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[2012] ZACAC 4
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Paramount Mills (Pty) Ltd v Competition Commission (112/CAC/SEP11) [2012] ZACAC 4; [2012] 2 CPLR 215 (CAC) (27 July 2012)
Republic
of South Africa
IN THE COMPETITION
APPEAL COURT OF SOUTH AFRICA
REPORTABLE
CAC
CASE NO: 112/CAC/SEP11 CT CASE NO: 15/CR/MAR10
In
the matter between:
PARAMOUNT
MILLS (PTY) LIMITED
.................................................................................
Appellant
and
THE
COMPETITION COMMISSION
................................................................................
Respondent
CORAM:
DAVIS, JP et DAMBUZA and
ZONDI, JJA
JUDGMENT
BY: ZONDI JA
FOR
THE APPELLANT: ADV. MM LE ROUX
INSTRUCTED
BY: BOWMAN GILFILLAN INC
FOR
THE RESPONDENT: ADV. DN UNTERHALTER (SC) & ADV. KH SHOZI
INSTRUCTED
BY: CHEADLE THOMPSON & HAYSOM INC. ATTORNEYS
DATE
OF HEARING: 9 MARCH 2012
DATE
OF JUDGMENT: 27 JULY 2012
Republic of South
Africa
IN THE COMPETITION
APPEAL COURT OF SOUTH AFRICA
REPORTABLE
CAC
CASE NO: 112/CAC/SEP11 CT CASE NO: 15/CR/MAR10
In
the matter between:
PARAMOUNT
MILLS (PTY) LIMITED
.................................................................................
Appellant
and
THE
COMPETITION COMMISSION
................................................................................
Respondent
CORAM:
DAVIS, JP et DAMBUZA and ZONDI, JJA
JUDGMENT
: 27 JULY 2012
ZONDI,
JA:
INTRODUCTION
[1]
The appellant (“Paramount”) brought an application
before the Competition Tribunal (“the Tribunal”)
seeking
the dismissal of the referral of a complaint by the Competition
Commission (“the Commission”) against it.
In the
complaint referral, in which Paramount is the fourteenth respondent,
the Commission alleged that the respondents violated
section 4 (1)
(b) (i)
1
of the Competition Act 89 of 1998 (“the Act”).
[2]
Paramount sought the dismissal of the complaint referral on two
separate and independent grounds, namely that the claims are
time-barred and that they are not legally competent and thus do not
reveal a case for Paramount to answer before the Tribunal.
The
Tribunal dismissed the application. The appeal is against the
Tribunal’s orders.
Factual
Background
[3]
It is common cause that, during December 2006, the Commission
received information of a possible bread cartel operating in
the
Western Cape. Acting on the basis of the information that the
Commission received and following a preliminary investigation,
the
Competition Commissioner on 14 March 2007, proceeded in terms of
section 49 B (1) of the Act and initiated a complaint against
Premier Foods, Tiger Foods and Pioneer Foods, all of whom had been
allegedly involved in the said bread cartel. A formal complaint
was
also lodged by one of the bread distributors in the Western Cape
against all three firms and the Commission thereafter embarked
on
its investigation.
[4]
During the early stages of the Commission’s investigation,
Premier Foods approached the Commission and indicated that
it was
willing to co-operate with the
Commission
and to confess its role in the bread cartel, in return for immunity
from
prosecution.
Premier Foods fully co-operated with the Commission, as a result of
which, it was granted conditional immunity from
prosecution on 14
February 2007, in respect of its participation in the bread cartel
in the Western Cape. On 16 March 2007, it
was also granted
conditional immunity from prosecution for its participation in the
national bread cartel, the wheat and maize
milling cartels.
[5]
Acting on the basis of the co-operation given to the Commission by
Premier Foods, and following its own investigation, the
Commission
on 14 February 2007, proceeded to refer the complaint against the
alleged remaining members of the bread cartel, namely
Tiger Brands
and Pioneer Foods, to the Tribunal.
[6]
Tiger Brands and Pioneer Foods filed their answering affidavits to
the complaint referral on 14 March 2007. Pioneer Foods
denied that
it operated a bread cartel and indicated that it would oppose the
matter before the Tribunal.
[7]
Tiger Brands on the other hand, indicated, in its answering
affidavit, that it was willing to co-operate with the Commission
and
offered to disclose the extent of its involvement and participation
in the alleged cartel activities.
[8]
Tiger Brands’ co-operation with the Commission culminated in
the conclusion of the consent agreement between the Commission
and
Tiger Brands on 9 November 2007. Insofar as the operation of the
cartel in the maize milling sector was concerned, Tiger
Brands also
applied for, and was granted conditional immunity from prosecution
in terms of the Commission’s Corporate Leniency
Policy.
