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[2017] ZACAC 2
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S.O.S Support Public Broadcasting Coalition and Others v South African Broadcasting Corporation (Soc) Limited and Others (140/CAC/Mar16) [2017] ZACAC 2; [2017] 1 CPLR 65 (CAC) (28 April 2017)
THE
COMPETITION APPEAL COURT OF SOUTH AFRICA
HELD
IN CAPE TOWN
In
the matter
between 140/CAC/Mar16
S.O.S
SUPPORT PUBLIC
BROADCASTING
COALITION
First
Applicant
THE
TRUSTEES FOR THE TIME BEING OF
THE
MEDIA MONITORING PROJECT
BENEFIT
TRUST
Second
Applicant
CAXTON
AND CTP PUBLISHERS AND
PRINTERS
LIMITED
Third
Applicant
and
SOUTH
AFRICAN BROADCASTING
CORPORATION
(SOC) LIMITED
First
Respondent
MULTICHOICE
(PROPRIETARY)
LIMITED
Second
Respondent
THE
COMPETITION
COMMISSION
Third
Respondent
JUDGMENT:
28 April 2017
DAVIS
JP
Introduction
[1]
On 24 June 2016 this Court held that an agreement entitled
"Commercial and Master Channel Distribution Agreement"
('the agreement') concluded between first and second respondents in
July 2013 did not give rise to a merger within the meaning
of s 12
(1) of the Competition Act 89 of 1998 ('the Act').
[2]
However, this Court expressed reservations that the Competition
Tribunal (Tribunal), against whose decision the appeal to this
court
had been lodged, did not enjoy the benefit of an investigation of the
agreement by the
third
respondent; in particular whether the agreement fell within the scope
of s 12 (1) of the Act.
[3]
The Court noted that the agreement involved a public broadcaster and
hence it was 'in the public interest for transactions involving
the
public broadcaster to be examined with a particular consideration of
the purpose of
the
Act'. It also observed that there was a considerable lack of clarity
concerning a number of factual aspects in the record which
were
relevant to the ultimate determination of whether s 12(1) of the Act
was applicable. In this connection the Court was critical
of the
approach adopted by the Tribunal:
'There
are many questions regarding disputed factual contentions which we
have raised in this judgment which could have been better
answered if
an inquisitorial approach had been adopted and a more sustained line
of questioning been implemented by the Tribunal
in the hearing before
it.' (para 110)
[4]
It is for this reason that the Court issued the following order:
1.
'The order of the Tribunal of 11 February 2016 is set aside.
2.
[Multichoice] and [the SABC] are directed to provide the Competition
Commission within 21 days of this judgment
[copies] of all
documentation including but not limited to
all correspondence board minutes, internal
memoranda
pertaining to the negotiation, conclusion and implementation of the
agreement of 3 July 2013.
3.
The Competition Commission is directed within 30 days of the receipt
of the aforesaid information and documentation
to file a report with
the Competition Tribunal recommending whether or not the agreement
gives rise to a notifiable change of control.
4.
In the event that the Competition Commission recommends that the
agreement gives rise to a notifiable change
in control which falls
within the definition of [a] merger in terms of s 12 of the Act, it
is directed that a rehearing of the
mater shall be conducted by the
Tribunal to determine whether the conclusion of the agreement did
entail such a merger as defined.'
[5]
On 13 October 2016 the applicants brought an urgent application
before this Court in which they sought the following relief:
1.
A declaration that first and second respondents are in breach of the
order to provide the documentation as
set out in this Court's order
on 24 June 2016;
2.
an order for first respondent to provide information and
documentation to third respondent;
3.
an order for second respondent to provide documentation,
alternatively a schedule to third respondent;
4.
authorisation either by way of a declaration of variation of the
order or a new order for third respondent
to exercise investigative
powers as set out in Part B of Chapter 5 of the Act for the purposes
of discharging its reporting obligations
in terms of the June 2016
order.
The
matter was argued before this Court on 2 December 2016 and judgment
was reserved.
[6]
On 7 December 2016 an enquiry into the management and performance of
first respondent commenced in Parliament. On 8 and 9 December
2016
erstwhile representatives of first respondent, including former board
member Mr Krish Naidoo (who, subsequent to this application
being
launched, was appointed to the new interim board of first respondent)
and former group GEO, Ms Lulama Makhobo testified under
oath before
the parliamentary enquiry, which investigation included an
examination of the agreement.
