this decision demonstrated an inherent
irrationality and lack of sound legal justification because, having
accepted that the
appellant had an interest in the merger and could
assist the Tribunal, it nonetheless denied the appellant the right to
participate
meaningfully in the merger proceedings by denying its
economic advisors access to the confidential parts of the record.
Secondly,
the finding that the appellant's issues were factual did
not justify the denial of the appellant's economic advisors access to
the confidential parts of the record. On the contrary, such finding
supported the position that full access should have been granted

because it is through an analysis of those facts by the appellant's
economic advisor that the appellant's theories of harm could
be
articulated to the Tribunal.
[10]
The first and second respondents' cross-appeal was also based on two
grounds. The first ground was that the
Tribunal had erred in finding
that the harm apprehended by the appellant was merger-specific. Their
contention was that the foreclosure
concerns raised by the appellant
were premised on an unsubstantiated allegation that the appellant
enjoyed an exclusive right to
provide the LPG terminal and storage
facilities in the Western Cape which, if undermined by the proposed
transaction, would force
its foreclosure and give rise public
interest concerns. They argued that such concerns did not arise from
the merger and, therefore,
were not merger specific because the first
respondent, pre-merger, already enjoyed the right to handle the LPG
and to construct
an LPG pipeline at the Port of Saldanha in the
Western Cape. Therefore, it could interconnect with the second
respondent's LPG
storage facilities if it chose to do so, either with
or without the merger. The second ground of cross-appeal was that the
appellant
did not put up any evidence to support its alleged material
interest and theory of harm.
The
legal principles
[11]
Against the factual background set out above, I proposed to adopt as
a starting point the provisions of section 53(c) of the
Competition
Act (read with the relevant provisions of Chapter 3 of the same Act
dealing with the control of mergers), which read
as follows:
'The
following persons may participate in a hearing, in person or through
a representative, and may put questions to witnesses and
inspect any
books, documents or items presented at the hearing:
(c)
if
the hearing is in terms of Chapter 3
-
(i)
any
party to the merger;
(ii)
the
Competition
Commission;
(iii)
any
person who was entitled to receive a notice in terms of section 13A
(2), and who indicated to the Commission an intention to
participate,
in the prescribed form;
(iv)
the
Minister, if the Minister has indicated an intention to participate;
and
(v)
any
other
person whom
the
Tribunal
recognises as
a participant.'
[12]
In
essence, the provisions of Section 53(c)(i) to (iv) of the
Competition Act specify
the
parties
who
are
entitled
to
participate
in
merger
proceedings,
while the provisions of Sub-Section 53(c)(v) grant the Tribunal the
discretion to recognise any other person who is
not a party to the
merger to participate in the merger proceedings. While the discretion
of the Tribunal is wide, it was authoritatively
held by this court in
Anglo
South Africa Capital (Pty) Ltd and Others v Industrial Development
Corporation of South Africa and Another
[1]
that
such discretion is not unfettered, and must be exercised judicially
in accordance with the rules of reason and justice
[2]
.
[13]
The
legal principles
enunciated
in
Anglo
South Africa
Capital
v
JDC (supra)
were
endorsed and applied by this court in
Community
Health Holdings (Pty) Ltd and Another v Competition
Tribunal
[3]
.
In
the latter case the court held that
although
the
intervention
regime
in
mergers
is
more
liberal
than
that
provided
for
in
Rule
46(1)
of
the Rules
of
the Tribunal,
that
does
not
mean
that
the
Tribunal
is
obliged
to
allow
any
party
to
intervene.
Instead,
the
Tribunal
must enquire into the question as to whether the party applying to
intervene will assist
it
in
its
enquiry
in
terms
of
Section
12A
of
the
Act.
This
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
intervention
is
more
than
likely to impact on the expedition of the proceedings, then the
Tribunal should decline the intervention or curtail its extent
[4]
.
[14]
If
there is no doubt that the participation of a party in the merger
proceedings would assist the Tribunal in fulfilling its mandate
in
accordance with the provisions of the Act, as was the case in
Anglo
South Africa Capital v JDC (supra),
one
would expect the Tribunal to exercise its discretion in favour of
allowing such party to intervene
[5]
.
In essence, the applicant must demonstrate a genuine ability to
assist the Tribunal in carrying out its statutory mandate
[6]
.
Even then, the decision as to whether or not to allow a party to
intervene rests entirely with the Tribunal, provided that it
is
exercised judicially and in accordance with the rules of reason and
justice. By the same token, the Tribunal is not obliged
to allow a
party to intervene based solely on its unsubstantiated claim that it
is better suited than the Commission to assist
the Tribunal in
carrying out its statutory mandate, without adducing any evidence to
that effect. This would open the door for
time-consuming fishing
expeditions and only serve to delay and/or prolong the merger
proceedings unnecessarily.