[9]
As regards the price implementation process, the Commission’s
investigation revealed that securing price increases through
unilateral conduct is fraught with uncertainty and risk. To be a
first mover in increasing prices allows rivals to maintain price
differentials and thereby gain market share at the expense of the
first mover.
[10]
The Commission’s investigation also revealed that, since the
industry had a long history of co-operation, a salient
answer to the
problem of market attrition was an agreement between competitors as
to price increases and their timing. The Commission’s
investigation further revealed, that there was a well understood
relationship that existed between the respondent firms, manifested
in periods of cooperation that occasionally break down and
usher in periods of price competition which then give rise to
renewed agreements to avoid the commercial attrition of unbridled
rivalry.
[11]
In setting out the scene in which the cartel’s
modus
operandi
operated, the Commission
points out that the South African milled white maize market may be
divided into regions by reason of
the manner in which firms
operating in this market organise their business activities. Amongst
these regions are the KwaZulu-Natal,
Western Cape, Eastern Cape,
Northern Gauteng (comprising the North of Johannesburg and
Pretoria), Gauteng Region (comprising
Johannesburg and
surroundings), Mpumalanga, Limpopo, Free State and Northern Cape.
[12]
According to the Commission, meetings took place at a national and
regional level. For various reasons, the agreements which
were
concluded at these meetings operated at a national level. First, all
the meetings, whether held at a national level or regional
level,
occurred in a national market and hence the agreements concluded are
agreements within this market. Second, the agreements
concluded at
these meetings were used to secure co-ordination at both a regional
and national level. Third, meetings took place
at a national as well
as at a regional level, and these were mutually reinforcing. The
agreements that were concluded at a national
level were then
conveyed through to a regional level, particularly through those
firms that had a national presence and this
informed the regional
agreements. This was also reinforced through the designated
chairpersons of each of the regions, some of
which chairpersonships
were fixed and others rotated.
[13]
The Commission points out that, even though these agreements were
struck over a period of time (1999 to at least January
2007) and
took place in different regions, they all formed part of a
continuing course of conduct. In other words, they were
simply part
of a set of arrangements and understandings by the respondents, who
chose to determine key aspects of their conduct
by reference to
agreement rather than competition. Put differently, the regional
agreements were not discrete agreements with
different adherents but
were part of the execution of a national, continuing agreement with
the same participants, the same procedures
and the same common
object, namely to establish a mechanism for fixing prices and other
trading conditions over a period of several
years.
[14]
The Commission says the respondents were able to meet from time to
time in respect of price, not on the basis that each regional
agreement was entirely independently from every other regional
agreement, but rather that the respondents were in a relationship
with one another in terms of which they agreed that they could, from
time to time, in their respective regions, enter into agreements
governing price. At these meetings, Pioneer Foods, Premier Foods and
Tiger Brands were represented by their respective employees.
[15]
According to the Commission, the cartel arrangements endured until
at least January 2007, although the Commission’s
investigation
revealed that it may have continued after that date, given the
pervasive nature of the conduct and the extended
period of time over
which it took place. The Commission points out that the respondents
also communicated by telephone to discuss
price fixing and other
trading conditions.
[16]
The Commission alleges that the sole purpose of these meetings was
to reach agreements in terms of which Premier Foods, Tiger
Brands,
Pioneer Foods, Foodcrop and Pride Milling represented as aforesaid,
would eliminate competition between themselves by
fixing their
selling prices and other trading conditions. It contends that these
agreements contravened section 4 (1) (b) (i)
of the Act and had the
effect of substantially preventing or lessening competition in the
market.
[17]
On 2 October 2009 the Commission expanded its investigation so as to
include
inter alia
Paramount, as its investigation relating to the first complaint
revealed that Paramount and other named firms
11
were also players in the industry who were party to the collusion in
that they attended the meetings and discussions where
these
agreements were reached’
[18]
It is significant to note that the Commission alleges in the second
initiation statement that Paramount and other respondents
were
engaged in the following conduct:
Fixing
of prices of wheat and maize products;
Creating
uniform prices lists for wholesalers, retail and general trade
customers;
Agreeing
not to use exact pricing in an effort to “
fool
customers”,
and
Agreeing
the timing of price increases and implementation dates.
[19]
In the amended initiation statement filed by the Commission on 24
March 2010, the Commission alleges
inter
alia
that Paramount together with
other firms had during the period 1997 to 2007 held meetings and/or
discussions, to discuss, inter
alia the conduct referred to in the
second initiation statement.
Complaint
Referral
[20]
On 31 March 2010, the Commission referred a complaint to the
Tribunal against the seventeenth respondents, including Paramount,
alleging that the respondents operated a cartel in milled white
maize meal in contravention of section 4 (1) (b) of the Act.
[21]
The gist of the Commission’s complaint is that, during the
period 1999, until at least January 2007, the respondents,
acting
through their respective representatives and/or employees, engaged
in cartel activities in milled white maize in that
they
telephonically and in meetings, directly fixed the selling price of
milled white maize products to their customers as well
as agreed on
the implementation dates of such price increases.
