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[2020] ZACAC 6
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Competition Commission of South Africa v Stuttafords Van Lines Gauteng Hub (Pty) (Ltd) and Others (181/CAC/Jan20) [2020] ZACAC 6; [2020] 2 CPLR 548 (CAC) (22 October 2020)
REPUBLIC
OF SOUTH AFRICA
IN
THE COMPETITION APPEAL COURT OF SOUTH AFRICA
CASE
NO: 181/CAC/Jan20
In
the matter between:
COMPETITION
COMMISSION OF SOUTH
AFRICA Appellant
and
STUTTAFORDS
VAN LINES GAUTENG HUB (PTY) (LTD) First
Respondent
PICKFORD’S
REMOVALS SA (PTY) LTD Second
Respondent
A
& B MOVERS (PTY)
LTD Third
Respondent
BRYTON’S
REMOVALS (PTY)
LTD Fourth
Respondent
AMAZING
TRANSPORT (PTY)
LTD Fifth
Respondent
KEY
MOVES
CC Sixth
Respondent
BAYLEY
WORLD
CC Seventh
Respondent
SELECTION
CARTAGE (PTY)
LTD Eighth
Respondent
ELLIOT
MOBILITY (PTY)
LTD Ninth
Respondent
CROWN
RELOCATIONS (PTY)
LTD Tenth
Respondent
MAGNA
THOMSON (PTY)
LTD Eleventh
Respondent
NORTHERN
PROVINCE PROFESSIONAL
MOVERS
ASSOCIATION Twelfth
Respondent
SUMMARY:
Collusive
Conduct – s 4(1)(b)(i) of Competition Act - not sufficient for
Tribunal to find that mere mention of prices, by
representatives of
furniture removal firms, during discussion at a meeting constituted a
contravention of section 4(1)(b)(i) of
the Act - Tribunal must find
that there was consensus, among furniture removal firms, to be bound
by the understanding which Commission
alleged was reached at the
meeting; that is that a levy of R350 would be added to the removal
cost per quote or consignment to
counter the excessive effects of
e-tolling.
JUDGMENT
KATHREE-SETILOANE
AJA:
[1]
This is an appeal and
cross appeal against a decision of the Competition Tribunal
(“Tribunal”) in which it held that
although the
respondents, all furniture removal firms, had agreed to fix prices in
contravention of section 4(1)(b)(i) of the Competition
Act (“the
Act”),
[1]
by concluding an
agreement with regard to the charging of Electronic Tolling
(“e-toll”) at the meeting of the Northern
Region of the
Professional Movers Association on 22 January 2014 (“Northern
Region of the PMA”) , they could not be
held liable because the
agreement was concluded more than three years prior to the initiation
of the complaint by the Competition
Commission of South Africa
(“Commission”). The Tribunal accordingly held that the
limitation provisions in s 67(1)
[2]
of the Act applied and that the complaint against the respondents had
prescribed.
[2]
The Commission’s appeal lies against the latter finding and the
first, second, seventh and eleventh respondents’
(“the
respondents”) cross-appeal lies against the former. The ninth
respondent (“Elliot Mobility”) opposes
the appeal, but
does not cross appeal.
Background
[3]
On 22 January 2014,
representatives of the twelve furniture removals firms
(“respondents”) attended a quarterly meeting
of the
Northern Province branch of the Professional Movers Association (
“PMA”) held in Isando, Gauteng.
[3]
The PMA is an association of removal firms constituted to protect the
interests of industry members and the general public. The
PMA is an
affiliate of the Road Freight Association (“RFA”),
another industry body. At the meeting, there was a discussion
about
the impact of the e-toll system, which was implemented on 3 December
2013 in Gauteng, on the furniture removals industry.
E-toll fees were
to be calculated according to the vehicle category and the number of
gantries through which a vehicle passed.
[4]
The quarterly meetings of the Northern Province PMA generally dealt
with topics of interest or concern to the transport and
removals
industry as a whole. The meetings were ‘very casual and of a
general nature’, and ‘really like a bit
of a social
thing’, with food and drinks afterwards.
[5]
The January meeting was attended by thirteen representatives of
removal firms operating in Gauteng. The meeting was chaired
by Mr
Charl Pienaar (“Mr Pienaar”), the Chairperson of the
Northern Province PMA. He also represented the first respondent
(“Stuttafords”) at the meeting. In the absence of the RFA
secretary who usually took minutes at the quarterly meetings,
Mr
Pienaar’s personal assistant, Ms Adele Vella (“Ms.
Vella”), attended the meeting to take minutes.
[6]
Mr Martin Oosthuizen (“Mr Oosthuizen”) attended the
meeting both as President of the PMA and as a representative
of the
second respondent (Pickfords). The meeting was also attended by: (a)
Mr Graeme Logon of Pickfords; (b) Ms Marlene Bystydzienski
of the
third respondent (A&B Movers); (c) Mr Doug Fear (“Mr Fear”)
of the fourth respondent (Brytons Removals);
(d) Mr Jody Riback of
the fifth respondent (Amazing Transport);
(e)
Mr Dean Knezovich of the sixth respondent (Key Moves); (f) Mr Liam
Bayley (“Mr Bayley”) of the seventh respondent
((Bayley
Worldwide); (g) Ms Adele Lawrence of the eighth respondent (Selection
Cartage); (h) Mr Deon Small (“Mr Small”)
of the ninth
respondent (Elliott Mobility); (i) Ms Carin Cronje of Elliott
Mobility; (j) Mr Johan Wessels of the tenth respondent
(Crown
Relocations); (k) Mr Tony Halgreen (“Mr Halgreen”) of the
eleventh respondent (Magna Thomson); and Mr Ben Nienaber
of British
International, which was not a respondent in the complaint referral.