Legal
arguments
[15]
Coming to the facts of this case, I will first deal with the legal
arguments advanced by Mr Ngcukaitobi SC,
who appeared together with
Ms Pudifin­ Jones, on behalf of the appellant. Starting with the
first ground of appeal, the gist
of Mr Ngcukaitobi's argument was
that in the light of an acknowledgement by the Tribunal that the
evidence brought by the appellant
thus far on the issues of public
interest was useful, its decision to deny the appellant leave to
bring further evidence in that
regard was irrational, primarily, for
two reasons. Firstly, the Tribunal could not rely on the Commission
to bring such further
evidence because the Commission had already
indicated in its report that the proposed transaction did not give
rise to any public
interest concerns. Secondly, it was clear that the
merging parties were not planning to lead any evidence on that point
either
because they were of the same view as the Commission on the
issue of the public interest concerns or it would not serve their
interests
to do so. For this reason, he submitted that unless the
appellant was allowed an opportunity to present further evidence and
arguments
on this issue, it would not receive any further
consideration by the Tribunal.
[16]
In the absence of any indication to the contrary, I assume that the
fact that the appellant's appeal was
not opposed was indicative of a
tacit admission by the respondents that the proposed transaction
would, indeed, give rise to the
public interest concerns raised by
the appellant. These included the likely effects of the merger on,
inter alia,
employment, the LPG industrial sector or region,
as well as the ability of firms owned by the HDP's to become
competitive. In the
circumstances, one would have expected the
Tribunal to grant the appellant leave to intervene on the public
interest concerns raised
by it, particularly, with a view to allowing
it an opportunity to make further submissions and present supporting
evidence in relation
thereto.
[17]
Instead,
the
Tribunal
denied
the
appellant
leave
to
intervene
because
it
believed
that:
firstly,
there
would
be
no
benefit
in
allowing
the
appellant
to
make
submissions
regarding
the
effects
of
the
merger
on
employment
because
the
facts
in relation
thereto
were
clear, and; secondly,
the
appellant
was
unlikely
to
assist
it
further
on
the
impact
of
the
merger
on
the
greater
spread
of
ownership
and
the
ability
of
the
small
and
medium
sized
black-owned
businesses
to
enter
and/or
expand
the
relevant
market
because
the
facts
were
already on record
[7]
.
Interestingly,
no indication was given in the Tribunal's reasons for decision as to
what use, if any, it intended to put the available
facts on the
public interest concerns raised by the appellant. It was argued by Mr
Ngcukaitobi that in the absence of the appellant
making the case for
the prohibition of the merger on the public interest grounds, the
arguments and evidence in support thereof
would probably not be
raised at all. In the absence of any indication to the contrary, that
seems to be the only logical conclusion.
[18]
For the purposes of the record, the available facts on the public
interest concerns raised by the appellant
were,
inter alia,
that
the appellant is a majority black-owned firm (60%); the first
respondent is a state-owned entity, and; the second respondent
has no
black ownership. Needless to say, it is apparent from these heavily
skewed demographics of ownership that the merger is
likely to have a
significant impact on the greater spread of ownership in the Western
Cape region and the other neighbouring coastal
areas. In the
circumstances, the Tribunal is required in terms of section 12A (IA)
of the Competition Act to conduct a proper assessment
of the effect
that the merger would have on, at least, the promotion of a greater
spread of ownership by HDPs in the relevant market
in order to
determine whether the merger can or cannot be justified on
substantial public interest grounds. These public interest
concerns
should be carefully considered at the merger hearing. For that reason
the appellant should be allowed to raise them. After
all section 12A
(IA) of the Competition Act specifically enjoins the Tribunal to have
regard to them. The respondents have denied
that the merger would
give rise to any public interest concerns, which denial can be dealt
with during the consideration of the
evidence and argument that the
appellant intends to bring to the hearing.
[19]
In
the circumstances, I believe that it was necessary for the Tribunal
to allow all sides an ample opportunity to present further
evidence
and/or arguments at the merger hearing in support of their respective
contentions. The same applies to the Tribunal's
denial of access to
the appellant's economic expert/s to the confidential parts of the
merger record. Bearing in mind that the
Tribunal had admitted that
the appellant could assist it in its determination of 'any potential
greater harm to the market as a
result of the change in the market
structure, ...
and
assist on the short and long-term effects of the merger on the
structure of the market and competitive dynamics post-merger
[8]
',
it
follows that granting the appellant's economic advisors access to the
confidential information is necessary. Additionally, granting
the
appellant's legal advisors access to the confidential information
while denying the economic advisors access to the same information