[22]
In the complainant referral the Commission sought
inter
alia
an order declaring that the
respondents were involved in ongoing price fixing agreements or
engaged on concerted practices in
respect of fixing maize and other
trading conditions in the Republic in the period 1999 to at least
January 2007 in a blatant
contravention of section 4 (1) (b) (i) of
the Act as well as levying an administrative penalty on each of the
respondents of
10% of the respondents’ total annual turnover
for the 2009 financial year.
[23]
In the alternative and to the extent that the agreements are found
to have been separate regional agreements, the Commission
sought the
same declaratory relief and administrative penalty for each regional
agreement to which each respondent is found to
be party.
[24]
It is common cause that, as regards Paramount, the facts, upon which
the Commission relied for the contention that Paramount
engaged in
prohibited conduct, are pleaded as follows in the founding
affidavits in support of the complaint referral:
“
93.
As I indicated earlier, the respondents did not only fix prices and
other trading conditions in meetings, but also did so
telephonically
such as in the following instances:
............
93.3.
during the period 2001 to September 2006, Gary O’Brien, Tiger
Brands’ regional Customer Manager, Eastern Cape,
had numerous
telephonic conversations with Phillip Poctier from Premier Foods,
Grant Smith from Pioneer Foods and Bruce Spanyard
from Paramount
Mills during which they exchanged information about their pricing
structures, fixed the selling prices of their
maize meal products as
well as the timing of future price increase”
[25]
Furthermore, it is common cause that, on 16 April 2010, Paramount,
through its legal representatives, requested a copy of
the original
complaint and initiation statement in order to ascertain the factual
basis and evidential basis of the complaint
against it. In reply
thereto, the Commission, through its attorneys of record, refused
Paramount’s request, contending
that, as far as it was
concerned, Paramount had been furnished with all material facts and
points of law relevant to the complaint
in the referral affidavit.
Not satisfied with the response, Paramount served a notice in terms
of Rule 35 (12) and (14) of the
Uniform Rules of Court, in terms of
which it called upon the Commission to produce for inspection and to
make copies of documents
referred to in the Commission’s
founding affidavit.
[26]
On 26 May 2010, the Commission’s attorneys wrote to
Paramount’s attorneys
inter
alia
enclosing the initiation
statements of 19 March 2007, 2 October 2009 and 24 March 2010.
[27]
In its answering affidavit filed on 8 June 2010, Paramount denied
its participation in any cartel meetings with the major
market
players. It also denied reaching any agreement or understanding or
engaging in any concerted practice, relating to price
with the major
market players.
[28]
In response to the allegations in paragraph 93.3 Mr Spanjaard who
deposed to Paramount’s answering affidavit says:
“
8.3.
It is true that Paramount attended the following meetings at which
representatives of the major market players were present:
8.3.1.
A meeting in 1999 at the Buffalo Club in East London, attended by
Immelman, Chris Barnes of Premier (“Barnes”)
and Gordan
Anderson of Algoa Roller Mills, a wheat miller based in Port
Elizabeth (“Algoa”)(“Anderson”).
Anderson
invited me to attend. He is not a representative of one of the major
market players and, to the best of my knowledge,
was
only engaged in milling
flour, not maize, at the time. I recall that we discussed that
year’s wheat crop condition and size,
the impact on the wheat
crop of weather conditions, products damage and returns,
uncreditworthy customers, pallet control, Safex
and transport. At
the time, Paramount was not milling maize, only wheat I do not
recall that we discussed price of any product;
8.3.2.
A meeting in 1999 between myself and Barnes at my office when Barnes
introduced himself to me as the East London mill manager
for Tiger.
No commercially sensitive information was discussed;
8.3.3.
A Meeting in 2001 at which representatives of Tiger, Premier,
Pioneer and Algoa were present at St George’s Park
in Port
Elizabeth. Again, Anderson invited me to the meeting. The meeting
was called off when I arrived. I suspect it
was
abandoned because I had
arrived. I
was
not invited to another
meeting of this type and, other than as set out below,
was
not advised of the outcome of
this or another similar meeting by telephone; and
8.3.4.
Regular social golf days in which representatives of most of the
milling companies participated. No commercially sensitive
information was discussed.
8.4.
With respect to telephone calls between the respondents, I have
caused a search of Paramount’s telephonic system to
be
undertaken in order to ascertain the number and frequency of
telephone calls made from Paramount’s telephone system
and my
cellular telephone to O’Brien. The telephone system contains a
record of calls made from 2004 to date.
8.4.1.
The search revealed a total of 12 telephone calls with O’Brien
over the entire six-year period 2004 to date.
8.4.2.
In November 2004, Paramount bought bran from Tiger in five
arms-length transactions concluded on commercial terms. In
Paramount
tried to purchase bran from Tiger again. This explains certain of
these 12 telephone calls.
