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[2018] ZACAC 4
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Siyakhuphuka Investment Holdings (Pty) Ltd v Transnet Soc and Another (158/CAC/Nov17) [2018] ZACAC 4; [2018] 1 CPLR 88 (CAC) (3 July 2018)
REPUBLIC OF SOUTH AFRICA
IN
THE COMPETITION APPEAL COURT OF SOUTH AFRICA
CAC
CASE NO: 158/CAC/Nov17
3/7/2018
In the matter between:
SIYAKHUPHUKA
INVESTMENT HOLDINGS (PTY) LTD
APPELLANT
and
TRANSNET
SOC
FIRST RESPONDENT
TRANSNET
NATIONAL PORTS AUTHORITY
SECOND
RESPONDENT
JUDGMENT
MNGUNI JA:
[1]
This appeal has its origin in an
unsolicited proposal submitted by the appellant to the second
respondent, a division of the first
respondent, on 25 January 2008
for the development of a container operation at the Port of Richards
Bay. The proposal had been
developed following significant research
in collaboration with Maersk, a major shipping line, and was aimed at
addressing the development
block for Zululand, through the creation
of container shipping connections to major global shipping
destinations to enable importers,
exporters and potential
establishers of new industry to be competitive in global markets.
[2]
On 30 April 2009, the respondents
rejected the proposal, resulting in the appellant filing a complaint
with the Ports Regulator
of South Africa (the Regulator) in terms of
s
47(2)(a)
and
(c)
of
the National Ports Act 12 of 2005 (the NPA).
[1]
The appellant alleged in that complaint that when the second
respondent was integrated as an operating division of the first
respondent
with the mandate to increase market share, the second
respondent, which would have been a competitor of the appellant in
respect
of the proposal, lost its ability to fairly determine the
appellant's application.
[3]
Whilst the complaint was still pending
before the Regulator, the appellant referred a prohibited practice
complaint to the Competition
Commission ("the Commission")
on 2 April 2014 comprising of two parts.
(a)
In
the first complaint the appellant alleged that the second respondent
operates as a division of the first respondent and there
is no
delineation between these two respondents. The appellant alleged that
since the first respondent's corporate strategy includes
protecting
base cargo volumes against new entrants and growing its market share,
the second respondent is incapable of impartiality
in the execution
of its duty under the NPA. The appellant contended that this conduct
constitutes an abuse of the first respondent's
dominant position and
violates s 8 of the Competition Act 89 of 1998 ("the Competition
Act").
(b)
In
the second complaint the appellant alleged that after rejecting its
proposal, the respondents availed the proposal to the Transnet
Port
Terminals ("the TPT") which is the appellant's direct
competitor. The TPT subsequently implemented the appellant's
concept
and design despite having previously expressed the view that the Port
of Richards Bay terminal was not suitable for the
containers. The
appellant alleged that this conduct too constitutes an abuse by the
first respondent of its dominant position in
violation of
s 8
of the
Competition Act
[4]
On 14 September 2015 the Commission
issued a notice of non-referral of the complaint in terms of s
50(2)(b)
of
the
Competition Act Aggrieved
by this outcome, the appellant
self-referred the complaint to the Competition Tribunal ("the
Tribunal") in terms of
s 51(1)
of the
Competition Act on
10
October 2015. The appellant alleged in the referral that the first
respondent's rejection of its application effectively amounts
to a
refusal by a dominant firm to give a competitor access to an
essential facility and/or refusal to supply a scarce good to
a
competitor when it would be economically feasible to do so. The
appellant asserted that the second respondent's actions were
in
violation of s
8(b)
, (c)
and
(d)(i)
of
the
Competition Act
[5]
Between the period of the original
complaint and the notice of non-referral the Regulator issued its
decision on 15 July 2015. The
Regulator concluded that the
appellant's proposal submitted in 2008 had become outdated by the
time the matter came to it for consideration,
that the proposal did
not meet all the requirements of a legitimate unsolicited bid as
contemplated by
s 56(5)
of the NPA read with Treasury Practice Note
11 of 2008/2009,. and that for the purposes of fairness,
transparency, cost effectiveness,
equitability and competitiveness in
the awarding of the concession, other possible competitors should be
given a fair opportunity
to offer such service if possible and to
present their proposals through a competitive process as envisaged in
s 56(5)
of the NPA The Regulator also dismissed the appellant's
argument that its intellectual property had been appropriated by the
second
respondent However, all was not lost for the appellant as the
Regulator, after stating that it is aware of the monopolistic
operation
of container terminals in South African ports system, held
that this is a competition matter which is better dealt with by the
Commission.
