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[2011] ZACAC 5
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Monsanto South Africa (Pty) Ltd and Another v Bowman Gillfillan and Others (109/CAC/JUN11) [2011] ZACAC 5 (18 August 2011)
IN THE COMPETITION APPEAL
COURT OF SOUTH AFRICA
REPORTABLE
CASE NO: 109/CAC/JUN11
In the matter between:
MONSANTO SOUTH AFRICA (PTY)
LTD
….................................................................................
First
Appellant
MONSANTO INTERNATIONAL, SARL
…................................................................................
Second
Appellant
and
BOWMAN GILLFILLAN
….........................................................................................................
First
Respondent
PIONEER HI-BRED INTERNATIONAL
….............................................................................
Second
Respondent
PANNAR SEED (PTY) LTD
…...................................................................................................
Third
Respondent
CORAM:
D M DAVIS JP et D H ZONDI AJA et T NDITA AJA
JUDGMENT
BY: DAVIS JP
FOR
THE APPELLANTS: ADV GAUNTLETT (SC), ADV M DU PLESSIS & ADV A
COUTSOUDIS
INSTRUCTED
BY: NORTANS INCORPORATED
FOR
THE FIRST RESPONDENT: ADV D U
P
VAN DER NEST (SC) & ADV N J GOVE (SC)
INSTRUCTED
BY: BOWMAN GILLFILLAN INC
FOR
THE SECOND RESPONDENT: ADV D N UNTERHALTER (SC), ADV CE WATT-PRINGLE
(SC) & ADV MM LE ROUX
INSTRUCTED
BY: EDWARD NATHAN SONNENBERGS
DATE
OF HEARINGS: 12 AUGUST 2011
DATE
OF JUDGMENT: 15 AUGUST 2011
JUDGMENT
109/CAC/JUNE
11
IN THE COMPETITION APPEAL
COURT OF SOUTH AFRICA
Reportable
CASE
NUMBER
:
109/CAC/JUN11
DATE
:
18 AUGUST 2011
In the matter between:
MONSANTO
SOUTH AFRICA (PTY) LTD
….................................................
1
st
Appellant
MONSANTO
INTERNATIONAL SARL
….....................................................
2
nd
Appellant
and
BOWMAN
GILFILLAN
….........................................................................
1
st
Respondent
PIONEER
HI BRED INTERNATIONAL INC
…..........................................
2
nd
Respondent
PANNAR
SEED (PTY) LTD
….................................................................
3
rd
Respondent
J UD G M E N T
DAVIS, JP
First respondent acted as
appellant's attorney for approximately 12 years. In January 2009.
appellant asked first respondent whether
it could give advice in
regard to certain competition issues. First respondent replied that
it was unable to do so, because of
a conflict of interest. It is
common cause that, after that date, appellant never gave a
competition law instruction to first
respondent, but chose to engage
its present competition solicitors, Norton Inc.
It appears that during 2008,
first respondent had begun to act for second respondent in its bid
to acquire third respondent. In
July 2010. a process of engagement
was initiated with the Competition Commission ('Commission')
concerning a proposed merger
of second and third respondents . On 15
September 2010, the Commission was notified through first respondent
of a proposed intermediate
merger transaction between second and
third respondent. On 7 December 2010. the Commission decided to
prohibit the proposed merger
On 20 December 2010. first respondent
lodged an appeal to the Competition Tribunal against this decision.
According to appellants'
attorneys, Norton's, a member of whom had attended the Competition
Tribunal's merger prehearing
conference on behalf of appellant,
they were alerted to the involvement of first respondent in the
merger between second and
third respondent on 17 January 2011. A
series of correspondence was then generated between Norton's and
first respondent, which
culminated in a letter on 10 February 2011
in which first respondent wrote to indicate that it considered that
it was not precluded
from so acting for the merging parties.
On 15 March 2011, appellant
brought an application in the High Court couched in the following
terms:
To interdict the first
respondent from continuing to act or advise or otherwise assist the
second and third respondents in connection
with any merger or
proposed merger between them, including, but not limited to the
proceedings before the Competition Tribunal
under case 81/AM/Dec
10."