8.4.3.
Moreover, the calls in October and November 2006 can be explained by
the fact that Tiger
was
rumoured to be considering
restarting or selling its East London mill, which had ceased
operations in February 2006, Paramount
was interested in these
developments, as well as in hiring staff retrenched when the mill
closed. I therefore called O’Brien
to ascertain both what was
likely to occur with the mill operation and to obtain
recommendations about retrenched employees.
I never discussed or
agreed pricing during these conversations with O’Brien”.
[29]
Thereafter, on 7 October 2010, Paramount’s attorneys wrote to
the Commission urging it to withdraw the complaint referral
against
it on the ground that the Commission had failed to make out a
prima
facie
against Paramount from either
the founding affidavit or the complaint referral and that there was
no basis in law or fact for
Paramount to remain a respondent in the
pending proceedings. Paramount relied on Woodlands matter
2
in its representation to the Commission. The Commission refused to
withdraw its complaint referral against Paramount contending
that it
believed that it had sufficiently and properly pleaded the complaint
referral so as to establish a
prima
facie
case against Paramount.
Paramount’s
case before the Tribunal
[30]
Paramount approached the Tribunal for an order dismissing the
referral complaint by the Commission against it on the grounds
that
the complaint is not legally competent because it does not meet the
test of legality and intelligibility (“the legality
test”)
and that the complaint referral is time barred because Paramount is
only implicated in the telephone calls in September
2006 and the
Commission was precluded from initiating an investigation into that
conduct by operation of section 67 (1) of the
Act (“the
prescription point”).
[31]
The Tribunal dismissed Paramount’s argument based on legality
test, holding that there was sufficient information in
the
Commission’s founding affidavit filed in support of a
complaint referral to enable Paramount to understand the case
against it and to answer it. It reasoned that, as a matter of
pleading, if Paramount found the Commission’s referral to
be
inadequate it should have objected to it and the Commission would
have an opportunity to rectify it.
[32]
The Tribunal pointed out that it has a discretion to manage and
conduct its own proceedings. It held that it is entitled
to utilise
its inquisitorial powers to request further evidence in appropriate
circumstances as its proceedings are
sui
generis.
[33]
In relation to the prescription point, the Tribunal held that it was
not properly pleaded and it dismissed it. It went on
to hold that
the prescription challenges can only be determined after evidence
has been led and the facts are fully ventilated.
It reasoned that to
decide the prescription issue only on the basis of legal argument,
and not through a factual enquiry, could
well result in the
unfortunate outcome that the party relying upon it may not get the
fullest protection of the section 67 of
the Act.
Proceedings
before this Court
[34]
Paramount’s appeal is against all of the findings and/or
rulings made by the Tribunal regarding the five points on
which its
complaint referral dismissal application was based.
[35]
When the matter was argued before this Court the dispute turned
essentially on the following questions:
(a)
whether the complaint referral is time-barred; and
(b)
whether the complaint referral is legally competent.
Time
Barred argument
[36]
Ms
Le Roux
submitted
on behalf of Paramount that the complaint referral should be
dismissed on the basis that it is time-barred as against
Paramount.
In developing her argument, Ms
Le
Roux
pointed out that Paramount is
named as respondent alleged to have contravened the Act for the
first time in the second initiation
statement, which is dated 2
October 2009, which, so Ms
Le Roux
argued, is more than three years
from the latest date, September 2006, on which the Commission
actually alleges that Paramount
engaged in conduct that constitutes
a contravention of the Act in paragraph 93.3 of the complaint
referral.
[37]
With reference to section 67 (1) of the Act, which provides that a
complaint in respect of a prohibited practice may not
be initiated
more than three years after the practice has ceased, she argued that
the prohibited practice in which Paramount
is alleged to have
engaged is the conclusion of the agreement either at the meeting or
by telephone and that a complaint in respect
of a prohibited
practice may not be initiated more than three years after the
practice has ceased.
[38]
Ms
Le Roux
submitted
that the Tribunal erred in dismissing Paramount’s argument on
the basis that Paramount had failed to show that
the prohibited
practice had ceased in 2006. She argued that this allocation of
onus
to Paramount was absurd as it is not Paramount but the Commission
that alleges that the prohibited conduct had ceased in 2006.
[39]
By contrast Mr
Unterhalter,
who
appeared with Mr
Shozi
on
behalf of the Commission, submitted that Paramount’s time bar
objection has to be dismissed as it was not properly pleaded,
both
in its answering and founding affidavits. As far as the answering
affidavit is concerned, he pointed out that Paramount
dealt with the
time bar objection in very terse terms, describing it only as a
“
preliminary matter”.
