About SAFLII
Databases
Search
Terms of Use
RSS Feeds
South Africa: Competition Appeal Court
SAFLII
>>
Databases
>>
South Africa: Competition Appeal Court
>>
2016
>>
[2016] ZACAC 1
|
|
Group Five Ltd v Competition Commission (139/CAC/Feb16) [2016] ZACAC 1; [2016] 2 CPLR 389 (CAC) (23 June 2016)
THE COMPETITION APPEAL
COURT OF SOUTH AFRICA
(SITTING
IN CAPE TOWN)
In the matter between
139/CAC/Feb16
DATE: 23 JUNE 2016
GROUP FIVE
LTD
............................................................................................................
APPELLANT
And
THE COMPETITION
COMMISSION
...........................................................
FIRST
RESPONDENT
Coram: DAVIS JP,
ROGERS AJA & BOQWANA AJA
Heard:
17 JUNE 2016
Delivered:
23 JUNE 2016
JUDGMENT
ROGERS
AJA (DAVIS JP & BOQWANA AJA concurring):
Introduction
[1]
We have before us
(i) an appeal by the appellant (‘Group Five’)
against an order by the Tribunal dismissing an
application by Group
Five for production of documents by the respondent (‘the
Commission’); and (ii) an application
by Group Five to
suspend, pending the determination of the appeal, a direction by the
Tribunal that Group Five file its answering
affidavit in a pending
referral within a specified time failing which the Commission was
authorized to seek default relief. Counsel
were agreed that we need
only address the appeal.
[2]
On 17 March 2015 the
Commission referred to the Tribunal a complaint that Group Five and
two other civil engineering companies had
engaged in collusive
tendering in respect of a road rehabilitation contract. In terms of
Tribunal rule 16 Group Five was obliged
to file its answering papers
20 business days after service of the referral papers.
[3]
During April 2015 Group
Five’s attorneys asked the Commission to produce the record of
its investigation, initially relying
on High Court rules 35(12) and
(14) and later also on Commission rule 15. On 18 June 2015 the
Commission provided an index of its
record and invited Group Five’s
attorneys to inspect and copy those parts that were not ‘privileged’.
Subsequently
the Commission changed its mind, demanding that Group
Five deliver its answering papers and asserting that Group Five was
only
entitled to the non-privileged part of the record during the
ordinary course of discovery.
[4]
On 3 August 2015 the
Commission served an application for default relief because Group
Five had not filed its answering papers.
Following some further
skirmishing Group Five on 7 September 2015 served an application to
compel production of the record. The
Commission did not file an
answering affidavit, instead contending that as a matter of law Group
Five was not entitled to production
of the record prior to filing its
answering papers.
[5]
Having heard argument,
the Tribunal on 18 January 2016 delivered its decision in which it
upheld the Commission’s stance,
dismissed Group Five’s
application and directed it to file its answering papers within 20
business days, failing which the
Commission could approach the
Tribunal for default relief.
High Court
rules 35(12 and (14)
[6]
In terms of rule
55(1)(b) of the Tribunal’s rules the Tribunal may have regard
to the High Court rules in respect of any matter
not governed by the
Tribunal’s rules. The Tribunal could thus, upon application by
a respondent in complaint proceedings,
direct the Commission to
produce in accordance with High Court rule 35(12) a document
mentioned in the referral affidavit or direct
the Commission in
accordance with High Court rule 35 (14) to make available for
inspection specified documents reasonably required
by the respondent
for purposes of filing its answering papers.
[7]
I can find no fault
with the Tribunal’s decision refusing production in terms of
these High Court rules. The referral affidavit
did not mention any
particular documents to which High Court rule 35(12) could have
applied. In accordance with usual practice,
the Commission made
introductory allegations that it had investigated the complaint and
received information pursuant thereto.
Although one may readily infer
that the Commission came into possession of documents during the
course of its investigation, the
Commission did not refer to any such
documents. Even if the generalised reference to an investigation and
information was impliedly
a reference to its investigation record,
the Tribunal was not obliged to apply High Court rule 35(12) and I
think it was right
not to do so.
[8]
Group Five also did not
show that it reasonably required the investigation record to prepare
its answering papers. The Commission’s
case concerning the
alleged collusive conduct is straightforward. The Commission alleges
that, by way of contact between Group
Five’s managing director
and named representatives of the other firms in November 2006, the
latter were asked to provide,
and did provide, cover prices for Group
Five, ie prices which would be higher than the price which Group Five
intended to bid.
