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[2020] ZACAC 4
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Business Connexion (Pty) Ltd v Vexall (Pty) Ltd and Another (182/CAC/Mar20) [2020] ZACAC 4; [2020] 2 CPLR 490 (CAC) (15 July 2020)
IN THE COMPETITION
APPEAL COURT OF SOUTH AFRICA
Case
Number: 182/CAC/Mar20
In
the matter between:
BUSINESS
CONNEXION (PTY)
LTD
Appellant
and
VEXALL
(PTY)
LTD
First Respondent
THE
COMPETITION
COMMISSION
Second Respondent
Delivered:
15 July 2020
JUDGMENT
UNTERHALTER
AJA
Introduction
[1]
On 12 February 2020, the Competition Tribunal (“ the
Tribunal” ) made an order (“ the Order “)
prohibiting
the Appellant (“BCX”) from selling or
offering a Unisolve license on condition that a customer purchases
value-added
services from BCX. The order is framed on the basis that
it remains in force for six months from 12 February 2020 or upon the
conclusion
of a hearing into the complaint, whichever is the earlier.
BCX was ordered to pay the costs. The Order was made at the instance
of the Respondent (“Vexall”).
[2]
BCX appeals the Order to this court. BCX complains that the
Tribunal incorrectly granted the Order. In essence, BCX contends that
the Tribunal had no proper basis to conclude that BCX engaged upon an
unlawful tying arrangement and the Tribunal issued the Order
without
any regard to anti-competitive effects of the alleged prohibited
practice, a necessary requirement in terms of s8(d) of
the
Competition Act 89 of 1998 (“ the Act”).
[3]
There is a preliminary issue that must be resolved before the
merits of the appeal may be considered: is the Order appealable ?
[4]
It is to this issue that I turn.
Is the order
appealable?
[5]
The Tribunal found that the requirements of s49C(2)(b) of the
Act had been met and, in consequence, issued the Order.
[6]
Section 49C(2)(b) provides that the Tribunal:
“
may grant
an interim order if it is reasonable and just to do so , having
regard to the following factors:
(i)
the evidence relating to the alleged prohibited
practice;
(ii)
the need to prevent serious or irreparable damage to
the applicant;
(iii)
the balance of convenience. “
[7]
Whether an order made by the Tribunal in respect of an
application for interim relief is appealable is given asymmetric
treatment
in s49C. The refusal by the Tribunal to grant interim
relief permits the disappointed applicant, as of right, to appeal to
this
court. (s49C(7)). Where, however, the Tribunal grants an interim
order, in terms of s49C(8):
“
The
respondent may appeal to the Competition Appeal Court in terms of
this section against an order of the Competition Tribunal
that has a
final or irreversible effect”.
[8]
The parties were, rightly, in agreement on two issues. First,
that the right of a respondent to appeal an interim order depended
upon the effect of the order rather than its form. Second, that the
right may found upon either the final effect of the order or
its
irreversible effect. The two types of effects are disjunctive.
[9]
Beyond this, the parties contended for very different
interpretations of s49C(8). Vexall submits that an order is final in
effect
if it determines an issue so as to render it
res judicata.
An order has an irreversible effect in circumstances where the
Tribunal will not be able to adjudicate an issue by way of final
relief because the right that is in dispute will have come to an end.
BCX submits that the ambit of consideration of irreversibility
is
much wider. If BCX, in compliance with the Order, is required to
amend its contracts with its customers that is irreversible.
So too,
if compliance with the Order brings about market-wide changes that
alter the basis upon which competition takes place,
that is an
irreversible effect of the Order. These are effects that flow from
the Order and hence the Order is irreversible. Vexall,
in response,
has referred to authorities that decide when an order of the High
Court is appealable, and contends that commercial
harm to the
respondent has never been the basis for deciding that an order is
appealable.
[10]
There
is a long line of cases that has interpreted the statutory language “
judgment or order”
[1]
to
decide whether a matter was appealable. The
Zweni
[2]
triad
for long held sway. A judgment or order was appealable if it had
three attributes: it was final in effect and not susceptible
of
alteration by the court of first instance; it was definitive of the
rights of the parties; and had the effect of disposing of
a
substantial portion of the relief claimed in the main proceedings.
This has not avoided some divergence in the courts as to when
the
grant of an interim interdict pending the outcome of an action may be
final in effect, and hence appealable.