[7]
The issue of the e-toll
system was discussed under item 4 of the meeting agenda. There were
ten issues on the agenda. The discussion
on the impact of the e-tolls
lasted between 5 to 10 minutes.
[4]
[8]
Approximately two weeks after the January meeting, Mr Pienaar asked
Ms Vella, who had taken handwritten notes of the proceedings
at the
meeting, to type up minutes and send them to the RFA before its
meeting on 10 February 2014. It was standard practice for
the minutes
of the quarterly meetings to be sent to the RFA. Ms Vella drafted the
minutes (“draft minutes”) and sent
them to the RFA.
[9]
According to Mr Pienaar, he did not read the draft minutes before
they were sent to the RFA, as he was very busy relocating
to Cape
Town at the time. Although Ms Vella could not recall whether Mr
Pienaar had seen the draft minutes before she sent them
to the RFA,
she confirmed that it was a very busy time for him.
[10]
Item 4 of the draft minutes reads as follows:
‘
4. E-TOLL
THE E-TOLL SYSTEM WAS
PUT INTO EFFECT OFFICIALLY ON THE 2
ND
OF DECEMBER 2013. CP
ADVISED THAT THE SUBSIQUINT [SIC] EFFECTS ON THE REMOVAL/TRANSPORT
INDUSTRY BE DISCUSSED. THIS WOULD NOT BE
A COLLUSION ISSUE. THE
HANDLING OF THESE COSTS ARE CRUSIAL [SIC] AS IT WILL HAVE A LASTING
EFFECT ON THE INDUSTRY. CP MADE MENTION
OF THE TRACKING OF VEHICLES
THAT HAVE BEEN USED TO ESTABLISH THE COST OF E-TOLLS FOR A VARIATY
[SIC] OF VEHICLES FROM OLIFANTSFONTEIN
TO WILLIAM NICHOL, INCLUSIVE
WITH THE EXECUTIVE SALES CONSULTANT ATTENDING TO THE SURVEY, IT WAS
NOTED THAT A MINIMUM TOLL FEE
OF R250 HAD TO BE APPLICABLE –
STUTTAFORDS VAN LINES HUB.
MARLANE BYSTYDZIENSKI
(MB) CONFIRMED THAT THEY HAVE BEEN ADDING AN AMOUNT OF R350 PER QUOTE
FOR BOTH LOCAL AND LONG DISTANCE CONSIGNMENT
TO COUNTER THIS COST –
A&B MOVERS.
DOUG FEAR(DF) ALSO
ADVISED THAT THEY HAVE BEEN IMPLEMENTING A FLAT RATE OF R350 JUST TO
COVER THE BASIC COSTING – BRYSTONS
REMOVALS.
DS ADVISED THAT THEY
FORMULATED A PERCENTAGE CALCULATION TO ENABLE THEM TO COST THE TOLL
FEES PER CONSIGNMENT MORE EFFECTIVELY –
ELLIOTT MOBILITY. IT
WAS AGREED THAT R350 SEEMS TO BE THE ACCEPTABLE AVERAGE.
IT WAS GENERALLY
CONCURRED THAT A LEVIE [SIC] OF R350 WILL BE ADDED TO THE REMOVAL
COST PER QUOTE/CONSIGNMENT TO COUNTER THE EXCESSIVE
EFFECTS OF THE
IMPLEMENTED E-TOLL SYSTEM IN GAUTENG.’
[11]
The whole of item 4 of the draft minute was typed in uppercase and so
too was item 3.
[12]
On 10 February 2014, Mr Oosthuizen, in his capacity as President of
the PMA, sent an email to Mr Pienaar in which he wrote:
‘
I wish to refer to
the minutes being sent to Catherine for the recent Northern Provinces
meeting that was hosted at the RFA premises.
The matter relates to a
discussion that took place on the E-toll application and how to
incorporate this as a line item on quotations.
Kindly ensure that
paragraph 4 of the minutes is amended prior to publishing it and
reflect the following wording;
‘
We have taken
advice on the matter and each party will act independently’
Please take the previous
statement out of the minutes as it is in contravention with the
Competition Act and place the RFA in accordance
with the Articles of
Association at risk. Due to the nature of the concern, I have been
advised that this incident will be reported
to the RFA EXCO and in
retrospect this has implications for the PMA as an Association.
Please include Sharmini
into the revised wording of your minutes.’
[13]
Mr Pienaar responded an hour later, writing as follows:
‘
This was a report
and not circulated as yet. E-Toll will also not be a line item. The
charges are based on factual information that
is available to every
citizen of this country. I will change the minutes to read
accordingly before distributing.’
[14]
Mr Pienaar testified that he had no sight of the draft minutes when
he sent this email. On 14 February 2014, Mr Pienaar wrote
a letter to
Ms Sharmini Naidoo, the CEO of the RFA apologising for the
circulation of the draft minutes and, among other things,
said the
following:
(a) It had not been
his intention to have a discussion about price fixing to recover
e-toll costs, but to highlight the costs
involved and ‘the
bottom- line effect that e-tolls will have on the transport
industry’.
(b) He had
indicated to members the cost of traveling from Midrand to Bryanston
as per the rates provided on SANRAL’s
webpage. This was only to
illustrate what the extra expense would amount to and the effect on
‘our very low margin industry’.