[7]
The applicants adopted the view that portions of this testimony were
directly relevant to the issues that were debated before
this court
on 2 December 2016. Accordingly, in a further application to this
Court, they sought admission of these proceedings
into evidence. In a
supplementary affidavit deposed to by Mr William Bird, director of
the second applicant, detailed reference
was made to the testimony of
Mr Naidoo and Ms Makhobo before the enquiry which took place in
Parliament. Mr Bird then stated:
'It
is in the interests of justice that the Commission should be able to
have regard to additional evidence and oral testimony that
has
emerged during the current inquiry conducted by an ad hoc
parliamentary committee, and should be in a position to conduct its
own detailed interviews with the relevant witnesses into issues such
as the exclusive licensing of the SABC's archival programming
and the
clauses in the Multichoice Agreement relating to encryption.'
The
core issue
[8]
Mr Budlender, who appeared with Mr Kelly on behalf of the applicants,
correctly noted that the core issue to be resolved in
this
application is the proper interpretation of the 24 June 2016 order
granted by this Court. In this connection there is a well-established
test for the interpretation of court orders, as set out in
Firestone
South Africa (Pty) Ltd v Genticuro AG
1977 (4) SA 298
(A)
at 304:
'Thus,
as in the case of a document, the judgment or order and the court's
reasons for giving it must be read as a whole in order
to ascertain
its intention. If, on such a reading, the meaning of the judgment or
order is clear and unambiguous, no extrinsic
fact or evidence is
admissible to contradict, vary, qualify, or supplement it. Indeed, it
was common cause that in such a case
not even the court that gave the
judgment or order can be asked to state what its subjective
intention was in giving it (cf.
Postmasburg Motors (Edms.) Bpk. v
Peens en Andere,
1970 (2) SA 35
(NC) at p. 39F-H). Of course,
different considerations apply when, not the construction, but the
correction of a judgment or order
is sought by way of an appeal
against it or otherwise ... infra. But if any uncertainty in meaning
does emerge, the extrinsic circumstances
surrounding or leading up to
the court's granting the judgment or order may be investigated and
regarded in order to clarify it;
for example, if the meaning of a
judgment or order granted on an appeal is uncertain, the judgment or
order of the court a
quo
and its reasons therefore, can be
used to elucidate it. If, despite that, the uncertainty still
persists, other relevant extrinsic
facts or evidence are admissible
to resolve it.'
[9]
This approach has been confirmed recently by the Constitutional Court
in two decisions.
Eke v Parsons
2016 (3) SA 37
(CC) at para
29;
Electoral Commission v Nhlope
2016 (5) SA (1) (CC) at para
33.
The
application of 13 October 2016
[10]
Mr Budlender's primary argument was that, on the basis of this
jurisprudence and thus the proper interpretation of the order,
of 24
June 2016, third respondent was entitled to exercise its ordinary
powers of investigation, thereby fulfilling its obligations
in terms
of the court order. In his view, this submission became
all the more powerful when first and second respondents'
failure to
comply properly with this Court's order of 24 June 2016 was taken
into account.
[11]
In this connection he referred to a letter generated by the third
respondent on 4 October 2016, written by its senior legal
counsel, Mr
Romeo Kariga, which, given its importance to the submissions made by
applicant, I reproduce in full:
1.
'We refer to the above matter and the order of the Competition Appeal
Court ("CAC") dated
24 June 2016, and our correspondence to
the Competition Tribunal ("Tribunal") dated 06 September
2016.
2.
As you are aware, the CAC order in this matter requires that the
Competition Commission
("Commission")
be furnished with "all
documentation ... pertaining to the negotiation, conclusion
and implementation of the agreement of 3 July 2013" to enable it
to compile its report.
On 25 July 2016, Multichoice (Pty) Ltd
("Multichoice") and the South African Broadcasting
Corporation (SOE) Limited ("SABC")
respectively
furnished the Commission with some, but not all. of the documents
envisaged in the CAC order of 24 June 2016.
As a result, on
17 August 2016, the Commission wrote to Multichoice and the SABC,
requesting further submissions and documents.
On 31 August 2016,
Multichoice provided the Commission with further documents. On 15
September 2016
and 30 September 2016, the SABC gave the
Commission
further documents as well.
3.
In its letter date 31 August 2016, Multichoice stated that, other
than documents which had already been
submitted to the Commission, it
does not have any further documents as requested by the Commission.