[6]
In response .to the complaint filed, the
respondents contended that the complaint did not constitute a
prohibited practice as set
out in Part A of Chapter 2 of the
Competition Act The
respondents contended that when the second
respondent performs its duties in terms of the NPA, it does so as the
deemed authority
and is neither in a horizontal nor vertical
relationship with the TPT because both the second respondent and the
TPT form part
of the same juristic entity. Accordingly, the second
respondent and the TPT are not in competition with each other. The
respondents
contended that even if the second respondent and the TPT
could be treated as different firms for the purposes of the
Competition Act, it
cannot be said that they are in a
customer-supplier relationship as contemplated in
s 5
of the
Competition Act for
the following reasons: The second respondent's
functions as set out in
ss 11
and
12
of the NPA are regulatory and
administrative and deal mainly with providing waterside services and
to control, regulate and land
side services. The second respondent is
not empowered to perform any operational functions except as provided
for in
s 11(4)
which only applies in exceptional circumstances. The
second respondent has the responsibility of determining the
requirements of
a port with regard to infrastructure and port
services and has the obligation of providing water based services. On
the other hand
the TPT provides port services and operates certain
port facilities until such time as a third party is authorised to
carry out
same.
[7]
According to the respondents, before any
person may operate a port facility or terminal or provide port
services, it must either
conclude an agreement with the second
respondent in terms of
s 56
of the NPA or be licensed to do so in
terms of
ss 57
or
65
of the NPA A person who, prior to the
commencement of the NPA (26 November 2006) operated such a facility
or rendered such a service,
was deemed in terms of
s 65(1)
to have
held such a licence temporarily pending the lodging of an application
for a fresh licence. The powers of the second respondent
to conclude
agreements in terms of
s 56
and to grant licences in terms of
ss 57
and/or 65 of the NPA are matters of law. The exercise thereof is
specifically regulated by the Ports Regulator in terms of
ss 30
and
47
of the NPA They cannot be said to constitute an economic activity
as envisaged in
s 3
of the
Competition Act, which
, although not
defined, excludes activities not conducted along commercial and
competitive lines.
[8]
For the reasons stated in paras 6 and 7
above, the respondents contended that the appellant had failed to
make out a case of abuse
of dominance , in particular of any
exclusionary acts in this matter.
[9]
Subsequently the appellant filed a
supplementary founding affidavit
[2]
in which it sought to apprise the Tribunal of recent events which
allegedly had a direct bearing on the matter. In it, the appellant
asserted that four months after the respondents had filed their
answering affidavit, the first respondent made public its decision
to
commence with the development of the base cargo terminal at Richards
Bay. It contended that the first respondent's decision
demonstrates
that there are sufficient actual and potential volumes of base cargo
to justify the development of a dedicated container
terminal at
Richards Bay. There had been no significant change in the base cargo
volumes since April 2009 when the respondents
refused its proposal.
The appellant asserted that this decision to develop the container
terminal at Richards Bay was made by a
broader first respondent group
which included the second respondent and the TPT. It further asserted
that its conclusion in this
regard is underscored by the fact that
the first respondent did not issue a request for proposal for the
development of the container
terminal but it simply announced that
the proposal would go ahead with the TPT as the developer and
beneficiary. It concluded by
stating that the first respondent's
decision to now develop a container terminal at Richards Bay
undermines the entire foundation
upon which the refusal of its
proposal was based.
[10] Whilst the
appellant accepted that the second respondent and the TPT constitute
a single firm
for Competition Law purposes, it contended that the
first respondent is a vertically integrated firm. The appellant
asserted that
the second respondent owns and controls all the land at
all South African ports including the Port of Richards Bay, and is
exclusively
empowered in terms of the NPA to authorise the design,
construction, rehabilitation, development, financing, maintaining and
operation
of the port terminals and port facilities or the provision
of services relating thereto,
[3]
and to grant licences to operate a port service or a port facility.