As regards the founding affidavit Mr
Unterhalter
pointed out that the time bar
objection was mentioned blithely in the last sentence of paragraph
7. He submitted with reference
to section 67 (1) of the Act that the
prohibited practice ceases when the agreement has been fully
implemented. He argued that
the phrase “
practice
”
appearing in section 67 (1) must be given a broader definition and
includes not only the conclusion of the agreement but
also the
implementation thereof.
[40]
The Tribunal dismissed Paramount’s prescription point on the
ground that Paramount had failed to place evidence in
its answering
affidavit showing that the conduct had ceased in 2006. The Tribunal
held that a party who wishes to rely upon the
provisions of section
67 (1) must put up some facts, which would ordinarily be within its
own knowledge, to show that such conduct
had ceased.
[41]
Secondly, the Tribunal dismissed the prescription challenge on the
ground that it can only be determined after evidence has
been led
and the facts fully ventilated. In the view of the Tribunal to
decide prescription issue only on the basis of legal
argument, and
not through a factual enquiry, could well result in the unfortunate
outcome that a party relying upon it may not
get the fullest
protection of the section.
[42]
In my view the Tribunal’s findings cannot be faulted. The
suggestion by Paramount that the determination of the prescription
challenge must be made by having regard to the allegations contained
in paragraph 93.3 of the Commission’s complaint referral,
is
not correct.
[43]
Firstly, the Commission’s pleaded case is that the
respondents’ conduct persisted up until at least January 2007,
but may “
have continued after
that date, given the pervasive nature of the conduct and the
extended period of time over which it took place"
which in my view is a clear indication that the prohibited conduct
in which Paramount is alleged to have participated is not
confined
to the events which occurred up until September 2006.
[44]
Secondly, it is clear, upon a proper reading of paragraph 93.3, that
the prohibited conduct which is pleaded and in which
Paramount is
alleged to have participated is the fixing of the selling prices of
maize meal products and the timing of future
price increases. As
correctly pointed out by Mr
Unterhalter,
the prohibited conduct does not end
or cease with the conclusion of the agreement fixing the selling
price. It continues to exist
and its effect continues to be felt
when the future prices, agreed upon pursuant thereto are
implemented. It is therefore not
proper to read the allegations in
paragraph 93.3 of the affidavit in support of the complaint referral
as if they related to
conduct which in terms of time has already
ceased to exist.
[45]
Thirdly, Paramount’s prescription challenge is not
specifically pleaded as required by Rule 16 (4) which requires the
respondent to set out in its answering affidavit the material facts
upon which its plea is based. In para 7 of the founding affidavit
filed in support of the application to dismiss the complaint
referral, Paramount in pleading prescription merely says
“
critically, the initiation
statement raises the likelihood that the allegations against [it]
are time-barred’.
It does not
provide factual material to support this statement. In any event, on
its own version as set out in para 8.4.3 of
its answering affidavit,
Spanjaard made the telephone calls in October and November 2006.
These are the calls which the Commission
alleges were made for the
purposes of discussing
inter alia
the fixing of prices of wheat and maize products. The fact that
telephone calls were made during the relevant period is therefore
not in dispute. What is disputed by Paramount is the purposes for
which Spanjaard made these calls. It is therefore clear, even
on
Paramount’s version, that the prohibited conduct, in which it
is alleged that it participated, could not have become
prescribed by
the time that the Commission filed its complaint referral. The
prescription challenge must therefore fail.
The
complaint referral is not legally competent
[46]
The second basis on which Paramount seeks the dismissal of the
complaint referral is that it is not legally competent since
it
fails to properly state a valid claim against Paramount and there is
no evidentiary basis for its continued prosecution before
the
Tribunal.
[47]
Paramount advances two grounds upon which it seeks the dismissal of
the complaint referral on this basis. First, it contends
that the
complaint referral does not contain
prima
facie
evidence of Paramount’s
violation of the Act and secondly, that it fails to pass muster in
terms of the
Woodlands
3
test, which requires the Commission to, at the very least, have been
in possession of information concerning an alleged practice,
which,
objectively speaking could give rise to a reasonable suspicion of
the existence of a prohibited practice and without which
there could
not be a rational exercise of the powers of Commission to
investigate, refer and prosecute complaints before the
Tribunal.
[48]
When the matter was argued before us, Ms
Le
Roux
abandoned the first ground on
which the dismissal of the complaint referral was sought by
Paramount and confined her arguments
to the second ground, namely
that the complaint referral fails to pass the
Woodlands
test.
[49]
Ms
Le Roux
submitted
that the complaint referral standing alone fails the
Woodlands
test of legality and intelligibility in that it does not contain
sufficient specificity to cognise Paramount of any section 4
(1) (b)
case against it. She argued that the complaint referral, when read
with the answering affidavit, does not establish a
prima
facie
case and therefore it should
be dismissed. She pointed out that the allegations in paragraph 93.3
of the Commission’s founding
affidavit in support of the
complaint referral cannot sustain a valid complaint against
Paramount in that they describe the conduct
that is alleged to have
ceased by September 2006 and is time- barred and they fail to state
in what conduct Paramount and its
representative Bruce Spanjaard, is
alleged to have engaged.