(c) It was for
these reasons that he had sent his initial communication that ‘the
rates were available to every citizen
of this country’. He had
still been convinced, in his head, that it was ‘a discussion on
actual cost rather than an
agreement on charges’.
(d) He only
realised, after receipt of Mr Oosthuizen’s letter and after
actually reading the draft minutes, what its
interpretation was and
that it ‘certainly said more’.
[15]
Prior to writing this letter, Mr Pienaar had seen the draft minutes,
as well as a legal opinion obtained by the RFA which indicated
that
the ‘concurrence’ recorded in the draft minutes would
amount to a contravention of the Act.
[16]
At the next meeting of the Northern Province PMA on 10 April 2014, a
revised version of the draft minutes (“the amended
minutes”)
was tabled and adopted. Item 4 of the amended minutes reads as
follows:
‘
The e-toll system
came into effect on 2nd December 2013. This is an expense to the
removal/transport industry that needs to be passed
on to the
consumer.
It was suggested that
each company decides to charge or not to charge and to calculate
based on their own costs how much they need
to recover. Obviously,
the respective companies operate different fleet sizes and overheads
are different.’
[17]
On 10 May 2014, Ms Catherine Larkin of the RFA sent an e-mail to all
the members of the Northern Province PMA, to which she
attached a
letter, dated 9 May 2014, from Mr Nico van der Westhuizen, the
Chairman of the RFA. The letter read as follows:
‘
We are addressing
this letter to you on behalf of the Board of the Road Freight
Association.
We acknowledge receipt of
your letter of apology by Mr Charl Pienaar, and accept such apology.
The purpose of this
letter is to share our concern with regard to the discussions that
took place at the Northern Region Meeting
on 22 January 2014.
You have already been
provided with a copy of the legal opinion that we have obtained,
which points to the risks of certain discussions
at your regional
level.
This letter therefore
serves to remind all relevant parties, not to make themselves guilty
of any acts of collusion or otherwise
[sic]. This includes decisions
on the pricing of toll gates, as well as any other matter which may
constitute collusion or any
breach of the
Competition Act, 89 of
1998
. Please note that such conduct also constitutes a breach of the
RFA’s Code of Ethics, signed by all members.
We trust that you will
appreciate the seriousness of this matter.’
A
copy of the draft minutes; and a copy of the legal opinion obtained
by the RFA in respect of what was recorded in the draft minutes
was
also attached to this email.
The
Complaint Referral
[18]
A complaint against the
respondents was initiated on 8 February 2017
[5]
,
alternatively 8 March 2017
[6]
.
The Commission referred the complaint to the Tribunal on 12 September
2017 in which it described the conduct which was the subject
of the
complaint as follows:
‘
The Respondents
are alleged to have entered into an agreement and / or engaged in a
concerted practice to fix the rate to be levied
to customers that
transport furniture using e-tolled Gauteng highways. The information
further indicates that the Respondents agreed
that average levy of
R350 would be added to the removal costs per quote to counter the
effects of [the] e-toll system in Gauteng
in contravention of
section
4(1)(b)(i)
of the
Competition Act 89 of 1998
as amended.’
[19]
The Commission alleged that the conduct was ongoing.
The
Findings of the Tribunal
[20]
The Commission referred
the complaint to the Competition Tribunal on 12 September 2017.
[7]
It sought an order in the following terms:
‘
1. Declaring that
the respondents have contravened
section 4(1)(b)(i)
of the
Competition Act in
that on or about 22 January 2014 the respondents,
being parties in a horizontal relationship, engaged in price fixing.
2. Declaring that the
respondents be liable for the payment of an administrative penalty
equal to 10% of their its turnover in terms
of
section 58(1)(a)(iii)
read with
section 59
(2) of the Act.’
[21]
The Commission argued, at the Tribunal hearing, that an agreement was
reached at the meeting of 22 January 2014 to recover
e-tolls and it
was subsequently implemented. The respondents, contended, to the
contrary that no agreement had been reached at
the meeting. Even if
it had, it was never implemented; thus the Commission’s
jurisdiction to refer the case was ousted by
the limitation of action
provisions contained in
section 67
(1) of the Act.
[22]
The Tribunal handed down
its decision on 20 December 2019 (“Tribunal Decision”).
In relation to the first issue, which
is whether the discussion that
took place amounted to an unlawful agreement in contravention of the
Act, the Tribunal found that
the respondents had agreed to price fix
in contravention of
s 4(1)(b)(i)
of the Act by reaching an
understanding, at the January meeting, that they would pass on the
costs of e-tolls by the implementation
of a general “administration
type of fee” that did not reflect the true cost of the e-tolls
for the service”.
The Tribunal also found that the respondents
had sounded each other out at the meeting and that the fee “hovered
in the amount
of R350”.
[8]
In this regard it stated that:
That it was not an
agreement to fix a price in precise terms, does not detract from the
conclusion that there was an agreement.
When competitors reach an
understanding to raise prices to consumers, whether by reference to
an agreed price or an agreed price
raising form of conduct, consumer
welfare is adversely affected.
In the present case the
competing firms were not even obliged to pass on the cost of E-tolls
to consumers. The decision to do so
by agreement, is, on its own, a
contravention of the Act, because such a decision excluded
independent action by firms, which in
a competitive market may have
led to different responses.
Second, it is also clear
that the firms reached agreement to pass on the cost not by the
actual amount incurred, but by way of a
general fee. Third, the firms
signalled to one another what the range of the fee might be, albeit
that we have not found they agreed
on a precise amount, contrary to
what the Commission alleged in the referral… .’