The second respondent is a monopoly provider or supplier of
port land
and authorisations or licenses to the firms in the downstream market
for the provision of port facilities or services.
The second
respondent is therefore a dominant firm in this market as it is the
only entity that can provide port land and authorisations
or licences
to operate a container terminal at the Port of Richards Bay. The
appellant asserted that it is the competitors of the
TPT in
downstream market for the provision of port facilities and port
services.
[11]
In their supplementary answering
affidavit the respondents raised two points in limine. In the first
point, they contended that
the issues which the appellant raised in
the competition proceedings, in particular those raised in its
supplementary founding
affidavit, are the same as those issues which
the appellant has raised in the review proceedings before the Durban
High Court where
it seeks to review the Regulator's dismissal of its
appeal. They contend that the cause of action before the Tribunal
does not
amount to a prohibited practice but rather an alleged breach
by the second respondent of its obligations in terms of the NPA. They
further contend that the appellant's remedy in this regard lies in
s
47
of the NPA and that the matter is fundamentally one of public law
over which the Tribunal does not have jurisdiction. Consequently,
it
would be improper for the Tribunal to adjudicate the complaint
bearing in mind that the matter was currently pending before
the high
court.
[12]
The second point in limine was allied to
the first one and was raised in the alternative in the event of the
Tribunal finding that
the first point was without substance. The
respondents alleged that the claim regarding the subsequent
announcement of the development
and operation of a container terminal
at Richards Bay did not form part of the original complaint submitted
in terms of
s 49B(2)
of the
Competition Act which
served before the
Commission and consequently, the Tribunal did not have jurisdiction
to consider such complaint.
[13]
On the merits the respondents persisted
in their denial that the first respondent is a vertically integrated
firm. They continued
to contend that the first respondent is a
company which has statutory recognised business units, two of which
are the second respondent
and the TPT. The respondents generally
denied the substance of the appellant's complaint.
[14]
On 6 April 2017 at the second
pre-hearing, the matter served before a single Tribunal member who
directed that the two points in
limine be determined by a full panel
of the Tribunal as an exception. The hearing before the full panel
took place on 6 July 2017.
On 17 October 2017 the Tribunal upheld the
respondents' two points in limine and dismissed the appellant's
complaint in its entirety
on the ground that it did not have
jurisdiction to adjudicate it.
[15]
In upholding the points in limine and
dismissing the complaint with no order as to the costs, the Tribunal
relied on its decision
in
AEC
Electronics (Pty) Ltd v Department of Minerals and Energy
[4]
and reasoned that when the second
respondent considers granting concessions to operate port terminals,
it is exercising functions
in terms of a statute and was therefore
exercising public power over which the Tribunal has no jurisdiction.
The Tribunal concluded
that the appellant's recourse in relation to
this particular point was to approach the high court in order to
review the decision
of the second respondent.
[16]
Undeterred by these failures, the
appellant launched this appeal against the dismissal of its complaint
contending that the Tribunal
misconstrued the nature of its complaint
and that this error resulted in the Tribunal upholding the
respondents' points in limine.
In addition, the appellant contends
that even on the Tribunal's own (mis) characterisation of the
complaint, the Tribunal ought
to have dismissed the exception that
the Tribunal did not have jurisdiction to consider the complaint. All
these contentions are
contested by the respondents. I find it
convenient lo consider each of these contentions in turn.
[17]
An appropriate starting point is to
consider whether the Tribunal mischaracterised the appellant's
complaint as contended by the
appellant's counsel. The primary thrust
of the appellant's attack against the Tribunal's decision is that it
erred in its approach
to jurisdiction and the pleadings, resulting in
miscasting the appellant's case on the merits and in the pleadings
before it. The
appellant's counsel submitted that the assessment of
the question whether a court has jurisdiction is determined on the
basis of
the pleadings and not the substantive merits of the case. In
support of this submission he relied on the decision in
Gcaba
v Minister of Safety and Security
&
others.
[5]
He argued that the Tribunal erred in
concluding that it was entitled to uphold the exception on the basis
that the issues raised
by the appellant in the competition
proceedings are the same as those which the appellant has raised in
the review proceedings
before the Durban High Court wherein it seeks
to review the Regulator's dismissal of its appeal. He submitted that
the Tribunal's
error in this regard was predicated in the wrong
thinking that the two separate claims could not be run concurrently.