[11]
Central
to the notion that an order is final in effect, whatever its form, is
that the order disposes of a definite portion of the
relief claimed
and is not susceptible of reconsideration by the trial court. That
much is clear. What has occasioned a difference
of opinion is whether
an order is final in effect in circumstances where the trial court
will not be able to make a final determination
of the right claimed
because
the right would by then have run out. On one view, the enforcement of
the right, in these circumstances, by way of an interdict,
though
interim in form, is final in effect, and hence appealable. The
contrary position is that a right may run its course before
it can
finally be adjudicated. This is but one of the ways in which an
interim order may cause prejudice that cannot be undone,
and in this
sense, it is final. But that does not render the interim order final
in effect or require that the court granting the
order should have
considered the order as final, thereby rendering the order
appealable. This difference was articulated in
Cipla
Agrimed
[3]
,
but
not resolved.
[12]
These
matters define a somewhat narrow debate, framed largely by the
position articulated in
Zweni.
An
altogether wider view is to be found in
Scaw
[4]
,
and the principles there articulated by the Constitutional Court. In
Scaw,
the
question was how to interpret s167(6)(b) of the Constitution which
permits of an appeal directly to the Constitutional Court,
when it is
in the interests of justice. The Constitutional Court reviewed the
jurisprudence of the Supreme Court of Appeal and
considered that the
appealability of a “judgment or order” should not be
confined to the
Zweni
principles,
but should extend to the broader concept of what the interests of
justice require. What the interests of justice require
will depend
upon the particular case.
Scaw
emphasizes
that irreparable harm occasioned by the interim order, if leave to
appeal is not granted, is an important consideration
in determining
the interests of justice. This marks a departure from the more
parsimonious position of some of the appellate
jurisprudence that
does not count the prejudice caused by an interim order to be
availing in deciding whether the order is appealable.
[5]
[13]
Scaw
found that the interim order, which restrained the
responsible Ministers from ending certain anti-dumping duties pending
a review,
was appealable. The interim order was found to be final and
caused irreparable harm because it maintained anti-dumping duties
that
would otherwise have ended. Furthermore, the duties were not
refundable and their continuation excluded the imported products from
the SACU markets. These consequences were said to be immediate,
irreparable, and final.
[14]
While it is helpful to have regard to the approach of the
courts in deciding when an interim order may be appealable, it must
be
recognised that these decisions determine this issue under
different legislation and in an institutional context that is bounded
by the question as to when a court of appeal should reconsider the
interim order of a high court. The present case is different.
We are
asked to decide, in terms of s49C(8) of the Act, when an appeal will
lie to this court, upon the grant of an interim order
by the Tribunal
. This requires an interpretation of this provision, understood in
the light of the institutional framework created
by the Act and its
substantive content.
[15]
There are a number of distinctive features of the Act that
warrant consideration. First, an appeal to this court concerns the
supervisory
jurisdiction of an appeal court over the Tribunal, an
administrative body, vested with very considerable powers. The appeal
does
not lie from one court to another. Second, s 49C(6) permits any
party to an interim relief application to review the decision of
the
Tribunal. Since the scope of judicial review is wide, the powers of
this court to review an interim relief order of the Tribunal
are not
insubstantial. Third, the legislature clearly intended to afford the
parties to an interim relief application asymmetric
rights of appeal.
The disappointed applicant may appeal the refusal of the application.
This permits the applicant to come before
this court as of right to
correct errors made by the Tribunal. Not so the respondent against
whom an interim order is granted.
The right of the respondent to
appeal is limited to an order that has an final or irreversible
effect. Plainly, there is a need
to demarcate when an order has one
or other of the effects stipulated, absent which there is no appeal
at the instance of a respondent.
[16]
It
is important also to give consideration to the powers the Act reposes
in the Tribunal to grant an order for interim relief. The
order that
may be sought is “
an
interim order in respect of an alleged practice”
[6]
.
Such
an order will ordinarily require the respondent to desist from
conduct
that
is
alleged
to
constitute
a
prohibited
practice.
Commonly
such
an
order
will
prohibit conduct. But the order may require conduct, for example an
order to remedy a refusal to supply.
[17]
Two features of the power to grant interim relief have
particular salience. First, the prohibited practices in chapter two
of the
Act are concerned with practices that affect markets, a market
or a segment of the market. Unlike disputes in private law which,
for
the most part, concern the rights enjoyed and duties owed by
individuals to one another, prohibited practices in chapter 2
concern
the conduct of firms and their effect on competition in the market.