Group Five did not need the Commission’s
record to answer these allegations. In its application to compel,
Group Five identified
certain respects in which the referral
affidavit was said to be vague and contradictory. If these criticisms
have any merit (which
it is unnecessary to decide), they would not be
resolved by production of the Commissioner’s record. The
appropriate procedural
response would have been to attack the
referral affidavit as non-compliant with Tribunal rule 15. Such an
attack would be in the
nature of a High Court exception, a procedure
which the Tribunal has often entertained under Tribunal rule
55(1)(b).
Commission
rule 15
[9]
In terms of Commission
rule 15(1) ‘any person’ is entitled to access to ‘any
Commission record’ provided
the document in question is not
‘restricted information’ contemplated in rule 14(1). It
was held in
Competition
Commissioner v ArcelorMittal South Africa Ltd & Others
2013
(5) SA 538
(SCA) that ‘any person’ includes a litigant
(paras 45-50). Group Five was thus entitled to access to the
Commission’s
record of its investigation save to the extent
that any part thereof was restricted information in terms of rule
14(1). Both the
Commissioner and Tribunal accepted this.
[10]
Rule 15(1) does not
specify a time within which the Commission must give access to the
unrestricted part of the record. The Tribunal
correctly held that by
necessary implication access had to be given within a reasonable
time. The Tribunal considered, however,
that what was reasonable was
affected by Group Five’s position as a litigant. It was not
reasonable, in the Tribunal’s
view, that access should have to
be given prior to the close of pleadings. The rules of the Commission
and Tribunal would be better
‘harmonised’ if access were
deferred until post-pleading discovery.
[11]
In so holding the
Tribunal fell into error. The Tribunal correctly recognised that the
right of access in rule 15(1) is a public-access
right, not a right
given specifically to litigants. Group Five’s right in terms of
rule 15(1) vests in it as part of the
unlimited class of ‘any
person’, not as a respondent in complaint proceedings. From
this it follows that the determination
of a reasonable period within
which the Commissioner must give access is not affected by whether or
not the requester is a litigant.
Put differently, Group Five’s
entitlement to the record within a reasonable period of time cannot
be negatively affected
by its status as a respondent. The
determination of a reasonable period is only concerned, in my view,
with the time the Commission
would reasonably require to prepare its
record and identify what parts are restricted. That may vary from
case to case but would
not be affected by the identity of the
requester.
[12]
There is nothing in the
Tribunal’s rules which expressly or by necessary implication
extends, in the case of litigants, the
reasonable period within which
the Commission must comply with Commission rule 15(1). A respondent
in complaint proceedings does
not have an automatic right to
discovery once the pleadings are closed. Whether and to what extent
the parties must make discovery
is determined from case to case by
directions given by the Tribunal in terms of Tribunal rule
22(1)(c)(v). It may well be that
in most if not all cases the
Tribunal will give directions for general discovery but that is not
as such a right afforded by the
Tribunal’s rules.
[13]
In any event, the
entitlement of a litigant to discovery is a right which vests in it
specifically in its capacity as a litigant.
It is distinct from a
general right of access such as Commission rule 15(1) affords. The
obligation to make discovery in litigation
is limited by relevance as
determined by the pleadings. The right of access afforded by
Commission rule 15(1) is in the nature
of things not limited in this
way. The Commission might have to produce more in response to rule
15(1 than it would by way of post-pleading
discovery. Conversely the
Commission’s obligation to make discovery might include
documents which were not part of its record
when it afforded access
in terms of rule 15(1).
[14]
Even if in some cases
there would be nothing for the Commission to discover once it has
afforded access to a respondent in terms
of rule 15(1), this would
not justify a limited reading of 15(1). The process of discovery
would not thereby be rendered otiose.
Post-pleading discovery would
be the means by which the Commission would gain access to relevant
documents in possession of respondents.
If this places respondents in
a more advantageous position (ie earlier access to documents), it is
an advantage which flows from
the fact that the Commission, unlike
them, is a public body in relation to whose records the rule-maker
has afforded a general
right of access.