[9]
[23]
Yet, in relation to the second issue for determination, namely
whether the prohibited practice ceased by the date of initiation
of
the complaint, on the basis that it took place three years prior to
the date of initiation of the complaint, the Tribunal held
that the
respondents could not be held liable for their conduct because the
claim had prescribed by virtue of
section 67(1)
of the Act. The
Tribunal added that the Commission could have avoided the limitation
of action problem if it had led evidence of
the implementation of the
agreement, which it had not done: It concluded:
‘
Although the
respondents may well have concluded an agreement with regard to the
charging of E-Tolls at the meeting of 22nd January
2014, they cannot
be held liable because the agreement was concluded more than three
years prior to the initiation of the complaint
and the limitation or
action in terms of
section 67
(1) applies. Put more colloquially the
claim for this count has prescribed.
Second, the Commission
could have avoided the limitation problem had it established that the
agreement had not ‘ceased’
and was in existence within
the three-year period after initiation. On the facts this has not
been shown. The case must be dismissed
against all the
respondents.’
[10]
Was
an Agreement Reached at the January Meeting?
[24]
Since the determination of the appeal is dependent on a positive
finding on the question for determination in the cross appeal,
I will
turn to the cross- appeal first.
[25]
The respondents contend, in the cross appeal, that the evidence
presented to the Tribunal established that no agreement in
contravention of
s 4(1)(b)(i)
of the Act was reached at the January
meeting, hence the Tribunal erred in concluding as much. The
Commission’s counter argument
is that the Tribunal was correct
in concluding, on the evidence of Mr Pienaar of Stuttafords, Mr
Oosthuizen of Pickfords, and Mr
Small of Elliot Mobility
specifically, that the respondents’ discussions at the January
meeting resulted in them reaching
an understanding in contravention
of
s 4(1)(b)(i)
of the Act.
The
Law
[26]
The conduct relied upon by the Commission in its referral is an
agreement amounting to price fixing in contravention of
section
4(1)(b)(i)
of the Act.
Section 4
of the Act prohibits the following
restrictive horizontal practices:
‘
(1) An
agreement
between,
or
concerted
practice
by,
firms
,
or a decision by an association of
firms
,
is prohibited if it is between parties in a
horizontal
relationship
and
if –
(a)
…
(b)
it involves any of the following
restrictive horizontal practices
:
(i) directly or
indirectly fixing a purchase or selling price or any other trading
condition;
…
.’
[27]
An agreement is defined
in
s 1
of the Act as including ‘a contract, arrangement or
understanding, whether or not legally enforceable’.
[11]
The essential components of the ‘agreement’ prohibited by
s 4(1)(b)(i)
of the Act are that the parties reach consensus in
respect of an arrangement which they regard as binding upon
themselves and one
another. Thus, as held in
Netstar
(Pty) Ltd and Others v Competition Commission of South Africa and
Another
.
[12]
‘
[A]n
agreement arises from the actions of and discussions among the
parties directed at arriving at an arrangement that will bind
them
either contractually or by virtue of moral suasion or commercial
interest. It may be a contract, which is legally binding,
or an
arrangement or understanding that is not, but which the parties
regard as binding upon them. Its essence is that the parties
have
reached some kind of consensus.’
[13]
[28]
Although
this Court, in
Netstar
,
recognized that the definition of an agreement extends the concept
beyond a common law contractual arrangement, it emphasized
that “what
it requires is still a form of arrangement that the parties regard as
binding upon both themselves and the other
parties to the agreement
”
and
that “absent such an arrangement there is no agreement even in
the broader sense embodied in the definition”.
[14]
[29]
Thus, in determining
whether an agreement is established, the court must evaluate whether
‘consensus sufficient to constitute
a “contract,
arrangement or understanding” has been proved on a balance of
probability’ by the Commission.
[15]
Where such conduct is not expressly confirmed by the parties
concerned, an inference may be drawn from the discussion itself where
one of the parties commits to act in a particular way and the conduct
of the other parties demonstrates an agreement to be bound.
The
proved facts from which the inference is to be drawn must objectively
establish that at least one party assumes an obligation
or gives an
undertaking or assurance that it will act in accordance with what was
discussed at the meeting. A mere expectation
that a party will act in
that way is insufficient.
[16]
As contemplated in
s 4(1)(b)(i)
of the Act, conduct that conforms
with a binding arrangement must be shown to exist. Expressed
differently, the adoption of a uniform
approach by the parties
concerned must be shown to be present.
[30]
The Court may also have
regard to the subsequent conduct of the parties in determining
whether an agreement has been concluded.
Although the steps taken by
the parties to implement the agreement or arrangement may be
considered,
[17]
s 4(1)(b)(i)
of the Act does not impose an onus on the Commission to prove that
the agreement has been implemented. The conclusion of an agreement
sans
implementation,
suffices to constitute a contravention of the Act.
[18]
What
is the Commission’s Complaint?
[31]
Based on the concluding
paragraph of the draft minutes,
[19]
the Commission alleged in its complaint referral, that the
respondents had ‘entered into an agreement and/or engaged in a
concerted practice to fix the rate to be levied to customers that
transport furniture using e-tolled Gauteng highways’ and
that
‘this conduct amounted to price-fixing in contravention of
section 4(1)(b)(i)
of the Act’.