Even those practices that are not defined by reference
to their
effects are nevertheless rendered unlawful by reason of their
presumptive harmful effects upon competition. As a result,
interim
relief granted by the Tribunal has effects upon the state of
competition in the market. Second, when the Tribunal grants
an
interim relief order, it is not a
status quo
order. The order
requires that the respondent firm desist from the prohibited practice
(in whole or in part). The purpose of the
order is to alter the
competitive relationship between firms in the market. If the interim
order is to be effective, it is intended
to permit of competition
taking place in the market that has hitherto not taken place. That
may have effects within a market or
across markets, and may affect
different market participants: customers, competitors and suppliers.
When the Tribunal grants an
interim order it alters the
status quo
in the market and is intended to change the way firms compete in
the market, with consequences that may well resonate within and
between markets.
[18]
An interim relief order under the Act does not provide a
remedy to permit a person claiming a right to enjoy the exercise of
that
right until the right is finally determined. Rather, the
Tribunal is empowered to regulate how competition in the market is to
take place for a six or twelve month period. That is a different
competence to that of a court adjudicating a dispute of right;
it is
a regulatory competence to decide whether the state of competition in
the market must endure, notwithstanding the evidence
that a
prohibited practice is taking place, or whether the Tribunal should
order a change.
[19]
Section 49C requires that in deciding whether to grant an
interim order, the Tribunal must have regard to three factors: the
evidence
relating to the alleged prohibited practice; the need to
prevent serious or irreparable damage to the applicant; and the
balance
of convenience. Upon examining these factors, the Tribunal
may only grant the interim order if it reasonable and just to do so.
[20]
The evidence of a prohibited practice, as I have sought to
explain, is not concerned with the rights of the applicant but the
competitive
position of competitors in the market, judged against the
regulatory criteria of the prohibited practices defined in chapter 2
of the Act.
[21]
The need to prevent serious or irreparable damage to the
applicant posits an enquiry into the effects of the alleged
prohibited
practice upon the applicant and it is for this reason a
party specific enquiry. However, here too the analogue of interim
interdicts
as an equitable remedy at common law must be approached
with care. The common law remedy asks what well-grounded apprehension
of
irreparable harm will be suffered by the applicant if interim
relief is not granted and the applicant succeeds in proving the
right,
now
prima facie
established . This concerns an
interference with an applicant’s rights and the harm that may
be suffered by an applicant as
a result of such interference until
the court can finally determine the question of rights. Interim
relief under s49C requires
an enquiry that is similarly structured,
but distinct in a number of respects. The need for intervention is a
function of the probability
of serious or irreparable damage
occurring,if no intervention is ordered by the Tribunal before it can
make a final determination
as to whether the alleged prohibited
practice has taken place. It is the damage to the competitive
position of the applicant that
the prohibited practice may cause that
marks out this enquiry. Other forms of damage to the applicant are
not relevant because
the Act’s purpose is to maintain and
promote competition in the market.
[22]
Finally, the balance of convenience in s49C is a direct
borrowing from the common law. It weighs the prejudice the applicant
will
suffer if the interim interdict is not granted against the
prejudice to the respondent if it is granted. This requires an
equitable
reckoning as to who bears the greater burden of error. If
the interim order is granted and no case is ultimately established to
prove the alleged prohibited practice, what prejudice will have been
suffered by the respondent, and how might that prejudice be
mitigated? So too, if the interim order is refused and the prohibited
practice is ultimately proven, what prejudice will the applicant
suffer in the interim. Here too, the currency of prejudice is
reckoned by recourse to the consequences for the competitive
positioning
of the parties in the market. A respondent that is
required to desist from conduct that gives it a legitimate
competitive advantage
suffers prejudice. An applicant that is
required to endure an unlawful competitive disadvantage also suffers
prejudice. How to
weigh prejudice in the balance is a difficult task.
Hence the warranted caution with which the Tribunal and this court
have approached
the exercise of the power to grant an interim
interdict.
[23]
The analysis of the power to grant interim relief in s49C and
the considerations that must be weighed to determine its exercise
assist in the interpretation of the stipulation in s49C(8) that the
respondent may appeal an interim order that has a final or
irreversible effect.
[24]
The correct approach to this interpretative exercise is, in
the first place, the recognition that the statutory language is
restrictive
of the respondent’s right to appeal an interim
order. The right is neither wholly permissive, as in the case of a
disappointed
applicant, nor flexible to the degree that the standard
of the interests of justice allows. However, a proper understanding
of
what constitutes a final or irreversible effect must reflect the
need to permit this court to correct error when particular failures
of justice would otherwise result.