Relying on
the decision in
Makhanya v
University of Zululand,
[6]
he was astute to point out that
'where a person has two separate claims, each for enforcement of a
different right, the position
is altogether different, because then
both claims will be capable of being pursued, simultaneously or
sequentially, either both
in one court, or each in one of those
courts'. He correctly pointed out that the appellant in this case is
in the position of two
separate claims, one under competition law and
another under public law, and is therefore permitted to pursue them
separately in
different fora.
[18]
To counter these submissions, the
respondents' counsel submitted that in determining the issue of
jurisdiction, the correct question
to ask is whether the Tribunal has
the power to enforce a claim arising from an administrative act or
the exercise of public power
that does not constitute economic
activity? He submitted that based on the authorities on which the
Tribunal relied on in dismissing
the appellant's complaint, the
Tribunal clearly does not have such power. In his submission, the
only time that the Tribunal will
have any power to intervene is after
a licence is issued or a concession awarded, as it is only at this
stage that economic consequences
will follow upon the carrying on of
the business authorised by the concession and/or licence. Counsel
contended that ,when categorising
the decision as either economic
activity or public law, one must be astute not to conflate the
decision with the motive for laking
the decision. In his view, this
distinction is important, as it is possible that a functionary
empowered by statute to make a decision
may be influenced by economic
motives when making that decision but that does not automatically
make the decision an economic activity
subject to the provisions of
the
Competition Act.
[19
]
Respondents' counsel submitted that the
matter is still a public law issue and that a person wishing to
impugn that decision on
the grounds that it was motivated by improper
economic motives, may do so by bringing a review in the high court in
terms of s
6(2)(e)(i) and (ii) of the Promotion of Administrative
Justice Act 3 of 2000 (the PAJA), or on the grounds of ultra vires,
irrationality,
or illegality if the decision is held not to be an
administrative action. He sought to argue in favour of a procedure
that would
allow the review proceedings to proceed, and, if during
the course of the review proceedings the· question of whether
the
conduct complained of was prohibited in term of the provisions of
the
Competition Act, then
the court hearing the review would be
obliged to act in terms of
s 65(2)
of the
Competition Act In
his
submission the legislature could never have intended that simply
because a dispute is raised which involves conduct prohibited
in
terms of the
Competition Act, the
entire dispute must be determined
by the Tribunal. He expressed the view that if the Tribunal were to
entertain the case and find
in favour of the appellant and grant the
relief which it seeks, it would be ordering the second respondent to
grant a concession
to the appellant in terms of
s 56
of the NPA
without there having been compliance with the requirements of that
section including, without limitation, subsection
(5) thereof which
enjoins the second respondent to follow a procedure that is 'fair,
equitable, transparent, competitive and cost
effective'. He contended
that the ad hoc granting of concessions and/or licences by the
Tribunal simply on competition grounds
would render the proper
integrated development of the South African ports impossible
resulting in the second respondent being unable
to carry out its
functions in terms of
s 11
of the NPA
[20]
He further submitted that the powers of
the second respondent to conclude agreements in terms of
s 56
and
grant licences in terms of
s 57
and/or 65 of the NPA are matters of
law, the exercise of which is specifically subject to oversight by
the Regulator in terms of
ss 30
and
47
of the NPA and cannot be said
to constitute economic activity as envisaged in
s 3
of the
Competition Act. He
pointed out that in
Gcaba
[7]
(above) the court found further that
the pleadings must be properly interpreted to determine what claim
the applicant is actually
asserting and which court has the
competence to determine such claim and that the mere fact that the
complaints were couched as
competition issues does not mean that they
were in truth competition issues.
[21]
It is common cause that in terms of
s 56
of the NPA the second respondent has powers to conclude agreements
and to grant licences in terms of
ss 57
and/or 65 of the NPA.
Section
3(1)
of the
Competition Act provides
that the Act applies to all
economic activity within, or having an effect within, the
Republic.