On 28 March 2010 an application
was brought by appellants before the Competition Tribunal, the
relief being framed as follows:
"Pending the final
determination of the interdict application launched by the
applicants against the respondents in the South
Gauteng High Court
under case number (11/10960). the merger proceedings before the
Competition Tribunal are hereby stayed."
The
Tribunal's Decision
:
It appears that the respondents
argued before the Tribunal that the dispute relating to the role of
first respondent in the merger
fell under the exclusive jurisdiction
of the Tribunal and accordingly the application, to which I have
made reference, should
not have been brought before the High Court.
The Tribunal found that the High Court had not been asked to
determine the merger
proceedings and that ''to the extent that the
resolution in this matter may have impacted on our processes, it is
incidental".
The Tribunal, therefore, considered that the High
Court enjoyed concurrent jurisdiction in respect of the relief
sought and it
dealt with the stay application on this basis.
The Tribunal
then approached the application for stay in terms of a test, which
had been set down in
Novartis
SA (Pty) Ltd v Main Street 2 (Ptv) Ltd
(2)
[2001-2002]
CPLR 470
(CT):
1. Whether the applicant has
reasonable prospects of success in the High Court.
2. Whether it is in the
interest of justice to stay the proceedings.
3. The balance of convenience.
The Tribunal found that there
had been no South African decision which had dealt with this kind of
conflict of interest, which
it suggested was based on a commercial
as opposed a legal interest. Accordingly;
"The legal policy issues
which are raised in this application will be novel for a South
African court (and therefore) the
prospect of success are by no
means certain."
It went on to emphasise that
the application to the High Court had not been brought on an urgent
basis, even though the applicants
would have been aware of the fact
that the merger hearing had been set down for 12 September 2011 and
merger proceedings inherently
require an expeditious decision.
Furthermore, on the papers, the
Tribunal was not satisfied that the appellants had showed a
significant degree of harm which would
have been caused by the
continuation of the merger proceedings. By contrast, a stay would
cause substantial prejudice to second
respondent, in that there
would then be no certainty as to when the merger hearings could be
conducted. For this reason, the
Tribunal dismissed the application.
Appellants'
Case
:
Mr
Gauntlett
,
who appeared, together with Mr
Du
Plessis
and
Mr
Coutsoudis
for
appellants, submitted that this court should approach this dispute
on the basis of a test formulated by the
House
of Lords in American Cyanamid Co v Ethicon Ltd
[1975] 1 ALL
ELR 504 (HL), which had, found favour with the majority in
Ferreira
v Levin NO
1995
(2) SA 813
(W) at 824-825. This test was set out by Lord
Diplock
at 501 as
follows:
"The
use of such expressions as a probability*, a
prima
facie
case'
or a strong
prima
facie
case'
in the context or the exercise of a discretionary prior to granting
an interlocutory injunction, leads to confusion as to
the object
sought to be achieved by this form of temporary relief. The court no
doubt must be satisfied that the claim is not
frivolous or
vexatious: in other words, that there is a serious question to be
tried.
It is no part of the court's
functions at this stage of the litigation to try to resolve
conflicts of evidence on affidavit as
to facts on which the claims
of either party may ultimately depend, nor to decide difficult
questions of law which call for detailed
argument and mature
considerations...
So unless the material
available to the court at the hearing of the application for an
interlocutory injunction fails to disclose
that the plaintiff has
any real prospect of succeeding in his claim for a permanent
injunction at the trial, the court should
go on to consider whether
the balance of convenience lies in favour of granting or refusing
the interlocutory relief that is
sought."
On the basis
of this test, Mr
Gauntlett
submitted
that the nub of the inquiry was:
Whether the interdict
application in the High Court raised a serious issue to be
determined.
On the basis that it did raise
a serious issue, the balance of convenience then favoured the
granting of the stay. On this basis,
he submitted that the Tribunal
ought to have refused the stay application only if it found that
the interdict application was
frivolous or vexatious, or that there
were clearly no prospects of success.
Applying
this approach to the facts, Mr
Gauntlett
contended
that for over 12 years first respondent had acted as appellants"
attorneys in a variety of matters, including commercial,
competition, regulatory and intellectual property work and had
received more than R6 million in legal fees. In mid 2008, first
respondent accepted an instruction to provide legal advice on
various aspects of a merger between second and third respondents,
including corporate, regulatory and competition law without at any
time informing appellant that it had accepted this particular
instruction.