[15]
The supposed
harmonisation of the Commission and Tribunal rules is illusory. If
the Commission is obliged in due course to produce
its record by way
of post-pleading discovery, that will be because of Tribunal Rule
22(1)(c)(v) and a discovery direction given
pursuant thereto, not
because of Commission rule 15. On the Tribunal’s approach, rule
15 in truth never comes into play in
relation to documents which are
relevant to the pleaded issues and thus discoverable. And in relation
to documents which are not
relevant to pleaded issues but
nevertheless producible in terms of rule 15, the Tribunal’s
rationale for linking production
to discovery is absent.
[16]
Unlike the Tribunal, I
do not find assistance in the cases decided under the Promotion of
Access to Information Act 2 of 2000 (‘PAIA’).
Industrial
Development Corporation of South Africa Ltd v PFE International Inc
(BVI) & Others
2012
(2) SA 269
(SCA) and the further appeal in the same case reported at
2013 (1) SA 1
(CC) were concerned with the interpretation of s 7(1)
of PAIA in relation to the right of a litigant to obtain documents by
way of subpoena duces tecum. Section 7(1) expressly excludes PAIA’s
operation (i) if the record is requested for purposes
of
criminal or civil proceedings; and (ii) after the commencement
of such proceedings; and (iii) any other law provides
for access
to the record in question. I leave open whether complaint proceedings
are ‘civil proceedings’ (they are
certainly not
‘criminal’ proceedings) and whether the Tribunal’s
rules provide for the production of the Commission’s
record
(bearing in mind, as I have observed, that discovery in complaint
proceedings strictly speaking depends on the extent to
which the
Tribunal in its discretion directs discovery to be made). The simple
point is that Group Five sought access in terms
of Commission rule
15(1), not in terms of PAIA. Rule 15(1) does not contain the same
limitation as s 7(1).
[17]
One of the cases
mentioned by the Tribunal was
Unitas
Hospital v Van Wyk & Another
[2006] ZASCA 34
;
2006
(4) SA 436
(SCA). The matter in issue was whether the requester, Mrs
van Wyk, required the record for the exercise or protection of any
rights
as contemplated in s 50(1)(a) of PIAIA. She wanted the
record for a proposed damages claim against a private hospital. In
assessing whether the record was ‘required’ within the
meaning of s 50(1)(a), Brand JA (from whose judgment the
Tribunal quoted) referred to s 7, with its ‘deference’
to the rules for discovery once litigation has begun, as
indicating
that pre-action discovery should not be regarded as the norm under
s 50. He did not say that reliance on s 50
was precluded
merely because the record in question would in due course be
discoverable but considered that the element of need
dictated by
s 50(1)(a)’s use of the word ‘required’ was
not satisfied on the facts of the case, given that
Mrs van Wyk was
able to formulate her claim without reference to the requested
record.
[18]
Unitas
does not in my view cast any light on
our case. Commission rule 15 does not contain the sort of
qualification found in s 50(1)(a)
of PAIA or an equivalent of
s 7 from which ‘deference’ to the Tribunal’s
rules of discovery might be inferred.
A supposed deference to
discovery is entirely at odds with the
ArcelorMittal
decision. After
all, the Commission’s contention in
ArcelorMittal
was that rule 15
did not apply to litigants. That contention could only have been
founded on the premise that once litigation has
started a
respondent’s rights to production of documents is regulated by
the Tribunal’s rules of discovery, not by
Commission rule 15.
The Supreme Court of Appeal’s decision was a clear rejection of
that premise.
[19]
The policy
considerations underlying s 7 of PAIA might justify the
introduction of a similar qualification in Commission rule
15. An
exclusion defined with reference to the purpose for which a record is
requested (ie for purposes of litigation which has
already commenced)
rather than with reference to the identity of the requester does not
give rise to the absurdity mentioned in
ArcelorMittal
(para 46). Where
litigation has commenced and a record is requested by a close
associate of the litigant, it may not be difficult
to show that it
has been requested for purposes of the litigation, ie that the
requester is a front for the litigant. However,
and as I have said,
rule 15 does not currently contain any such qualification.
Group
Five’s obligation to file answering papers
[20]
The Commission was thus
wrong to assert that it did not have to comply with rule 15(1) until
the post-pleading discovery stage.
By the same token, though, Group
Five was wrong in linking its obligation to file answering papers to
the Commission’s obligation
in terms of rule 15(1). Because
Group Five’s entitlement to the record in terms of rule 15(1)
vests in it as an ordinary
member of the public, not a litigant,
there is no logical connection between its right to the record and
its obligation to plead.