[32]
The case which the Commission relied on in its founding affidavit to
its complaint referral is that:
‘
An agreement was
reached in the [22 January 2014] meeting that the First to the
Eleventh Respondents must add an average levy of
R350 on each quote
produced by the Respondents when transporting furniture along the
Gauteng e- toll roads”.
It further alleged that:
The purpose of the
agreement was to pass on to consumers the added costs incurred when
transporting furniture using highways in
the province of Gauteng
because of the e-tolls’.
[33]
During the Tribunal hearing, the Commission relied on two agreements
in the alternative. These are an agreement to charge customers
a
fixed fee of R350 to pass on e-toll costs to customers (“the
alleged R350 levy agreement”); alternatively, an agreement
to
recover e-toll costs from customers (“the alleged e-toll
recovery agreement”).
[34]
At the hearing of the appeal there was considerable debate on the
question of the exact nature of the Commission’s case.
The
Commission submitted that its case is, and has always been, that the
respondents reached a so called “broader agreement”
to
“pass on or recoup” e-tolls costs from the customer. It
sought support for this from the words “to counter
the effects
of the implemented e-toll system” which appear in the
concluding paragraph of the draft minute.
[35]
However, as shown by the respondents, this is not the case which the
Commission relied on in its founding affidavit to its
complaint
referral. Its case, as embodied there, is that “the respondents
reached an agreement to add an average levy of
R350 on each quote
produced by them when transporting furniture along the Gauteng e-toll
roads”. The Commission’s case
was built upon the recordal
in the draft minutes that the respondents’ representatives, at
the January meeting, agreed that
a levy of R350 would be added to the
removal costs per quote to counter the effects of the e-toll systems.
That the Commission
had alleged, in its founding affidavit, that “the
purpose” of the alleged R350 levy agreement was “to pass
on
to the consumer the added costs incurred…because of the
e-tolls” does not mean that it was open to the Commission to
rely on a so called broader agreement to recoup e-toll costs from the
consumer generally. Nor does the use of words “to counter
the
effects of the implemented e-toll system” suggest this.
[36]
Crucially, nowhere in the draft minutes is reference made to a
broader agreement to pass on or recoup e-toll costs from the
customer. That the Commission’s pleaded case is founded
squarely on the concluding paragraph of the draft minutes is
consistent
with its contention, during argument in the appeal, that
the recordal there is fatal to the respondents’ cross appeal.
It
sought support for this argument in the finding of the Tribunal
that Mr Pienaar did not question the correctness of the contents
of
the draft minutes or distance himself from it. The Commission
accordingly contended that the contents of the draft minutes reliably
reflect the understanding or arrangement reached by the respondents
in contravention of
s 4(1)(b)(i)
of the Act.
Is
there a Collusive Agreement on the Evidence?
[37]
As concerning this question, the Court must consider whether the
evidence, viewed as a whole, supports the finding of the Tribunal
that the respondents reached an agreement, at the January meeting, to
engage in the prohibited practice envisaged in
s 4(1)(b)(i)
of the
Act.
[38]
The Tribunal correctly found, based on the evidence of the
Commission’s own witness, Mr Oosthuizen, that the Commission
had not established with sufficient certainty whether the agreement
was reached on the specific amount. It however, found based
on the
Commission’s alternate case (not pleaded in its founding
affidavit) that the respondents had reached an understanding
at the
meeting that: “The new [e-tolls] cost should be passed on to
the consumer possibly as either a flat rate or percentage…
Second, the sums mentioned gave each an indication of the ballpark of
what this amount was. …What appears to have happened
is that
Pienaar had sounded them out at the R250 mark and that others had
suggested a higher amount closer to R350”.
[39]
Apart from the fact that this finding is not based on the
Commission’s case as pleaded in its founding affidavit, there
is also a clear lack of specificity in the finding that the
respondents entered into an “understanding” as required
by our jurisprudence. This Court has repeatedly held that for an
“agreement, understanding or arrangement” to constitute
a
collusive agreement as contemplated in
s 4(1)(b)(i)
of the Act, it
must be proved on a balance of probabilities that the parties
concerned had reached consensus on the subject matter
of the
understanding, and that that they regarded such understanding as
binding upon themselves or on each other. Consensus is
of the essence
in demonstrating that firms have engaged in a prohibited practice in
the form of a cartel agreement as contemplated
in
section 4(1
)(b)(i)
of the Act.
[40]
The Commission, however, failed to present any reliable evidence
demonstrating that those present, at the January meeting,
reached any
consensus on an understanding or arrangement which they regarded
binding upon themselves (or their principals), or
that they agreed
upon a uniform approach to the recovery of e-toll costs. To the
contrary, the evidence established that different
individuals drew
different conclusions from the discussion that took place at the
meeting, and none regarded themselves, the firms
they represented, or
the other firms represented at the meeting as being bound by any
uniform approach to recoup or recover costs.
[41]
All of the witnesses,
[20]
who testified at the Tribunal hearing about the discussion that took
place at the January meeting, were unanimous that it highlighted
the
impact that e-tolls would have on the removals industry, and the
‘bottom line’ of removal firms. The only suggestion
made
at the meeting was, along the lines, recorded in the amended minute
that: “[E]ach company decides to charge or not to
charge and to
calculate based on their own costs how much they need to recover”.