On the basis of the
relationship between appellant and first respondent, appellant
provided five examples of the type of confidential
information which
had been given by appellants to first respondent during the former's
role as the latter's attorneys. Accordingly
appellants contend that
these examples illustrate that first respondent was possessed of
confidential information, that the information
was still
confidential and that it was relevant to the present merger
proceedings. Briefly the five cases are the following:
1. From December 1999 to
February 2000, first respondent advised and prepared a merger
notification in relation to appellants'
merger with Sensako.
2. During 2007 and 2008, first
respondent advised appellant on its wheat business, which was known
as Project Baker First respondent's
advice in this regard was, in
the appellants' view, wide ranging, including tax, corporate,
employment, pension fund, intellect
for property and competition law
aspects.
3. In January 2009, appellant
telephonically requested advice on a licensing of a new biotech
trait they had introduced into South
African. Apparently, first
respondent refused to give advice, because of what it said was a
conflict of interest, but not before
requesting that appellant send
an e-mail setting out the information upon which the advice would be
based.
4. In February 2009, Mr Parker,
a director of first respondent, held a meeting with appellants'
chief deputy general counsel from
the United States of America, and
associate general counsel, Europe, Middle East and Africa. Mr Parker
was informed about sensitive
and confidential business issues, the
potential impact on appellants' business, including a discussion
concerning appellants'
competitive position regarding the second and
third respondents. It further asked for regulatory and legal advice
in respect
of maize projects.
5. In August 2010, first
respondent provided advice on and preparation of a necessary
response in relation to a request for access
to a Research and
Development Agreement between appellants and third respondent that
was sought by the African Centre for Biosafety.
In summary, appellants contend,
on the basis of these five cases which are the only material
averments about confidentiality that
they have set out in their
papers, that information had been imparted in confidence in the
course of a fiduciary relationship
and, if this information came
into possession of a third party, it could be potentially used to
the disadvantage of appellants.
Accordingly appellants had a right
to be protected.
In support
of this factual set of averments, Mr
Gauntlett
cited a
decision in
Marks
& Spencer Group PLC v Freshfields Bruckhaus Derinqer
[2004] EWCA
Ci (V) 741.
In brief,
Freshfields
had sought
to act for a group of organisations who were a consortium which had
made an offer for
Marks
& Spencer
.
The Court of Appeal held that, given the fact that
Freshfields
had acted as
solicitors for
Marks
& Spencer
,
a clear conflict was present. In coming to this conclusion, the
Court of Appeal said the following at para 28:
"Freshfields have dealt
with the majority of Marks & Spencers high end - and complex
litigation and other commercial
and employment matters. They are,
therefore, in possession of confidential information relating to
pricing, supply chains, including
the terms of Marks & Spencer's
supply contracts, Marks & Spencer's pricing policy, supply
volumes and their attitude
to termination renewal. They acquired
information on logistical information.
dependency on food supply lines
at peak trading periods and the Per Una contractual terms and senior
management terms."
On the basis
of this test the court's jurisdiction to intervene was founded on
appellants' right to the protection of confidential
information, in
circumstances where an inherent conflict of interest was present,
arising from first respondent's simultaneous
representation of
appellant and second and third respondents in a merger in respect of
which first respondent could advance arguments
which stood directly
in contrast to the business interests of appellant. Appellants had,
therefore, in Mr
Gauntlett
's
view, established that first respondent possessed confidential
information which was or might be relevant to the matter and
the
disclosure to which it had not consented.
On the strenghth of this line
of argument, he contended that the burden fell on first respondent
to show that there was no risk
of disclosure. The High Court would
intervene unless it was satisfied that there was no such risk of
disclosure. The risk was
a real one. it was not fanciful or
theoretical. It need not be substantial, but in this case it was
sufficient to justify the
application which had been brought by
appellants before the High Court.
Concerning the other aspects of
the test, that is the interests of justice and the balance of
convenience, appellants contended
that a temporary delay occasioned
by allowing the High Court time to make a decision on these
important issues, was clearly outweighed
by the prejudice which
would be suffered by appellant and the concomitant damage to the
administration of justice, if the Tribunal
was to allow the merger
to continue and later the High Court was to find that first
respondent was precluded from acting for
the merging parties,
because of a conflict of interest and a risk of breaches of
confidentiality. For these reasons, appellants
contend that the
balance of convenience favoured what they referred to as a short
stay' of the merger hearings.