[25]
The
clearest case would be a decision by the Tribunal deciding upon
interim relief
that
is final in the sense contended for by Vexall, that is to say, when
the Tribunal decides an
issue
with finality in the sense that it is rendered
res
judicata.
Varieties
of this meaning of final in effect, as I have observed, are captured
by the formulation that the Tribunal has finally
disposed of a
substantial portion of the relief sought or the circumstance where an
interim order has an immediate effect that
will not be reconsidered
on the same facts in the main proceedings
[7]
.
[26]
It is difficult to see how these meanings can lie at the heart
of what the legislature had in mind in the formulation that an order
has a final effect. Section 49C permits a complainant to seek an
interim order. Mostly, but not invariably, it is not the complainant
that is the party seeking a final remedy. It is the Competition
Commission (“the Commission”) that makes the referral,
decides what is to be referred and the relief that is to be sought.
The application for interim relief may be made before or after
the
Commission has decided whether to make a referral, and if it has, on
what basis. A Tribunal that sought to make a final determination
as
to some part of the relief that the Commission or the complainant
might seek upon referral or was seeking by way of a referral,
would
not just be acting incautiously, but almost certainly
ultra vires.
[27]
In proceedings before the High Court for an interim order, the
outcomes are more variable. The High Court is frequently confronted
with the question as to whether a clear right or a
prima facie
right, though open to doubt, has been established or there is a
question of law that the court chooses to decide. Sometimes the
interim relief granted by the court is wider than the final relief
that is to be sought at trial. And sometimes the interim relief
rests
upon facts never to be revisited. These are circumstances that may
make the resulting order of the High Court final in effect,
and this
reflect the capacious equitable remedial powers that are reposed in
the High Court.
[28]
That however is not the position of the Tribunal hearing an
interim relief application. The Tribunal is an administrative
functionary.
It has no inherent powers. Its power to grant interim
relief derives from s49C. It is not at large to make equitable
orders. The
constraints on its powers are evident.
[29]
It is therefore an implausible interpretation of the language
of s49C(8) that it was intended to provide for an appeal only in
circumstances
where the Tribunal granted an interim order that is
ultra vires
its powers. That is the purpose of s49C(6) which
recognises the right to review a decision of the Tribunal to grant
interim relief.
Thus, a Tribunal that purported by way of interim
relief to make a final decision, when the Tribunal was required to do
so only
upon a referral, would be issuing an order final in effect,
and as such the order would be appealable. But the more obvious
remedy
would be the review of an
ultra vires
decision.
[30]
What further meaning is then to be given to the language of an
order that has a final effect? It deals centrally with the
circumstance
in which the alleged prohibited practice that is made
subject to an interim order will not finally be determined by the
Tribunal
before the prohibited practice comes to an end. This can
occur, for example, because an exclusivity agreement or some other
restraint
will expire. Although, as the
Cipla Agrimed
case
reveals, there remains controversy as to this species of finality,
given the regulatory subject matter of the Act, there are
good
reasons to recognize that an interim order made by the Tribunal in
these circumstances is final in effect.
[31]
I have observed that interim orders granted in terms of the
Act are not generally
status quo
orders. Such orders require
that a prohibited practice, existing or threatened, ceases or is in
some measure materially altered.
If a respondent is required to
endure the constraint of an interim order, albeit for six months,
without the prospect of a hearing
to show that it has not engaged
upon the prohibited practice, an injustice results. The respondent is
deprived of an opportunity
to correct any error that the Tribunal may
have made. An interim order is a justified intervention on the basis
that there is a
need to prevent serious or irreparable damage to the
applicant. That justification is coupled with the recognition that
the order
may be made in error, by reason, not least, of the limited
evidence known to the Tribunal. We tolerate the risk of error because
the Tribunal will finally decide the matter at a hearing in due
course, and the respondent will have an opportunity to put its
case
and correct any error that was made. Where that will not occur, an
injustice is done to a respondent, and a right to appeal
to this
court restores what justice requires: the opportunity to correct an
error that would otherwise never be made the subject
of
reconsideration.