[42]
Mr Oosthuizen, in particular testified that the discussion lasted
between five to ten minutes and was open and transparent,
and no-one
was instructed to keep it confidential or secret. The undisputed
evidence of Mr Pienaar (Stuttafords) and Mr Fear (Brytons
Removals)
was that their mentioning of e-toll rates (R250 and R350
respectively) associated with specific hypothetical journeys,
was
based on their own calculations and research. According to Mr
Pienaar, one attendee (Ms. Bystydzienski) blurted out, “out
of
the blue”, the amount of R350 which her firm was charging, and
another (Mr David Small of Elliot Mobility) mentioned his
firm’s
method of costing. Mr Pienaar accepted that, at this point, he ought
to have stopped the discussion, and subsequently
regretted having not
done so.
[43]
It is manifest from the evidence that none of the respondents’
representatives, present at the meeting, sought to sum
up the outcome
of the discussion, and even though they left with a similar
understanding of the substance of the discussion, they
drew different
conclusions from it. As indicated, Ms. Vella, the personal secretary
to Mr Pienaar, attended the meeting to take
the minutes in the
absence of the customary minute taker. According to her testimony,
she was inexperienced at taking minutes at
the time and,
consequently, had provided her own conclusion of the discussion (as
she was taught at an executive PA course she
had attended), in the
last paragraph of the draft minutes, in circumstances where no one
had summed up what the outcome of the
discussion was. Ms. Vella’s
evidence was not disputed by the Commission.
[44]
Her testimony that the concluding paragraph of the draft minutes was
inaccurate is consistent with the evidence of the other
witnesses who
testified on their recollection of the discussion that took place, at
the January meeting, on the subject of e-tolls.
Significantly, none
of them recalled an agreement, ‘general concurrence’ or
any consensus among those present that
all the firms would charge a
specific levy, of R350 or any other amount, to recover e-tolls costs.
They steadfastly maintained
that there was no such consensus.
Pertinently, Mr Oosthuizen, the Commission’s own witness, was
adamant that no agreement
was reached at the January meeting, and
that the concern which he raised, at the time, related to the general
discussion about
“rates” which he assumed to be in
contravention of the Act.
[45]
As the evidence reveals,
the respondents took diverse approaches to the question of recovering
e-toll costs. Stuttafords, Pickfords,
Brytons Removals, and Magna
Thomson recovered e-toll costs from customers, while others such as
Elliot Mobility and Bayley Worldwide
did not. Since Bayley Worldwide
incurred no such costs, there was no reason to recover them.
Conversely, Stuttafords, Pickfords,
Magna Thomson and Brytons
Removals recovered e-toll costs consequent upon decisions taken,
independently of each other, before
the January meeting.
[21]
Notably, none of them followed a common approach. Stuttafords imposed
a charge of R300 per move from early April 2014. Pickfords
did not
charge a particular amount but rather a percentage (2% of the value
of the transport costs), with a discretionary R100
minimum cost.
Brytons Removals imposed a charge of R230 per move which it
determined in September 2013. And Magna Thomson imposed
a charge of
R290 per day, erratically between 19 June 2014 and September 2014,
and thereafter more consistently. The charge was
eventually changed
to R290 per move.
[46]
Considering the significant differences, among the respondent firms,
relating to their size, areas of operation, fleet size,
vehicle
types, routes travelled, operational requirements, costs structures,
overheads, service offering and customer preferences,
the
probabilities suggest that there could have been no consensus on the
adoption of a common approach in relation to the recovery
of e-toll
costs. In this respect, Mr Pienaar testified that the e-tolls costs
recovered by Stuttafords would have no application
to any of the
other removal firms in the industry, as it redeployed the biggest
removal fleet in South Africa and focused on domestic
removals in
affluent areas in Johannesburg and Pretoria. Equally, Mr Fear
testified that Brytons Removals incurred different costs
to a removal
firm such as Stuttafords, because it is a single-branch, one-person
company, involved exclusively in international
travel. He said that
Brytons Removals, in contrast to Stuttafords, operated a very small
fleet because its business involved mainly
packing and not
transporting. He added that e-toll costs are insignificant on a
move-by-move basis but have a significant effect
on a firm’s
bottom line over a year. Similarly, Mr Bayley testified that Bayley
Worldwide operated a small fleet of vehicles
specifically designed
for storage and international moves.
[47]
Mr Naik who determined Pickfords approach to the recovery of e-toll
costs from its customers, was not present at the January
meeting. He
testified that when the e-tolls were implemented on 3 December 2013,
he evaluated what impact e-toll costs would have
on Pickfords by
considering the different sizes of the vehicles it operated (light,
medium, and heavy) and compared them with typically
routes travelled
by its vehicles. He said that there was “no one easy fix.”
Mindful of these differences, Mr Oosthuizen,
Mr Pienaar and Mr Fear
agreed it would have made no commercial sense for all the removal
firms, represented at the January meeting,
to have adopted a uniform
approach to e-toll costs, particularly because the amounts to be
recovered by each of the firms represented,
were dependent on the
variables mentioned above including the effect on a firm’s
bottom line.
[48]
The respondent’s subsequent conduct strongly supports the
inference that no consensus was reached at the January meeting
on
their approach to the recovery of e-toll costs. And that those that
elected to recover the costs of e-tolls from their customers,
did so
independently of any discussions which took place at the January
meeting. This much is clear from the range of different
approaches
adopted by them. Bearing in mind the distinct and different features
of each of the respondents, it would have made
no commercial sense
for them to adopt a uniform approach to e-tolls, in circumstances
where such an approach would serve no business
rationale whether
legitimate or anti-competitive. The evidence of the respective
operations of the respondents strongly support
this conclusion.