On 23 September 2016, the Commission
requested Multichoice to provide
an affidavit to that effect. On 30 September 2016, Multichoice
submitted the affidavits from Mr
Mark Payner, CEO of Mullichoice and
confirmatory affidavits from Mr lmtiaz Patel and Greg Hamburger,
being the people who negotiated
and drafted the Agreement
respectively. The affidavits state that Multichoice does not have the
further documentation requested
by the Commission.
Furthermore.
Multichoice stated that is has no obligation to itemise documents
that it says are in its possession, which it contends
do not fall
within the scope of the CAC order. In the circumstances, the
Commission is unable to determine whether or not Multichoice
has
complied with the order of the
CAC.
4.
The SABC responded to the Commission's letter of 17 August 2016 in
two letters. The first letter
was sent to the Commission on 15
September 2016 and the second letter on 30 September 2016. Both
letters came with attachments.
Notably in its letter of 30
September 2016, the SABC states that it "could not manage to
trace" some of the key documents
requested by the Commission
which are envisaged in the CAC order. It is not clear
to
the Commission what SABC means when it says that it "could not
manage to trace" documents, when it is clear that these
documents existed. The Commission is of the view that the SABC has
therefore not complied with the order of the CAC
. The Commission
will send a letter to the SABC requesting an explanation as to what
happened to these documents, why they could
not be traced, and the
process followed in tracing the documents, by way of a sworn
affidavit by the CEO of SABC.
5.
In light of the above, as at the date of this letter, the Commission
has not been furnished with
"all documentation... pertaining to
the negotiation, conclusion and implementation of the agreement of 3
July 2013" as
required by the CAC order to enable it to perform
its task envisaged in the CAC order. The order
of
the CAC contemplated that the
Commission should render its report to the Tribunal once it has been
furnished with "all documentation."
The documents
that have been submitted to
the
Commission are not sufficient to enable the Commission to properly
discharge its Court mandated task in this matter. In order
to give
proper effect to the order of the CAC, and to preserve the
effectiveness of the order of the CAC, as required by the
Constitution,
the Commission intends to interrogate certain relevant
executives in Multichoice and SABC who were responsible for the
negotiation
and conclusion of the Agreement, including board members
who deliberated on the negotiation. conclusion and implementation of
the
......
6.
In
view
of
the
fact
that
the
Commissio
n
's
investigation
of
this
matter
is
subject to a court order and the Commissio
n
’
s
report must be submitted to
the Tribunal. the Commission
therefore requests a directive from the Tribunal on whether the
Commission is entitled to conduct such
interrogation in order to give
effect to the CAC order in circumstance
s
where it
has
not been furnished with “all document
a
tio
n
”
as envisaged by
the CAC. As pointed out above the documentation
submitted to the Commission is not sufficient to enable the
Commission to
properly give effect to the order of the CAC.' (my
emphasis)
[12]
On the basis of this letter Mr Budlender submitted that it was clear
that both first and second respondent had failed to comply
fully with
the order and hence this had the effect that third respondent was
prevented from carrying out its obligations pursuant
to the order.
Respondent's
correspondence
[13]
To fully assess this submission, it is necessary to refer to the
responses of first and second respondent. In a letter of 31
August
2016 second respondent replied to third respondent through its
attorney. It supplied third respondent with a further lever
arch file
of documentation with regard to the negotiation and conclusion of the
agreement. Regarding the request for board minutes,
the letter
recorded that there are 'only two passing references' to the
negotiation and conclusion of the agreement in these minutes
and that
no other documentation sought by third respondent existed.
[14]
The letter then continues:
'Members
of Multichoice management team are empowered to make many decisions
concerning the business of the company, including,
for example, as
regards to negotiation and conclusion of this and other channelled
distribution agreements without those decisions
having to be
motivated to and ratified by the Board of Multichoice.'
[15]
On 15 September 2015, seven weeks after the deadline imposed by this
Court in its 24 June 2016 order had lapsed, first respondent
replied
to the third respondent's letter of 17 August 2016. It furnished
third respondent with further documentation. This did
not include
documentation pertaining to its change of position regarding
encryption which, as observed in this Court's judgment,
involved
first respondent shifting its position from supporting encryption to
opposing it. The letter from first respondent's attorneys
concluded
by stating that they were 'in the process of engaging with the SABC,
regarding the remaining questions which had been
posed by third
respondent'.