[32]
This reasoning must be understood in light of the structure of
the Act as to the prosecution of complaints. An interim relief
application
may be made by a complainant, whether or not a hearing
has commenced in respect of an alleged prohibited practice. This
means that
the application may be made while the Commission is
investigating a complaint, after the Commission has referred a
complaint to
the Tribunal, or, failing a Commission referral, the
complainant has done so. If the complaint is referred, then, even if
the prohibited
practice comes to an end before the Tribunal can
decide the matter, the prohibited practice will nevertheless, in most
circumstances,
be finally determined by the Tribunal because either
the Commission will seek a declaration that the conduct of a firm
constituted
a prohibited practice and an administrative penalty
should be paid, or the complainant will seek remedies, not least a
declarator,
as a precursor to a claim for civil damages. If this
occurs, the respondent will have the opportunity to persuade the
Tribunal
that it did not engage in the alleged prohibited practice.
If the respondent is successful, then apart from avoiding the
imposition
of any further remedies, the respondent will be in a
position to show that it suffered the consequences of an interim
order when
, on a determination of all the facts, no order was
warranted.
[33]
This
has important implications for damages that a respondent will be able
to claim from a complainant that has benefited from an
interim order,
where the complainant has been required to make a tender of a cause
of action for damages at the time that the interim
order is granted.
Such a tender, though so often neither made nor required, should
usually be a necessary
part
of
any
interim
order
that
issues
from
the
Tribunal,
because
it
prevents
a
complainant from securing an interim order without bearing the cost,
in the event that the complainant is not ultimately vindicated.
[8]
[34]
Thus, although it will often be the case that the Tribunal
does determine finally whether a prohibited practice has taken place,
this is not invariably so. The complainant may secure an interim
order and the Commission then decides not to refer the matter.
The
complainant may then do so, but is not required to do so. If the
complainant does not (it may consider the expense is not warranted
in
respect of a prohibited practice that has ended or will soon do so),
then the Tribunal will not finally determine the matter.
In these
circumstances, the interim order is final in effect. The interim
order may be appealed to this court so as to decide whether
the
respondent should suffer the interim order until the alleged
prohibited practice ends. So too, the interim order may be appealed
even if the order has lapsed, in circumstances where the applicant
has been required to tender a cause of action for damages. The
effect
of the decision of this court would then determine whether the
respondent would be able to pursue any claim for damages
against the
complainant.
[35]
On this account, the right to appeal an interim order that has
a final effect is a narrow but important safeguard of the rights of
a
respondent, which would otherwise have an interim order imposed upon
it, without recourse to persuade the Tribunal that its final
determination should be to dismiss the referral. That renders an
interim order final in effect.
An irreversible
effect.
[36]
s49C(8) gives the respondent a right of appeal against an
order that has a final or irreversible effect. What effects may be
said
to be irreversible? Vexall submits that it is not mere
commercial prejudice to the respondent that is relevant since that
would
render almost every interim interdict appealable and that was
clearly not parliament’s intention. There is force in this
submission. However, an irreversible effect should not be understood
to mean an effect that either determines an issue in the ultimate
adjudication before the Tribunal or an issue that will never be
determined in such adjudication. That is so because these meanings
fall within the concept of an effect that is final. And, as I have
explained, it is principally the second of these two meanings
that is
of application under the Act because the first is likely to
disciplined under this court’s review jurisdiction.
[37]
What then is the terrain of irreversible effects that would
render an interim order appealable? The interim relief jurisdiction
of the Tribunal is engaged in cases where there is evidence that the
respondent’s conduct amounts to a prohibited practice
and there
is a need to prevent the applicant from suffering serious or
irreparable damage, the balance of convenience then being
a further
consideration. The serious or irreparable damage to the applicant
contemplated in s49C(2)(b)(ii) is damage to the competitive
position
of the applicant in the market. The damage is irreparable if there is
a likelihood that , before the applicant will be
able to secure final
relief, the applicant will exit the market or will otherwise suffer
material damage to its competitive position
in the market of a kind
that it will not readily regain.
[38]
This conception of what constitutes irreparable damage to the
applicant derives from the purpose of the Act. The Act seeks to
foster
competition. It is not there to buffer firms from the
consequences of competition on the merits, much less to secure or
enhance
their commercial prospects. If that is so for the applicant,
a like conception of irreversible effect is apposite when considering
what effects are relevant to an assessment of the respondent’s
position that would be considered irreversible for the purpose
of
vesting a right in the respondent to appeal an interim order. That is
to say, an interim order has an irreversible effect if
is it is
likely to cause the respondent to exit the market or to cause the
respondent to suffer material damage to its competitive
position in
the market that it will not be able to restore upon the lapsing of
the order or the dismissal of a referral concerning
the prohibited
practice that is the subject of the interim order.