makes no rational sense.
[20]
This brings me to the legal arguments advanced by Mr Marolen, who
appeared for the first and second respondents,
in support of their
cross-appeal against the decision of the Tribunal to allow the
appellant to intervene in the merger proceedings.
The first part of
Mr Marolen's legal arguments was dedicated to the appellant's
suspension application. As indicated in the opening
paragraphs of
this judgment, the suspension application was argued separately
before Vally JA prior to the hearing of this appeal.
For this reason,
I will leave the issue of the intervention application for final
determination by Vally JA.
[21]
Regarding the merits of the appeal, it was argued by Mr MaroIen that
the appellant had no prospects of success
in the appeal for a variety
of reasons, the most notable of which was that the appellant had lost
its right of intervention due
to its breach of the Tribunal's order
setting out the time periods by which the parties were to file their
respective papers. In
my view, the issue of the appellant's
failure to adhere to the Tribunal's order is a matter for the
Tribunal. It is its order that
was not complied with. That order was
obviously designed to ensure that its proceedings were finalised as
soon as is practically
possible. The order of this court may (or may
not) affect that timetable, but that is a matter for the Tribunal.
Order
[22]
The following order is issued:
1.
The appeal is upheld.
2.
The cross-appeal is dismissed.
3.
Paragraphs 2, 3 and 4 of the Tribunal's order are amended to read as
follows:
'[2]
Sunrise's participation
in the aforementioned merger
proceedings
shall be limited to making written
and oral submissions on the following issues:
2.1
Market delineation, including whether or not there is a separate
relevant market for the provision of LPG
import terminal facilities
in which the applicant is active and the merged entity will become
active;
2.2
Market concentration;
2.3
The ability and incentives of the merged entity to engage in
market foreclosure; and
2.4
Remedies, in particular
-
2.4.1
Whether the transaction should be prohibited; or
2.4.2
Remedies
that could address any competition
concerns, including the adequacy of "open access"
conditions.
2.5
The public interest effects of the
proposed
merger.
[3]
The Commission must, subject to the provision of appropriate
confidentiality undertakings,
provide
Sunrise's
legal
and
expert
economic
advisors
with
the confidential merger record within five (5) business days
of this order. To the extent that the Commission requires permission

in respect of information that belongs to third parties, it must
obtain such permission within five (5) business days of this order,

which period shall run concurrently with the 5 business days within
which the Commission must provide the confidential merger record
to
the applicant. The Commission shall provide the third parties'
information to Sunrise within two business days after permission
has
been obtained, subject to the applicant providing confidentiality
undertakings. In the event that third parties do not grant
permission
to their confidential information, Sunrise shall be limited to making
submissions on the confidential record as made
available to it.
[4]
Sunrise's participation in the merger hearing before the Tribunal
shall include the right:
4.1
to attend pre-hearing conferences, if any, that are held
before the merger
hearing;
4.2
to access the confidential version of the Commission's large merger
record on the basis set out in paragraph 3 of this
order;
4.3
to make written submissions within ten (1OJ business days of
receipt of the confidential record including third parties'
confidential
record as set out in paragraph 3 of this order;
4.4
to make oral submissions, based on its written submissions at
the merger hearing, subject to reasonable time limitations being
imposed
by the Tribunal',·
4.5
to lead factual
and expert
witness/witnesses and to cross-examine the merger parties' witnesses,
if any.'
(amendments are underlined).
4.
There is no order as to costs.
M
E NKOSI
ACTING
JUDGE OF APPEAL
I
concur
VALLY
JUDGE
OF APPEAL
I
concur
POTTERILL
ACTING
JUDGE OF APPEAL
APPEARANCES
For
the Appellant:                   Mr

Ngcukaitobi SC
With
him:                                Ms

Pudifin-Jones
Instructed
by:                         Edward

Nathan Sonnenbergs Incorporated
For
the First and
Second
Respondents:           Mr
Marolen
Instructed
by:                        Werksmans

Attorneys
Heard
on:                              01

November 2022
Delivered
on:                         22

November 2022
[1]
[2003]
I
CPLR
10
(CAC).
[2]
Anglo South Africa Capital (Pty) Ltd
(supra)
at
p21 T -
J.
[3]
2005 (5) SA 175
(CAC) at para 38.
[4]
Community Healthcare Holdings
(supra)
para
39.
[5]
Anglo South Africa Capital
(supra)
at
p22 A -
B.
[6]
WeBuyCars (supra) para 27.
[7]
Paras 90 and 91
of
reasons for decision.
[8]
Page 249 to 250 of the record par 86 of the reasons for decision.

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