[8]
The legislature established the Competition Commission and Tribunal
as the primary authority in competition matters and by introducing
s
3(1A)(a) established that where another regulatory authority has
jurisdiction over any area of a matter covered by the
Competition Act
its
jurisdiction would be concurrent with that of the competition
authorities. The section provides:
'In
so far as
this Act
applies to an industry, or sector of an
industry, that is subject to the jurisdiction of another
regulatory
authority
which authority has jurisdiction in respect of conduct
regulated in terms of Chapter 2 or 3 of
this Act, this Act
must
be construed as establishing concurrent jurisdiction in respect of
that conduct.'
In
the course of argument the respondents' counsel conceded that the
legislature established the competition authorities as the
primary
authority in competition matters and that by introducing s 3(1A)(a),
established that where another regulator has jurisdiction
over any
matter covered by the Act, its jurisdiction would be concurrent with
that of the competition authorities. He, however,
harked back to s
56(5) of the NPA and contended that any agreement contemplated in
subsections (1) or (4) may only be entered into
by the second
respondent in accordance with a procedure that is fair, equitable,
transparent and cost-effective.
[22]
In
Competition
Commission of SA v Telkom SA Ltd
&
another
Malan
JA said:
[9]
'Both the repeal of section
3(1)(d)
and the introduction of section
3(1A)(a) brought about a complete change from the earlier position.
They are general provisions
intended to regulate the subject-matter
comprehensively and intended to establish the general jurisdiction of
the competition authorities
in all competition matters. The
Competition Act applies
to all economic activity within or having an
effect within South Africa. It provides for wide powers and general
remedies more
effective than the limited ones given by the
Telecommunications Act. There is no room for the implication of
exclusive jurisdiction
vested in ICASA contended for. The authorising
legislative and other provisions Telkom relied upon did not oust the
jurisdiction
of the Commission and the Tribunal but could well give
rise to defences to the complaints referred. The competition
authorities
not only have the required jurisdiction but are also the
appropriate authorities to deal with the complaint referred.'
[23]
This reasoning commends itself to me as
applying equally to the present matter. As I understood the argument
advanced on behalf
of the appellant, this court is called upon to
determine a narrow question without reference to the merits of the
dispute, of whether
the basis of the claim as foreshadowed and
formulated in the complaint involves the Tribunal's competence. In
light of this narrow
question which this court is required to answer,
it seems to me that the argument advanced on behalf of the
respondents based on
the requirements in ss 56, 57 or 65 of the NPA
puts the cart before the horse. In the circumstances the answer to
the narrow question
is in the affirmative.
[24]
This is however not the end of the
enquiry. The next step to consider is whether there is any substance
in the appellant's contention
that the Tribunal mischaracterised its
two complaints?
[25]
The main thrust of the first complaint
as pleaded in the supplementary founding affidavit is the following:
The second respondent
owns and controls all the land in all South
African ports, including the Port of Richards Bay. In terms of the
NPA, the second
respondent is exclusively empowered to authorise the
design, construction, rehabilitation, development, financing,
maintaining
and operation of port terminals and port facilities or
the provision of services relating thereto. The second respondent is
the
only entity that is authorised to grant licences to operate port
facilities and services throughout South Africa.
[26]
The second respondent has prevented the
appellant, which is a potential competitor in the market to the TPT,
from developing a container
terminal and providing a container
terminal service at the Port of Richards Bay. The refusal by the
second respondent to provide
access to an essential facility to the
appellant has impeded and prevented it from entering into and
expanding within a market
and constitutes an exclusionary act for
purposes of the
Competition Act. There
was also no technological or
efficiency or other pro-competitive gain which arose as a result of
the respondents refusal to accept
its proposal. In addition, the
first respondent's refusal to grant the appellant's proposal and the
second respondent's subsequent
entering into an agreement with Maersk
Line had the effect of inducing the appellant's customer Maersk not
to deal with the appellant.
The appellant did not complain that its
proposal was not properly considered, which would be a public law
complaint, but rather
that the proposal was considered in sufficient
detail and that the first respondent itself attempted to implement
the proposal
through the use of coercion and abuse of its dominant
position.