[16]
In its letter of 23 September 2016 to first respondent, third
respondent pointed out that the encryption issue was relevant
to
whether the agreement between first and second respondent, which
precluded the first respondent from encrypting its broadcast
signals,
had influenced first respondent's change of stance.
[17]
The letter concluded thus:
'The
Commission requires that the SABC furnish it with "all
documentation ... pertaining to the negotiation, conclusion and
implementation of the agreement of 03 July 2013" as per the
Commissioner's letter of 17 August 2016 by no later than 30 September
2016. The Commission reserves its rights to institute the appropriate
legal proceedings to ensure compliance with the CAC order.'
[18]
On 30 September 2016, first respondent's attorney informed third
respondent that, notwithstanding a diligent search, first
respondent
was not able to trace any further documents requested. Insofar as
board minutes dealing with encryption was concerned,
they wrote:
'Please
refer to a memorandum date 9 December 2011, prepared for the SABC
Board of Directors, attached hereto as annexure 0 2.11
and the
various documents in response to question 2.6.
[19]
In amplification of this response, Mr James Aguma, the acting Group
Chief Executive Officer of first respondent, said the following
in
his answering affidavit:
'No
written presentations were made to the Joint Board and Group Exco
meeting on 05 September 2013, as contemplated in the Commission's
question 2.13 above. The people who served on these internal bodies
of the SABC who supported STB Control had made verbal submissions
but
no written presentation was made by them.
In
relation to the SABC's Board resolutions regarding Set Top Boxes,
referred to in the SABC Board Minutes of the Special Board
meeting
held on 20 September 2013, reference was made in the minutes to a
previous position which the SABC board held which supported
STB
control. However, no such board resolutions and minutes existed. I
have confirmed that this is the case with the Company Secretary
of
the SABC, as confirmed in the attached confirmatory affidavit.'
[20]
The approach of second respondent was crystallised in an answering
affidavit of the Chief Executive officer of second respondent,
Mr
Mark Rayner, who confirmed that second respondent had provided all
available documentation pertaining to the negotiation, conclusion
and
implementation of the agreement which was in its
possession. Further documentation, as requested by
third respondent
in its letter of 17 August 2016, did not exist. Furthermore, all
documentation relating to encryption and conditional
access which
pertained to the negotiation, conclusion and implementation of the
agreement in the possession of second respondent
had been provided to
third respondent.
[21]
To return to applicant's argument, Mr Budlender noted that, in the
first place, much of the documentation provided to third
respondent
had been submitted after the court deadline of 25 July 2016.
Furthermore, it appeared that key documents could not be
located and
in the case of second respondent it was claimed that they did not
exist. In this connection Mr Budlender referred to
third respondent's
observation in its answering affidavit:
'It
would be playing possum if the Commission was simply to fall over and
say that in that event its recommendation to the Tribunal
is that the
transaction is not a merger.'
[22]
In Mr Budlender's view, as the purpose of the 24 June 2016 order was
to enable a proper inquiry to be conducted into
whether the agreement
fell within the scope of s 12 (1) of the Act, the inadequate
compliance with the court order necessitated
a declaration that
the third respondent be empowered to exercise its powers of
investigation under s 49A of the Act.
The
further application
[23]
Pursuant to the further hearing on 3 April 2017 which was triggered
by the SABC hearing in Parliament and an affidavit deposed
to by Mr
Bird to which I have made reference, Mr Budlender submitted
that, as both Mr Naidoo and Ms Makhobo had voluntarily
testified in
public and on oath before a parliamentary enquiry that they were
involved in the process that led to the conclusion
of the agreement,
it was clear that they would be well placed to offer
information to third respondent that was relevant
to an enquiry
concerning the applicability of s 12(1) of the Act. This
evidence could then ameliorate the inability of third
respondent to
properly carry out its functions, which inability had been caused by
the fact that key documents 'could not be traced'
by the first and
second respondents.
[24]
In particular, Mr Budlender argued that this further evidence would
demonstrate that:
1.
The agreement was discussed and debated by the first respondent's
board;
2.
At least two of first respondent members had strong views about the
lawfulness of non-encryption in terms
of the agreement;
3.
First respondent's board was evidently divided about the agreement,
contrary to the impression created
in its papers filed before the
Tribunal in response to the applicants' application; and
4.
First respondent received at least two opinions relating to the
agreement and, more specifically
on the issue of encryption.