[50]
She urged this Court in deciding the dismissal application in light
of
Woodlands
test to consider, firstly, the status of the affidavits in referral
proceedings before the Tribunal, namely whether they are
pleadings
or rather are evidence akin to that considered in application
proceedings and secondly, whether deficiencies in the
affidavits can
be cured by the delivery of witness statements or receipts of
evidence through discovery and testimony later,
during the course of
Tribunal proceedings.
[51]
In relation to the first question Ms Le Roux submitted that the
affidavits in referral proceedings must satisfy the
Woodlands
test and must make out a valid and proper case against a named
respondent on their face. Relying on the authority of
Loungefoam
4
,
she submitted that the Tribunal proceedings are equivalent to motion
or application proceedings in the High Court
5
and that being the case, she argued, if the complaint referral and
answering affidavits before the Tribunal do not make out a
prima
facie
case, the complaint referral
must be dismissed. She emphasised that the affidavits in the
referral proceedings must comply with
the provisions of the Tribunal
Rules 15, 16, and 17
6
.
She submitted that the
Plascon-Evans
7
rule applies to complaint referral proceedings and that being the
case, then in the event of there being a factual dispute, the
matter
must be decided on the basis of Paramount’s version.
[52]
In relation to the second question Ms
Le
Roux
submitted that deficiencies in
the affidavits in referral proceedings cannot be cured by
subsequently delivered unsworn witness
statements. She argued that
the affidavits alone must on their face reveal a legally competent
and intelligible case against
a respondent.
[53]
Mr
Unterhalter
on
behalf of the Commission submitted that Paramount’s reliance
on Woodlands is misplaced. He pointed out that the Court
in
Woodlands
was
concerned with the jurisdictional standard that is relevant to the
initiation of complaints and provides the standard under
which one
can determine whether a complaint has been initiated in a fashion
that permits the Commission to exercise its powers
of investigation,
and in due course, a referral to the Tribunal, if necessary.
[54]
I agree with Mr
Unterhalter’s
submission. It is important to
interpret and apply the dicta in Woodlands within the specific
context of that dispute. Thus, Paramount’s
reliance on
Woodlands
as a basis for an attack on the Commission’s complaint
referral is misplaced in that in
Woodlands
the Court was not at all concerned with the content of the
Commission’s referral. In
Woodlands,
the Court was concerned firstly, with the validity of a summons that
had been issued by the Commission against the appellants
and
secondly, with the validity of the Commission’s initiation
statement. It set aside the referral because, in its view,
the
Commission’s initiation, statement and subsequent
investigation had to relate to the information available or the
complaint so filed by the complainant.
8
In other words, what was challenged in
Woodlands
was the validity of the initiation statement not the complaint
referral. In the matter before this Court, what is being challenged
is the sufficiency and adequacy of the complaint referral, in
respect of which issue, the
Woodlands
judgment holds no application.
[55]
As regards Ms
Le Roux’s
argument which seeks the dismissal
of the complaint referral on the basis that the referral affidavit
and the answering affidavits
do not make out a
prima
facie
case, Mr
Unterhalter
submitted that there was no basis
for the contention that, in circumstances where a referral was made
on the basis of an affidavit,
and an answering affidavit has been
filed, then somehow, a trial action is converted into motion
proceedings and that the Tribunal
should determine the proceedings
as if they were motion proceedings.
[56]
In arguing the matter before the Tribunal and also in this Court Ms
Le Roux relied heavily on a dictum at para 12 in
Loungefoam
supra for the contention that the Tribunal referral proceedings are
equivalent to motion or application proceedings in the High
Court.
The Tribunal rejected Ms Le Roux’s contention on two grounds,
namely, firstly, on the basis that no such decision
was made by this
Court in
Loungefoam
and secondly, that her argument ignores the fact that the Tribunal
is a creature of a statue with statutory provision empowering
it to
regulate the conduct of its proceedings.
[57]
I agree with the Tribunal’s finding that
Loungefoam
does not provide support for the contention which Ms Le Roux seeks
to advance. In
Loungefoam
supra at para 7 this Court, in the process of considering the
specific issues which were squarely before it for determination,
found it necessary to comment on the procedure which had been
adopted by the Commission in seeking to raise the issues before
the
Tribunal.
[58]
The first issue on which this Court commented related to the
amendment application in which the Commission
inter
alia
sought leave to amend its
notice of motion, the founding, supplementary and replying
affidavits in the complaint referral. The
appellants had objected to
the amendment, contending that it is not competent in law for a
deponent to amend an affidavit. In
response to the objection, the
Commission contended that it was entitled to amend its affidavits on
the ground that “
the
objections to amendments to affidavits in ordinary motion
proceedings in a Court of law do not apply. A founding affidavit
in
a complaint referral is not required to contain evidence in support
of allegations of prohibited practices”.