[49]
Accordingly, the Tribunal erred in concluding that the respondents
“replaced their independent action – in this
case how to
deal with a new expense – with interdependent action reached as
a result of an understanding with competitors”
and that “this
is the only credible explanation for why the discussion took place in
the first place and why the amounts
and the mechanisms for recovering
were mentioned”. The Tribunal erred in arriving at this
conclusion for the further reason
that that it suggested no basis for
rejecting the evidence of Mr Pienaar (and the other witnesses who
supported his decision) that
the purpose of the discussion was to
highlight the impact of e-tolls on the removals industry and on the
business of the removals
firms.
[50]
The Tribunal also erred in finding that what the respondents did at
the January meeting, by mentioning the rates R250 and R350
respectively, constituted “classic price signalling to
competitors at what level they might pass on costs”. Once
again,
the Tribunal made this finding without indicating any basis
for rejecting the evidence of both Mr Pienaar and Mr Fear that the
amounts which they mentioned were the product of their own research
and desktop calculations of the e-toll costs associated with
hypothetical journeys. Though unwise, the mere mention of these rates
does not translate into an agreement as contemplated in terms
of
s
4(1)(b)(i)
of the Act without a showing of consensus as understood in
our jurisprudence.
[51]
It is important to bear in mind that the neither the contents of the
draft minutes nor the amended minute constitute proof
in themselves
that the respondents reached an understanding or agreement in
contravention of
s 4(1)(b)(i)
of the Act. I reiterate that what had
to be established by the Tribunal, before it could make a finding
that the respondents contravened
s 4(1)(b)(i)
of the Act, was not
merely that certain prices/rates were bandied around during the
discussion by the respondents’ representatives
present at the
January meeting, but that the evidence showed that there was
consensus, among them, to be bound by the understanding
which they
purportedly reached at the meeting; that is that a levy of R350 would
be added to the removal cost per quote or consignment
to counter the
excessive effects of e-tolling. The evidence of both the Commission’s
witness, Mr Oosthuizen and the respondents’
witness was
unequivocal on this point no such agreement had been
reached.
[52]
That ought to have resulted in the dismissal of the complaint, but
regrettably the Tribunal went outside the Commission’s
pleaded
case to find that the respondents reached an agreement to recoup
costs which “hovered in the R350 mark”.
[53]
The Tribunal’s
reliance on this broader agreement to recover e-toll costs was based
entirely on the testimony of Mr Small
of Elliot Mobility who agreed,
in answer to a leading question in his interrogation by the
Commission (and in cross-examination
at the Tribunal hearing) that
the representatives at the January meeting “agreed to recoup
e-toll costs”. Since the
leading question put to Mr Small
embodied a legal conclusion to the effect that there was a cartel
agreement (as contemplated in
s 4(1)(b)(i)
of the Act), the Tribunal
was required to treat it with caution and view it in the context of
the totality of the evidence.
[22]
As might be expected, it did not do so.
[54]
On consideration of Mr Small’s evidence as a whole, it is clear
that he left the meeting with the impression that e-toll
costs were
going to impact heavily on the removal firms and that they ought to
be recovered. However, what is readily apparent
from his testimony is
that no consensus had been reached that all the firms present at the
meeting were bound to recover those
costs. Mr Small testified that,
although he assumed “in his head”, while in the meeting,
that everybody would have
to recover e-tolls from their customers, he
left the meeting not thinking that his firm was under any obligation
to recover e-tolls,
and did not view the discussion as an agreement.
This is borne out by his further testimony that he did not understand
himself,
as Elliot Mobility’s representative at the meeting, to
have any obligation after the meeting about the recovery of e-tolls.
He consequently took no steps to give Elliot Mobility an instruction
in respect of the recovery of e-tolls. On the whole, Mr Small
did not
consider Elliot Mobility or any of the other firms that were
represented at the meeting, to be bound by any consensus to
recover
e-tolls.
[55]
By and large, Mr Small’s evidence on this aspect was consistent
with the overall evidence of Mr Bayley of Bayley Worldwide
and Mr
Halgreen of Magna Thomson, who testified that there was no agreement
that the e-toll costs had to be recovered from the
customer.
[56]
Mr Pienaar testified that “the only understanding reached at
the meeting was that the firms would have to determine how
they would
recoup e-toll costs from their customers”. In this regard, the
amended minute which he drafted reads: “The
e-toll system…
is an expense to the removal/transport industry that needs to be
passed onto the customer”. The Commission
contends, on the
basis of these two statements, that the respondents reached an
agreement to collude as contemplated in
s 4(1)(b)(i)
of the Act by
passing or recouping e-toll costs from the customer. This contention
is unsustainable for two reasons. The first,
as testified to by Mr
Bayley, is that: “That may be Charl Pienaar’s personal
opinion, but it certainly wasn’t
agreed to by the members at
the meeting. Secondly, an “understanding”, as described
by Mr Pienaar, cannot “without
more” constitute an
agreement to collude in the sense required by
section 4(1)(b)(i)
of
the Act. Absent a finding of consensus that the parties regard as
binding upon themselves and one another, there can be no agreement
within the meaning of
s 4
(1) (b) of the Act.
[57]
Thus on consideration of the evidence as a whole, the Tribunal erred
in finding that the respondents had agreed to fix prices
in
contravention of
s 4(1)(b)(i)
of the Act by reaching an
understanding, at the January meeting, to pass on the costs of
e-tolls to their customers by imposing
a fee in the “R350
mark”. The Tribunal erred both in evaluating the evidence that
the parties presented to it, as well
as in its application of the
legal test, as enunciated by this Court, on the question of what
constitutes an agreement to collude
as envisaged in
section
4(1)(b)(i)
of the Act.