Evaluation
[25]
As indicated, the key to unlocking this dispute turns on the meaning
of the order which was granted on 24 June 2016. In interpreting
this
order the jurisprudence is well established. If the meaning of the
order is clear and unambiguous, it is not open to this
Court to give
it a fresh interpretation or to supplement its meaning.
[26]
In my view, the meaning of the order is clear and unambiguous. In the
first place, the order was granted following a decision
by the
Tribunal that the agreement did not fall within the scope of a merger
as defined in the Act. This Court held that the Tribunal
did not have
the benefit of third respondent's assistance in that the latter had
advised that it had not investigated the transaction.
This Court also
found that there were exceptional circumstances in this case which
dictated a different result from the default
position, namely that a
lack of evidence had put an end to the dispute and that the appeal
against the Tribunal's decision should
fail without more.
[27]
To recapitulate: this Court found that it was in the public interest
that clarity, if possible, should be achieved with regard
to a number
of factual aspects of this case which had been disputed. It was for
this reason that a limited order, which was similar
to the draft
order proposed by the applicants, was granted, namely that first and
second respondents should provide all documentation
possessed by them
which was relevant to the negotiation, conclusion and implementation
of the agreement. On the basis of this documentation,
third
respondent was directed to examine the transaction and make a
recommendation to the Tribunal. Furthermore it was clear from
the
reasoning adopted in its judgement, that this Court was cognisant of
the fact that the agreement had been entered into in July
2013 and
that it was imperative that the matter be brought to finality
as expeditiously as possible.
Hence
a restrictive timetable was employed for the relief so granted in
terms of the order.
A
fresh order
[28]
As a final submission, applicants sought the issue of a
fresh order. Three reasons were offered in
support thereof:
1.
There was a dispute about whether the Commission was entitled to
exercise its powers of subpoena under
s 49A of the Act.
2.
This Court may exercise its jurisdiction under s 62(2)(a) of the Act
to resolve this issue. It
may do so by granting declaratory relief,
or by way of a fresh order expressly authorising the Commission to do
so.
3.
Non-compliance with a court order is a constitutional issue. It was
therefore contended that this court
has jurisdiction to hear this
matter and grant additional relief in accordance with s 66 (2)(b) of
the Act.
[29]
For reasons which I have set out, the order of 24 June 2016 did not
and cannot be read to grant third respondent powers in
terms of s 49A
of the Act. Accordingly there is not an issue to resolve, in that the
meaning and purport of the order so granted
made clear the scope of
the powers to be granted to third respondent in order to generate a
report. There is thus no
basis to grant a fresh
order.
Conclusion
[30]
For all the reasons set out, there is no room to dispute the clear
wording of the order, namely that third respondent was entitled
to be
provided with all documentation relevant to the agreement which was
possessed by the two respondents. Had this court decided
to grant a
more far reaching form of relief, that is to order that a full
scale investigation be conducted by third respondent,
it would have
said so in express terms. This latter conclusion cannot be implied
from the wording of the order nor from the reasoning
employed to
justify the granting of what was considered by the Court to be
exceptional relief in the circumstances.
[31]
It follows that no additional justifiable grounds had been raised for
the granting of a fresh order. In substance,
this
case is about applicants' argument that third
respondent has an entitlement to exercise its powers
by way of
subpoena in terms of s 49 A of the Act. The order of 24 June 2016 did
not refer to powers under s 49A of the Act and
expressly confined the
source of the inquiry to be conducted by third respondent exclusively
to documentation as set out in the
order. In other words, the order
made clear the nature of the remit given to third respondent which,
in terms of the order of this
Court, was predicated on a limited
basis.
[32]
Turning to the further evidence sought to be led with regard to the
parliamentary hearing, it follows from the approach that
I have
adopted, that an order which would empower third respondent to
conduct interviews with Mr Naidoo and Ms Makhobo falls outside
of the
scope of the order which was granted on 24 June 2016. By contrast,
there does not appear to be any obstacle to third respondent
examining the transcript of the parliamentary hearings. After
all, this transcript is a public document. Whatever information
is contained therein surely can be employed by third respondent to
make a recommendation as to whether the agreement gives rise
to a
notifiable change of control, failing within the definition of merger
in terms of s 12 of the Act.
[33]
For all of these reasons, the application of 13 October 2016 and the
further application of 13 December 2016 are dismissed
with costs
including the costs of two counsel.
_______________________
D
M DAVIS JP
ROGERS
JA and VICTOR AJA concurred