[59]
This Court rejected the Commission’s contention. It held in
para 12:
“
An
affidavit in competition proceedings has precisely the same
character as it has in any other circumstances. It is a sworn
statement on oath by a witness that is required by Rule 15 (2) to
set out a concise statement of the grounds of the complaint
and the
material facts and points of law relevant to the complaint and
relied on by the Commission. It serves the same purpose
as an
affidavit in application proceedings, which contains both the
allegations necessary in a pleading, including any relevant
propositions of law and the essential evidence in support of those
allegations. ”
[60]
This
dictum
makes it clear that this Court was concerned with the nature of the
affidavits in complaint referral proceedings before the Tribunal
but
not with the nature of the complaint referral proceedings . It does
not support a conflation of motion proceedings in general
and
proceedings before the Tribunal. This Court made it clear that an
affidavit in the Tribunal referral proceedings has the
same
character as it has in any other circumstances, which means that it
must contain factual averments that are sufficient to
support the
cause of action on which the relief that is being sought is based.
The fact that an affidavit in Tribunal referral
proceedings has the
same character as it has in motion proceedings does not mean that
the proceedings before the Tribunal, subsequent
to a referral are
akin to motion proceedings. The procedure for the adjudication of
the disputes in referral proceedings is different
to that used in
motion proceedings. The role of the Tribunal in the adjudication of
disputes in referral proceedings is set out
in sections 52
9
and 55
10
of the Act which
inter alia
require the Tribunal to conduct its hearings as expeditiously as
possible and in accordance with the principles of natural justice.
[61]
As regards the role of the Tribunal in the adjudication of
competition disputes, this Court made it clear in
Senwes
v The Competition Commission of South Africa
11
that
the Act does not view the Tribunal as functioning in the same way as
would an ordinary Court, inflexibly constrained by an
adversarial
model of adjudication. It held that
“
while
a party against whom a complaint has been lodged, is clearly
entitled to sufficient information to determine the nature
of the
prohibited practice,..., the enquiry as to the requisite level of
understanding should not be sourced in the principles
which apply to
the nature of adversarial proceedings employed in a civil case”.
I agree entirely with this statement. In
the circumstances, the
contention that the competition referral proceedings are akin to
motion proceedings and that by reason
thereof the adequacy of the
information in the affidavits in the referral proceedings should be
determined in terms of the principles
which apply to motion
proceedings, should fail.
[62]
Responding to Ms Le Roux submission that the deficiencies in the
affidavits in the referral proceedings before the Tribunal
cannot be
cured by subsequently delivered witness statements, Mr Unterhalter
submitted that the question as to whether witness
statements can
cure a pleading is, in effect, to ask a fundamentally wrong question
to ask because this is not a question of
jurisdiction. He argued
that the question should be whether the Commission has pleaded with
sufficient particularity to enable
Paramount to plead to the
complaint referral. He submitted that in the present case, the
Commission pleaded with sufficient particularity
to enable Paramount
to understand the allegations against it and to plead thereto.
[63]
I agree with Mr Unterhalter. If Paramount felt that it was in any
disadvantaged by reason of the manner in which the complaint
referral was formulated it was open to it to raise an objection or
request further particulars before filing its answering affidavit.
The cause of complaint could have been removed by means of a request
for further particulars.
[64]
In any event, the suggestion by Ms Le Roux that the witness
statements cannot cure deficiencies in the affidavits in the
complaint referral proceedings, is not correct. The answer to her
submission is to be found in the decision of the Tribunal in
Pioneer
Foods (Pty) Ltd v The Competition Commissioner
50/CR/MAY08 where at in
Pioneer
Foods (Pty) Ltd v The Competition Commissioner
50/CR/MAY08 where at para 49 it had this to say regarding the role
of witness statements in the referral proceedings:
“
In
this matter no case has been made out. Firstly, the pleadings have
given Pioneer more than sufficient detail on meetings that
its
representatives were alleged to have attended. But most importantly
Pioneer will receive all the Commission’s witness
statements
on an agreed date, prior to the commencement of the hearing. It will
thus, as the Commission points out, have more
information about the
hearing than parties would ordinarily enjoy in Court proceedings”.
[65]
It is clear from this
dictum
that, contrary to Ms Le Roux’s contention, witness statements
have an important supplementary role to play in the complaint
referral proceedings before the Tribunal. Besides playing this
supplementary role, in my view, they also have an important purpose
to serve, namely, to give the other party such information about a
party’s evidence as will remove the element of surprise.
Order
[66]
I accordingly make the following order:-
The
appeal by Paramount is dismissed with costs, such costs to include
the costs of two counsel, where two counsel were employed.