[27]
The appellant asserted that the first
respondent realised that its proposal involving a container operation
backed by Maersk, would
constitute a significant threat to the
respondents' monopoly if implemented. The respondents therefore used
their dominant position
to prevent this threat or challenge in line
with their broader and avowed strategy to protect volumes against new
entrants. Shortly
after the refusal of the appellant's proposal, the
respondents implemented a similar proposal without following a
s 56
process and without a licence issued by the second respondent. The
appellant asserted that the TPT applied and received approval
for the
first time for such a licence in March 2016. The appellant asserted
that the first respondent's recent decision demonstrates
that there
are sufficient actual and potential volumes of base cargo to justify
the development of a dedicated container terminal
at Richards Bay.
And that since there have been no significant changes in the base
cargo volumes since April 2009, when the first
respondent refused the
appellant's proposal, its decision to now develop a container
terminal in Richards Bay undermines the foundation
of the first
respondent's refusal to approve its proposal in the first instance
and confirms that the decision was an abuse of
dominance. The
appellant has alleged that the respondents' conduct contravenes
ss
5(1)
,
0
00000">
8(b), (c)
and
(d)(i)
of
the
Competition Act.
[28]
Appellant's counsel contended that the
Tribunal incorrectly characterised the first complaint as a public
law complaint, for it
said that when the second respondent makes a
decision whether or not to grant a concession, it is exercising
public power over
which the Tribunal has no jurisdiction. He
submitted that the Tribunal's reliance on
AEC
Electronics
(above) as a basis for
refusing to exercise jurisdiction was misplaced because its complaint
before the competition authorities
was not a public law complaint,
but squarely a competition complaint. He submitted that unlike in
AEC
Electronics,
if
the appellant had launched its case in the high court on the
pleadings filed before the Tribunal, the appellant would fail to
make
out a case for any administrative relief because the first complaint,
when correctly characterised, is squarely a competition
law complaint
as it is contended that the first respondent abused its position
achieved through gaining full strategic control
for competitive
purposes over the second respondent.
[29]
By contrast respondents' counsel
submitted that the complaint was couched as a competition issue
through reference to terms such
as 'abuse of dominance' and
'monopoly' obviously for the purpose of seeking an award from the
Tribunal of a concession or licence
to operate a container terminal
in Richards Bay, in spite of the fact that the power to make this
award had been given to the second
respondent by the legislature
subject only to oversight by the Regulator. He reiterated the first
respondent's denial that it was
abusing its powers to advantage its
business units to the detriment of would be competitors. He described
the complaint as an opportunistic
attempt by the appellant to secure
either a concession or a licence for the rendering of a port service
without going through the
processes set out in
ss 56
,
57
, and
65
of
the NPA which it seeks to do by clothing its complaint as a
competition issue when patently it is not.
[30]
With regard to the alleged
mischaracterisation of the second complaint, the case pleaded by the
appellant is the following: The
respondents' refusal to accept the
appellant's proposal constitutes a refusal to provide the appellant
access to an essential facility
to its competitor. According to the
appellant this is exclusively a competition complaint. The appellant
asserted that the first
respondent used strong arm tactics and its
monopolistic position to contract Maersk Line in calling Richards Bay
at the first respondent's
underequipped Multi-Purpose Terminal for
break bulk cargo at the berths as proposed by the appellant. Pursuant
to that, the first
respondent concluded a three year port and rail
integrated contract with Maersk Line based on the appellant's concept
and design.
The first respondent however refused to provide the
appellant access to the property, a licence or authorisation, which
the appellant
needs to operate a container terminal.
[31]
In terms of
s 3(2)
of the NPA, the
second respondent is required to operate independently of the broader
first respondent group. It provides that
until such time as the
necessary steps are taken for the incorporation of the National Ports
Authority of South Africa as a company,
the second respondent is to
all purposes deemed to be the authority, and must perform the
functions of the authority as if it were
the authority. In terms of
s
11(1)
of the NPA, the main functions of the authority are inter alia,
to own, manage, control and administer ports to ensure their
efficient
and economic functioning, and in doing so it must, inter
alia, plan, provide, maintain and improve port infrastructures and
regulate
and control the development of ports in South Africa.
[10]
[32]
The second respondent is required to
carry out these functions without favouring the first respondent in
any way.