[39]
An interim order may only be made in respect of the alleged
prohibited practice. The order will either require the respondent to
desist from the practice or restrict aspects of the practice. That is
relief intended to prevent or ameliorate the damage of which
the
applicant complains. There is no linear relationship that determines
that a competitive gain made by the applicant as a result
of the
interim order brings about an equal and opposite loss of competitive
positioning for the respondent. However, the grant
of an interim
order will often have the effect that the respondent loses an
advantage that it enjoyed in the market. Whether that
is an advantage
to which the respondent is entitled, reflective of competition on the
merits, or whether it is an advantage enjoyed
by reason of a
prohibited practice to which the respondent has no entitlement, is an
issue that will only be finally determined
when ( and if ) the
Tribunal decides the matter at a hearing in due course. But if the
respondent can make a showing that the interim
order has the effect
that the respondent’s competitive position is materially
diminished in the market or that there is a
loss of some aspect of
effective competition within or between markets, then these are
relevant effects for the purpose of considering
whether the
respondent enjoys a right of appeal. What signifies is that the
interim order will materially diminish the competitive
positioning of
the respondent in the market, when it may turn out that the
competitive advantage lost by the imposition of the
order is a wholly
legitimate advantage. In an enactment concerned to preserve and
promote competition this provides a justified
basis upon which a
respondent may seek the reconsideration of the interim relief by this
court.
[40]
Such a showing however will not suffice to establish the
right. The relevant effects must be irreversible. This means that the
respondent
will be unlikely to restore its competitive advantage in
the market, even if the Tribunal were, in due course, to vindicate
the
respondent and dismiss the referral. What is irreversible on this
interpretation of s49C(8) is not a detriment suffered by the
respondent in the interim period during which the order holds, but
rather what is lost to the respondent by way of competitive advantage
that will not likely be regained, on the assumption that the
respondent was to prevail before the Tribunal when the referral is
finally decided. The same conclusion as to irreversibility is reached
if what is lost to the respondent by way of competitive advantage
over the life of the order will not likely be regained, on the
assumption that the complaint is never referred to the Tribunal.
[41]
In sum, therefore, an interim order has a final or
irreversible effect in the following circumstances:
(a) The interim
order is rendered final in effect because the prohibited practice and
the relief to which it gives rise will not
be considered by the
Tribunal because no referral is likely to be made or the Tribunal
purports to decide an issue with finality
by way of interim relief
that it would be required to decide on a referral to it. This second
variety of finality will likely constitute
an
ultra vires
decision
that is reviewable, but it may be also be appealed.
(b) The interim
order has an irreversible effect where it materially disadvantages
the competitive position of the respondent in
the market and the
disadvantage is not likely to be undone should the respondent prevail
before the Tribunal upon the hearing of
the referral or should the
referral never occur.
May BCX Appeal?
[42]
I turn then to consider whether BCX has made out a case that
the interim relief granted against it by the Tribunal meets the
requirement
that the order has a final or irreversible effect.
[43]
BCX, in its answering affidavit in the interim relief
application, has contested the basis upon which Vexall contends that
BCX has
abused its dominant position and engaged in unlawful tying
arrangements. BCX’s defence is very fully set out. In sum, BCX
says that Vexall has unlawfully appropriated its intellectual
property and used it as a springboard to compete with BCX; that the
only services in issue form part of the product offered by BCX in the
upstream market and hence there is no tying; and, furthermore,
in the
market for value added services, Vexall is not materially
constrained, and so no case can be made out for anti- competitive
effects.
[44]
These will be important issues for the Tribunal to consider
when (and if) the matter is referred to it for final relief. The
scope
of the present enquiry is altogether narrower. The interim
order granted by the Tribunal prevents BCX from selling or offering a
Unisolve license on condition that a customer purchases value-added
services from BCX, where value-added services are defined to
exclude
software support services. The interim order runs from 12 February
2020 and remains in force for six months. We were informed
by counsel
that Vexall has made an application to the Tribunal to extend the
interim order for a further six months in terms of
s49C(5) of the
Act. That may take place on good cause shown, and the Tribunal has
yet to decide this application.
[45]
I observe that the showing of good cause is not a modest
burden. Nor would the Tribunal be justified in approaching the
question
of extension on the simple basis that if there are no
changed circumstances, the interim order should stand. Orders of this
kind
may have a significant impact upon the state of competition in
the relevant markets. The imposition of the interim order will offer
some evidence as to what impact the order has had upon competition.