ZONDI
JA
I
agree
DAMBUZA
JA
I
agree
DAVIS
JP
1
'4
Restrictive horizontal practices prohibited
(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...
2
Woodlands
Dairy (Pty) Ltd v Competition Commission
2010
(6) SA 108
(SCA)
3
At
para 20 and 35
4
Loungefoam
(Pty) Ltd and Others v Competition Commission of South Africa
102/CAC/Jun10
(6 May 2011).
5
Hart
vPinetown Drive-In Cinema (Pty) Ltd 1972(1) SA 464 (D) at 469 C- E.
Quoted with approval in Radebe v Eastern Transvaal Development
Board
1988 (2) SA 785
(A) at 796 D-E.
6
15.
Form of Complaint Referral
(
1
)...
(2)
Subject to Rule 24 (1), a Complaint Referral must be supported by an
affidavit setting out in numbered paragraphs -
(a)
a concise statement of the grounds of the complaint; and
(b)
the material facts or the points of law relevant to the complaint
and relied on by the Commission or complaint, as the case
may be...
16. Answer
(1)...
(4)
Any other Answer must be in affidavit form, setting out in numbered
paragraph -
(a)
a concise statement of the grounds on which the Complaint Referral
is opposed;
(b)
the material facts or points of law on which the respondent relies;
and
(c)
an admission or denial of each ground and of each material fact
relevant to each ground set out in the Complaint Referral.
(5)
An allegation of fact set out in the Complaint Referral that is not
specifically denied or admitted in an Answer will be deemed
to have
been admitted.
(6)
In an answer, the respondent must qualify or explain a denial of an
allegation, if necessary in the circumstances.
17. Reply
(1)..
(2)
A reply must be in affidavit form, setting out in numbered
paragraphs -
(a)
an admission or denial of each new ground or material fact raised in
the Answer; and
(b)
the position of the replying party on any point of law raised in the
Answer.
(3)
If a person who filed a Complaint Referral does not file a Reply,
they will be deemed to have denied each new issue raised
in the
Answer, and each allegation of fact relevant to each of those
issues.
7
Plascon-Evans
Paints Ltd v Van Riebeeck Paints (Pty) Ltd
[1984] ZASCA 51
;
1984 3 SA 623
(A) 635
(“It is correct that, where in proceedings on notice of
motion disputes of fact have arisen on the affidavits,
a final
order, whether it be an interdict or some other form of relief, may
be granted if those facts averred in the applicant’s
affidavits which have been admitted by the respondent, together
with the facts alleged by the respondent, justify such an order.
The power of the court to give such final relief on the papers
before it is, however, not confined to such a situation. In
certain
instances the denial by respondent of a fact alleged by the
applicant may not be such as to raise a real, genuine or
bona fide
dispute of fact.”)
8
At
para 34
9
2.
Hearings before Competition Tribunal
(1)
The Competition Tribunal must conduct a hearing, subject to its
rules, into every matter referred to it in terms of this Act.
(2)
Subject to subsections (3) and
(
4
),
the
Competition Tribunal -
(a)
must conduct its hearings in public, as expeditiously as possible,
and in accordance with the principles of natural justice;
and
(b)
may conduct its hearings informally or in an inquisitorial manner.
(2A)
Despite subsection (2) (a), the Chairperson of the Tribunal may
order that matter be heard-
(a)
In chambers, if no oral evidence will be heard, or that oral
submissions be made at the hearings; or
(b)
By telephone or video conference, if it is in the interests of
justice and expediency to do so.
(3)
Despite subsection (2), the Tribunal member presiding at a hearing
may exclude members of the public, or specific persons
or categories
of persons, from attending the proceedings-
(a)
if evidence to be presented is confidential information, but only to
the extent that the information cannot otherwise be protected;
(b)
if the proper conduct of the hearing requires it; or
(c)
for any other reason that would be justifiable in civil proceedings
in a High Court.
(
4
)
At
the conclusion of a hearing, the Commission Tribunal must make any
order permitted in terms of this Act, and must issue written
reasons
for its decision.
(5)
The Competition Tribunal must provide the participants and other
members of the public reasonable access to the record of
each
hearing, subject to any ruling to protect confidential information
made in terms of subsection (3) (a).
10
55
.
Rules
of procedure
(1)
Subject to the Competition Tribunal’s rules of procedure, the
Tribunal member presiding at a hearing may determine any
matter of
procedure for that hearing, with due regard to the circumstances of
the case, and the requirements of section 52 (2).
(2)
The Tribunal may condone any technical irregularities arising in any
of its proceedings.
(3)
The Tribunal may
-
(a)
accept as evidence any relevant oral testimony, document or other
thing, whether or not -
(i)
it is given or proven under oath or affirmation; or
(ii)
would be admissible as evidence in court; but
(b)
Refuse to accept any oral testimony, document or other thing that is
unduly repetitious.
11
87/CAC/FEB09
at paras [39]
and [40]