Section 47
of the NPA contemplates that a complaint may be
lodged against the second respondent if access to ports and port
facilities is
not provided in a non-discriminatory, fair and
transparent manner
[11]
or if the first respondent is treated more favourably by the second
respondent and that it derives an unfair advantage over other
transport companies in its dealings with the second respondent.
[12]
In order for the second respondent to comply with its duties in its
dealings in terms of the NPA, it is required to operate entirely
independently of the rest of the first respondent and, must eschew
the first respondent's interests insofar as they are inconsistent
with the objectives of the NPA or where there are other more
effective means available to the second respondent to achieve those
objectives.
[33]
The appellant asserted that from a
competition law perspective, it is arguable that the second
respondent is, as a matter of law,
pursuant to the provisions of the
NPA, an independent entity from the TPT and should be treated as such
by the competition authorities.
It asserted that should the Tribunal
find that the second respondent and the TPT are, as a matter of law,
independent firms for
the purposes of competition law, then it is
clear that they have entered into an agreement (whether by contract,
arrangement or
understandings}, the effect of which was to exclude
the terminal and service at the Port of Richards Bay. According to
the appellant,
the agreement is clearly evidenced by the fact that
its proposal was considered by the executive of the first respondent
rather
than by the second respondent and by the fact that the TPT has
subsequently been given authorisation to develop a container terminal
at the port to the exclusion of the appellant and other potential
competitors.
[34]
The appellant's counsel contended that
in exercising the first respondent's competitive strategy .as an
operating· division,
all of the second respondent's activities
become commercial activities as the second respondent is obliged to
serve the first respondent's
commercial goals. The award of the
business by the first respondent to itself has manifestly led to the
reduction in competition
for container services at the Port of
Richards Bay and the TPT has become the monopoly supplier of these
services. He submitted
that the dispute before the Tribunal was not
about a public entity exercising public powers incorrectly, but was
about the first
respondent using and abusing the second respondent
for its own purposes and competitive advantage, and in doing so,
denying competitors
such as the appellant access to essential
facilities.
[35]
The conduct of the respondents
complained of concerns the alleged contravention of
ss 5(1)
and
8(b),
(c)
and
(d)(i)
of the
Competition Act The
appellant
pertinently alleged the contraventions of these sections in its
complaint referral. In its relevant part,
s 5(1)
provides that 'an
agreement
between
parties in a
vertical relationship
is
prohibited if it has the effect of substantially preventing or
lessening competition in a market, unless a party to the
agreement
can prove that any technological,
efficiency or other pro-competitive, gain resulting from that
agreement
outweighs
that effect'.
Section 8
contains prohibition for a dominant firm to
(b) refuse to give a competitor access to essential facility when it
is economically
feasible to do so; (c) engage in an exclusionary act,
other than an act listed in paragraph (d), if the anti-competitive
effect
of that act outweighs its technological, efficiency or other
pro competitive, gain; or (d)(i) requiring or inducing a
supplier
or customer to not deal with a competitor. An essential
facility is defined as 'an infrastructure or resource that cannot
reasonably
be duplicated, and without access to which competitors
cannot reasonably provide goods or services to their customers'. An
exclusionary
act is defined as 'an act that impedes or prevents a
firm entering into, or expanding within, a market'. A vertical
relationship
is defined as 'the relationship between a firm and its
suppliers, its customers, or both'.
[36]
As already stated, the
Competition Act
applies
to all economic activity within, or having an effect within
the Republic. Under the
Competition Act, the
complaints of
anti-competitive behaviour are investigated by the Commission before
they are referred to the Tribunal, irrespective
of whether the
complaint was initiated by the Commission or was submitted to it by a
third party. If the investigation reveals
that no prohibited practice
or abuse has occurred, the Commission may not refer the complaint to
the Tribunal but instead, may
issue a notice of non-referral if the
complaint was submitted to it by a third party, in which case the
complainant may self-refer
the complaint to the Tribunal.
[37]
The mere referral of a complaint
triggers the exercise of the Tribunal's adjudicative powers and the
Tribunal is obliged to conduct
a hearing into the matter with the
object of determining whether a prohibited practice has indeed
occurred. If a prohibited practice
is established, then the Tribunal
may impose a remedy it deems appropriate, choosing from a number of
remedies listed in the
Competition Act. In
terms of
s 27
the
functions of the Tribunal include the power to adjudicate any conduct
prohibited in terms of Chapter 2, to determine whether
prohibited
conduct has occurred, and, if so, to impose any remedy provided for
by the
Competition Act. The
Tribunal is required to conduct its
hearing in public and in accordance with the principles of natural
justice. It has powers to
summon and interrogate and to order the
production of books, documents or items required for the hearing.