[21]
Whether due compliance
by the Commission with rule 15(1) would result in respondents getting
access to the requested record before
they have to file answering
papers would depend inter alia on when the respondent requests access
and the amount of time the Commission
reasonably requires, in the
particular circumstances of the case, to list the documents in its
record and identify those parts
which constitute restricted
information. If there is a dispute about whether particular
information is restricted, that would need
to be determined
independently of the procedural timetable applicable to the complaint
proceedings. It would obviously be improper
for the Commission to
delay production of its record for tactical reasons or to contrive
disputes about privilege and confidentiality.
By the same token,
however, respondents should not be encouraged to delay the filing of
their answering papers on the basis of
a right of access to
information which has nothing to do with their status as litigants.
Conclusion
[22]
In the present case,
and because of their incorrect views, the Commission and Group Five
did not comply with their respective obligations.
And because the
Commission wrongly believed it only had to produce its record at the
post-pleading discovery stage, it did not
elaborate upon its claim
that certain documents listed in its record were ‘legally
privileged’ or ‘confidential’.
The only practical
way to resolve this is to treat the parties’ respective
obligations as running from the date of our order,
since our judgment
will clarify what those obligations are.
[23]
This means that the
Commission must produce its record within a reasonable period of time
from the date of our judgment and that
Group Five must file its
answering papers within 20 business days from the date of our
judgment.
[24]
Since the Commission
has already prepared an index of its record and identified parts of
that record as ‘not restricted’,
there is no reason why
those parts should not be made available forthwith. This will result
in Group Five’s obtaining access
to those parts of the record
before the expiry of 20 business days from the date of our judgment.
[25]
In regard to those
parts of the record which are said to be ‘legally privileged’
or ‘confidential’, such
disputes will have to be
resolved, as I have previously observed, by a process which is
independent of Group Five’s obligation
to file its answering
papers. If this means that Group Five has to file its answering
papers before disputes about production are
resolved, so be it.
[26]
As to costs, the
Commission has failed in its contention that its obligation in terms
of Commission rule 15 is deferred until the
discovery stage. Group
Five, for its part, has failed in showing an entitlement to
production in terms of High Court rules 35(12)
and (14) and has
failed in its attempt to link the timing of its answering papers to
production in terms of rule 15. Put differently,
the Tribunal was
right in directing Group Five to file its answering papers within 20
business days and in dismissing Group Five’s
application for
discovery in terms of High Court rules 35(12) and (14) but wrong in
dismissing Group Five’s rule 15 application.
I thus think that
the parties should bear their own costs of appeal.
[27]
The following order is
made:
(a) The appeal succeeds in part.
(b) Save for para 78.3 thereof, the Tribunal’s
order and directions contained in para 78 of its decision of 18
January
2016 are set aside and replaced with an order in the
following terms:
(i) The respondent (‘the Commission’)
must, in terms of Commission rule 15, forthwith afford the appellant
(‘Group
Five’) access to those portions of its record
identified as ‘not restricted’ in the index of its record
attached
to its letter of 18 June 2015 and to any further portions of
its record which it no longer claims are restricted.
(ii) Group Five must, within 20 business days after
the date of this judgment (that is, the Competition Court of Appeal’s
judgment), file its answer (as contemplated in rule 16 of the
Tribunal’s rules) in the complaint proceedings under CC Case
2009SEP4641/CT Case 021014.
(iii) If Group Five has not filed its answer within
the aforesaid period, the Commission may approach the Tribunal’s
registrar to set down its application for default judgment.
(c) If Group Five contends that those portions of
the record which the Commission contends are protected are not
protected
or that access thereto should be permitted (with or without
conditions) in terms of Commission rule 15(1)(b), the Tribunal must
determine the said dispute after receiving such further affidavits
(by way of supplementation of Group Five’s application
dated
7 September 2015) as it may direct to be filed.
(d)
The parties shall bear their own costs in the appeal.
APPEARANCES
For
Appellant Mr AR Bhana SC & Mr AG Gotz
Instructed
by:Baker & McKenzie
Commerce
Square, 39 Rivonia Road
Sandhurst
For
Respondent Messrs T Ngcukaitobi & T Motloenya
Instructed
by: Ndzabandzaba Attorneys Inc
Unit
3, Ground Floor, 65 Peter Place Road
Bryanston