This must be carefully considered. So too, given the significance
of
orders of this kind and the risk of error, the Tribunal should
consider whether on all the evidence before it, the further extension
of the order is justified. That consideration should not exclude an
open-minded approach as to whether the original grant of the
interim
order was warranted, not to undo what has been done, but rather to
recognise that if an error was made it should not be
perpetuated. The
Tribunal must also consider, as it failed to do, whether Vexall
should be required to tender a cause of action
for any damages BCX
may suffer should the prohibited practice , ultimately, not be
established.
[46]
That said, the issue remains, in the first place, whether the
interim order has a final effect. BCX does not set out a basis for
this, save in one respect. There is nothing to indicate that the
tying arrangements that are at the centre of the dispute between
the
parties will run out and not be capable of consideration by the
Tribunal upon a referral by the Commission or Vexall. Nor is
there
anything to indicate that the decision of the Tribunal granting
interim relief has been determined with finality so as to
render its
decision upon a referral either otiose, redundant or moot. The
interim order that prohibits BCX from selling or offering
a Unisolve
license on condition that a customer purchases value-added services
is not an order that has a final effect.
[47]
The one order of the Tribunal that is final in effect is its
order that BCX pay the costs of Vexall’s application for
interim
relief. It is final in effect because the order is neither
framed on the basis that costs will be determined as part of the
decision
on the referral, nor in accordance with the outcome of the
referral. BCX submits that the Tribunal enjoyed no power to make this
order and we should set it aside on appeal. I will return to this
issue.
[48]
Does the interim order have an irreversible effect upon BCX?
BCX contends that the Order is appealable , and thus raises the issue
of irreversibility The burden of BCX’s argument was that Vexall
had failed to make out a case for an interim interdict and
the
Tribunal fell into error in holding otherwise. But what is salient,
in deciding upon appealability, is the effect of the order
upon BCX’s
competitive position in the market and whether the interim order is
likely to cause material competitive harm
to BCX that is
irreversible. In dealing with irreversibility, BCX submitted that the
interim order granted by the Tribunal had
an immediate effect. That
is so. It prohibited BCX from imposing a condition to purchase
value-added services upon the sale or
offering of a Unisolv license.
Counsel for BCX emphasized that this has required BCX to change its
agreements with customers and
prospective customers. That is no doubt
disadvantageous to BCX and may result in customers acquiring
value-added services from
BCX’s competitors, including Vexall.
But that does not show that the loss of competitive advantage is
irreversible. That
requires some evidence that when the interim order
ends or if BCX is ultimately vindicated by the Tribunal, BCX is not
likely to
be able to restore the competitive disadvantage that it has
lost. That is not what BCX contended before this court.
[49]
In its answering affidavit, BCX does state that the conduct of
Vexall is resulting in BCX haemorrhaging staff, clients and
intellectual
property that, if allowed to continue unabated, will
bring the viability of the division of BCX, in which the Unisolv
business
is housed, into question. The deponent says this:
“
In fact,
there is a likihood that BCX will be forced to exit as a competitor
in the market if Vexall were allowed to proceed apace.”
[50]
This claim however is not supported by specific evidence that
makes some showing as to why the competitive advantage that is lost
by the contractual term that is prohibited by the interim order will
not be likely to be restored should BCX be vindicated in due
course
or when the interim order ends. Something more needs to be said than
to assert that the competitive harm to BCX may render
its business
unviable. Without evidence as to what irreversible competitive
effects the interim order is likely to bring about,
it is not
possible to conclude that BCX may appeal the interim order on the
basis that it has an irreversible effect. In particular,
what is
missing is a factual justification as to why , upon the lapse of the
interim order or BCX’s ultimate vindication
, BCX will not be
able to restore its competitive position in the market.
[51]
It will be recalled that the legislature did not intend to
permit every respondent to appeal the imposition of an interim order.
The right to appeal requires that the interim order has a final or
irreversible effect. The legislature thereby sought to ensure
that a
particular kind of injustice was avoided. That is an injustice that
would arise if the Tribunal made an interim order when
it should not
have, and the Tribunal either determined issues with finality or
granted an order that is likely to have irreversible
effects upon the
competitive position of the respondent. The corollary of this is that
the legislature was willing to countenance
the respondent enduring
harm, both competitive and pecuniary, over the life of an interim
order, in the absence of the interim
order having a final or
irreversible effect, even if the Tribunal may have granted the
interim order in error.