[13]
On conclusion of the hearing it must make an order permitted by
the
Competition Act and
must issue reasons for such order.
[14]
[38]
I am persuaded that both the first and
second complaints, properly construed, fall within the
Competition
Act and
the Tribunal's exclusive jurisdiction because in each of the
complaints the conduct alleged pertains to an abuse of the first
respondent's
dominant position and its refusal to grant access to the
appellant to an essential facility.
[39]
Having carefully considered the
appellant's complaint, I am satisfied that it is squarely based on
alleged anti-competitive conduct
under Chapter 2 of the
Competition
Act, abuse
of dominant position and refusal to provide access to an
essential service in violation of s 8 of the Act. To my mind these
are
matters of competition which are better dealt with by the
Competition Commission. In the circumstances I find that the Tribunal
erred in its conclusion that it did not have the jurisdiction to
adjudicate the appellant's complaint and that the complaint was
a
public law complaint beyond the jurisdiction of the competition
authorities.
[40]
What remains to be considered is the
question of costs. The general rule is that in the ordinary course
costs follow the result.
I am unable to find any circumstances which
persuade me to depart from this rule.
Order
[41]
In the result the following order shall
issue:
(a)
The appeal is upheld with costs
such costs to include costs of two counsel.
(b)
The order of the Tribunal of 17
October 2017 is set aside and replaced with the following order:
"The exception is dismissed with
costs."
Mnguni JA
Davis JP and Van der
Linde AJA concurred
Appearances
Heard:
25 April 2018
Delivered:
03 July 2018
For
the Appellant:
Mr M. Du Plessis SC
Assisted
by:
Ms S. Pudifin-Jones
INSTRUCTED
BY:
Jacques Roos Attorneys
REF.:
JL Roos/S17
TEL.:
032-525 45 52
For
the Respondents:
Mr C.J. Pammenter SC
Assisted
by:
Ms C. Sibiya
INSTRUCTED
BY:
Mkhabela Huntley Attorneys Inc.
REF:
TRA25-0035/Mr Enabor/rb
TEL:
011- 783 80 20
[1]
Section 47(2)(a) and
(c)
of
National Ports Act 12 of 2005
provides:
'A complaint against the Authority
may be based on any ground provided for by the Regulator by
direction under
section 30(3)
or on the ground that -
(a)
access to ports
and port facilities are not provided in a non-discriminatory, fair
and transparent manner;
(c)
Transnet is
treated more favourably and that it derives an unfair advantage over
other transport companies.'
[2]
The supplementary founding affidavit was deposed to on 6 June 2016.
[3]
Section 56
of the NPA.
[4]
AEC Electronics (Pty) Ltd v Department of Minerals and Energy
(48ICRIJune 09)
[2010] ZACT 12
(8 February 2010).
[5]
Gcaba v Minister of Safety and Security
&
others
2010
(1) SA 238
(CC) para 75.
[6]
Makhanya v University of Zululand
2010 (1) SA 62
(SCA) para
27.
[7]
Gcaba v Minister of Safety and Security
above para 75.
[8]
The exceptions provided in this section are:
'(a)
collective
bargaining within the meaning of
section 23
of the
Constitution,
and Labour Relations Act, 1995 (Act 66 of 1995);
(b)
a
collective agreement, as defined in
section 213
of the
Labour
Relations Act, 1995
; and
(c)
and
(d).......(e)
concerted
conduct designed to achieve a non-commercial socio-economic
objective or similar purpose'.
[9]
Competition Commission of SA v Telkom SA Ltd
&
another
[2010] 2 All SA 433
(SCA) para 35.
[10]
Section 11(1
)(a)
and
(g)
of the NPA
[11]
Section 47(2)(a)
of the NPA
[12]
Section
47(2)(c)
of the NPA
[13]
Sections
54(c)
and
56
of the
Competition Act.
[14
]
Section 52(4)
of the
Competition Act.