[58]
For all these reasons, the appeal falls to be dismissed and the cross
appeal is upheld. Costs should follow the result in the
appeal and
the cross appeal.
[59]
In the result, I make the following order:
1. The appeal is
dismissed with costs, including the costs of two counsel.
2. The cross appeal is
upheld with costs, including the costs of two counsel.
3. The order of the
Competition Tribunal is confirmed.
_______________________
F
KATHREE-SETILOANE AJA
DM
Davis JP and B Mnguni JA concur
Appearances:
Counsel
for appellant:
Mr T Ngcukaitobi SC with Ms. I Kentridge and Ms. C
Tabata
Instructed
by
: Ndzabandzaba Attorneys Inc
Counsel
for the first, second and eleventh respondents
: Ms. M Norton SC
with
Mr
F Pelser and Ms. Z Cornellisen
Instructed
by
: Edward Nathan Sonnenbergs
Counsel for the 9
th
respondents:
Ms. G. Engelbrecht
Instructed by:
Nochumsohn
and Teper Attorneys
Seventh
Respondent represented by Mr Bayley in person Date of Hearing:
29
June 2020
Date
of Judgment
: 22 October 2020
[1]
No. 89 of 1998.
[2]
Section 67(1)
of the Act provides:
(1)
A complainant in respect of a prohibited practice may not be
initiated more than three years after the practice has ceased.’
[3]
The PMA establishes ethical standards for its members (including
standards which preclude practices, independent or concerted,
which
prejudice consumers) and service delivery standards.
[4]
Other issues discussed at the meeting included: membership of
Accredited Movers of South Africa (AMOSA); the role of the PMA
in
respect of complaints against member firms; firms’
accreditation for insurance purposes; and dates and arrangements
for
the PMA golf day and the PMA Congress.
[5]
The date recorded in manuscript on the Commission’s form CC1
as the date of filing of the Commission.
[6]
The date recorded in the date stamp on the Commission’s form
CC1.
[7]
Only the first, second, fourth, seventh, ninth and eleventh
respondents were represented in the hearing. The Commission had
concluded settlement agreements with the third, sixth and tenth
respondents in terms of which they undertook to provide evidence
and
testify at the hearing of the complaint referral. The Commission,
however, elected not to call representatives of any of
those
respondents to testify at the hearing.
[8]
Competition Commission v Stuttafords Van Lines Gauteng Hub (Pty) Ltd
and Others, Competition Tribunal of South Africa, Case No.
CR164Sep17 (20 December 2019) paras 74, 81, 84, and 93. (“Tribunal
Decision”).
[9]
Tribunal Decision at paras 72-74.
[10]
Tribunal Decision at paras 112-113.
[11]
Section 1(1)(ii)
of the Act.
[12]
Netstar (Pty) Ltd v Competition Commission of South Africa and
Another
[2011] 1 CPLR 45
(CAC) (“Netstar”) at para 25.
[13]
Netstar at para 25; MacNeil Agencies at para 56.
[14]
Netstar, above, para 25. See also Reinforcing Mesh Solutions (Pty)
Ltd and Others v Competition Commission and others
[2013] 2 CPLR 455
(CAC) (“Reinforcing Mesh”) paras 18 and 19.
[15]
MacNeil Agencies (Pty) Ltd v Competition Commission
[2013] ZACC 3
para 56 (“MacNeil”); Competition Commission v Primedia
(Pty) Ltd t/a Ster Kinekor Theatres para 38 (“Primedia”).
[16]
Cf: Australian Competition and Consumer Commission v CC (NSW) (Pty)
Ltd
[1999] FCA 954
;
(1999) 92 FCR 375
at 408 cited in Videx Wire Products (Pty) Ltd
v Competition Commission
[2017] 2 CPLR 589
(CAC) para 14 (“Videx”).
[17]
In Novartis SA (Pty) Ltd and Another v Maphil Trading (Pty) Ltd
2016
(1) SA 518
(SCA) at para 35, the SCA held held as follows in
relation to whether the parties concerned intended to bind
themselves contractually:
‘
That inevitably
requires an examination of the factual matrix – all the facts
proven that show what their intention was
in respect of entering
into the contract: the contemporaneous documents, their conduct on
negotiating and communicating with
each other, and, importantly, the
steps taken to implement the contract.’
[18]
Reinforcing Mesh Solutions (Pty) Ltd and Another v Competition
Commission
[2013] ZACC 4
paras 30-31.
[19]
As quoted earlier in the judgment, the concluding paragraph of the
draft minutes read: ‘It was generally concurred that
a levie
(sic) of R350 will be added to the removal costs per
quote/consignment to counter the excessive effects of the
implemented
e-toll system in Gauteng’.
[20]
Mr Oosthuizen for the Commission, Mr Fear for Bryton Removals, Mr
Bayley for Bayley Worldwide, Mr Small for Elliot Mobility and
Mr
Halgreen for Magna Thomson.
[21]
Stuttafords decided during the latter part of 2013 that it would
recover e-toll costs and implemented the decision to charge
an input
cost from April 2014. Pickfords decided to recover e-tolls before 3
December 2013 and decided at a meeting of 19 March
to implement an
input cost. Brytons Removals decided in September 2013 to apply an
input cost. Magna Thomson decided before 16
January 2014 to recover
e-toll costs from customers, and by 1 March 2014 decided to apply an
input cost.
[22]
Videx at para 20.