[52]
Accordingly, I find that the interim order of the Tribunal is
not appealable, save in respect of the order for costs. And it is to
this aspect of the matter that I finally turn.
The costs order
[53]
The Tribunal ordered BCX to pay Vexall’s costs as part
of the order it granted in terms of s49C. It is final and is not made
subject to reconsideration. The costs order has
a
final
effect, as s49C(8) stipulates. This marks out a difference between
this statutory provision and the holding in
Zweni
which
requires that the order must dispose of a substantial part of the
relief claimed. A costs order , without more, does not satisfy
the
test in
Zweni.
It does satisfy the requirement of a final
effect. The costs order is accordingly appealable.
[54]
BCX
submits that the Tribunal had no power to make the costs order that
it did. This is so because s57(1) of the Act provides that
each party
participating in a hearing must bear its own costs, subject to s57(2)
and the Tribunal’s rules of procedure. Section
57(2) vests the
Tribunal with no competence to make a costs order against an
unsuccessful respondent in interim relief proceedings
because Vexall
has not referred a complaint to the Tribunal in terms of s51(1). Rule
58(1) of the Tribunal rules has been interpreted
restrictively by the
Constitutional Court so as not to confer a power to order costs
outside of the scheme of the Act.
[9]
It follows that the Tribunal made a costs order against BCX in error.
That is so also because the Tribunal did not provide any
reasons as
to why the costs should be ordered in interim relief proceedings when
the final word has yet to be pronounced on the
merits of Vexall’s
complaint. Even if the Tribunal enjoyed the competence to make the
order that it did, absent special circumstances,
it should not have
done so.
Conclusion
[55]
It follows that BCX’s appeal must be dismissed in
respect of the order made by the Tribunal on 12 February 2020, save
in respect
of paragraph 4 of the order as to costs. BCX appeal
succeeds on the question of the costs awarded against it by the
Tribunal.
[56]
As to the costs of this appeal, Vexall has been successful,
save in respect of the Tribunal’s order as to costs. In my
estimation,
it would be an equitable reflection of that success if
BCX were to be liable for 80% of Vexall’s costs on appeal.
In
the result, the following order is made:
(i)
The appeal is dismissed, save in respect of paragraph 4 of the
Tribunal order, in respect of which the appeal is upheld.
(ii)
Paragraph 4 of the Tribunal order is set aside.
(iii)
The first respondent is ordered to pay 80% of the Appellant’s
costs on appeal.
______________________
David Unterhalter
Acting Judge of
Appeal
Davis
JP and Vally JA concurred in the judgment of Unterhalter AJA
APPEARANCES
For
the appellant: AGotz (SC), LSisilana and S Quinn
Instructed
by: Cliffe Dekker Hofmeyer Inc.
For
the respondent: GD Marriot
Instructed
by: DLA Piper SOUTH Africa (RF) Inc.
Heard
on: 26 June 2020
Judgment
delivered on: 15 July 2020
[1]
S20(1) of the Supreme Court Act 59 of 1959 , since repealed;
s16(1)
of the
Superior Courts Act 10 of 2013
allows that an appeal may,
with leave granted, be brought against ‘any decision’ of
a High Court, which has been
held to have the same meaning as
‘judgment or order’.
[2]
Zweni v Minister of Law and Order 1993(1) SA 523 (A)
[3]
Cipla Agrimed (Pty ) Ltd v Merck Sharp Dohme Corporation 2018(6) SA
440 (SCA)
[4]
International Trade Administration Commission v Scaw South Africa
(Pty ) Ltd & Others 2012(4) SA 618 (CC) See also National
Treasuryand others v Opposition to Urban Tolling Alliance and others
2012(6)SA223(CC) at para 25
[5]
Cronshaw & another v Fidelity Guards Holdings (Pty) Ltd 1996 (3)
SA 686 (A)
[6]
s49C(1)
[7]
Metlika Trading Limited and Others v Commissioner, South African
Revenue Service
2005 (3) SA 1
(SCA) at para 24
[8]
See Hix Networking Technologies CC v System Publishers (Pty ) Ltd &
Another
[1996] ZASCA 107
;
1997 (1) SA 391
(SCA) at 403D-F
[9]
Competition Commission of South Africa v Pioneer Hi-Bred
International Inc & others
2014 (2) SA 480
(CC) para 39