Respondents'
Case
:
Mr
Van
der Nest
,
who appeared together with Mr
Graves
on behalf of
first respondent, referred to the five examples employed by
appellant to justify the apprehension of a breach of
conflict of
interest. It is important to emphasise at this stage that no core
bundle was prepared in this appeal and that the
full application
papers have been placed before this court as part of the record,
indicating clearly that the only allegations
of a breach of
confidential information are the five examples to which I have
already made reference. I shall deal with first
respondent's reply
thereto in the same sequence as
I
have
set them out in summarising appellants' argument.
1. The
Sensako merger filing
:
According to first respondent this merger filing took place in 1999,
some 11 years ago, involved a failing firm, Sensako. First
respondent's answer to the allegations made by appellant was that
the information was historical and had no value at this stage.
It
contends
that the appellant, in its papers, could point to no single fact
that was confidential, is confidential and remains relevant
to the
merger.
2.
Project Baker
:
The project name of the subject matter to this complaint related to
disposal of appellants' wheat business. Preliminary regulatory
advice was given by first respondent in December 2007 and further
advice that the transaction was not notifiable to the Competition
Authority in April 2008. Appellant, in reply contended that
information made available regarding the wheat business, would now
have an impact on its maize business. In first respondent's view,
not only was this an unsustainable contention, but the entire
averment was filled with what Mr
Van
der Nest
referred
to as general statements and conclusions of so vague a nature as not
to justify any apprehension of a breach of confidentiality.
For example, in appellants'
reply affidavit the following is stated:
"Highly confidential
business strategy information was conveyed by Monsanto to Bowman
Gilfillan in respect of the South African
Seed Industry. This
confidential information was of vital strategic importance to
Monsanto and provided material insight into
the seed industry."
In short, general allegations
were made, but no concrete information was provided to justify the
conclusion that confidential
information was at risk of being
disclosed
3.
The
African Centre for Biosafetv
PAIA
request: First respondent was instructed to prepare a written
response to the request by the African Centre for Biosafety
for a
copy of the research and development agreement between appellant and
third respondent in terms of the Promotion of Access
to Information
Act 2 of 2000 ('PAIA'). The agreement was concluded with first
respondent, which, of course, raises the obvious
inference that, as
it was a contract with third respondent, the latter would have been
aware thereof. The agreement could not
possibly be regarded as
confidential in the sense that third respondent was fully entitled
to place this agreement before the
Tribunal. In addition, the
response prepared by first respondent concerned no more than the
refusal to have to supply that document
pursuant to the provisions
of PAIA.
4.
Licensing
Agreements
:
Appellant had referred to an e-mail sent to Mr Parker from Ms Voruz
on behalf of appellant, on 15 January 2009 at the request
of Mr
Parker to summarise the issues in the advice sought. In the e-mail.
Ms Voruz said that it sought advice on,
inter
alia,
competition
aspects of new technology, which appellant wanted to introduce into
South Africa. The e-mail referred to three parties
only, being
appellant, first respondent and second respondent.
To the
extent that the e-mail refers to market share, Mr
Van
der Nest
contended
that all of that information was, in any event, set out in the
Commission's report in which it had sought to justify
its refusal to
allow the merger. To the extent that any further information
contained in the affidavit could be considered to
be confidential,
it affected both second and third respondents and, therefore, could
hardly be classified as confidential, in
that two other parties, who
would have known about this information, were the very parties being
advised by first respondent,
hence they would have been already in
possession thereof.
5.
The
Biowatch case
:
This instruction commenced in August 2002 and according to first
respondent, to all intents and purposes was finalised on the
merits
during April 2005. It was a civil hearing whereby first respondent
sought to resist (which they did successfully), disclosure
of the
documents based on PAIA. The information had been supplied to
government bodies. The matter was heard by the Supreme Court
of
Appeal and then the Constitutional Court, which judgments are
obviously in the public domain. According to first respondent,
no
more than a general statement that the information was confidential
was set out in the papers of the appellant.
The appropriate test to
determine and stay application
In the light
of these disputes, and the detailed answers provided by first
respondent, it is necessary to turn to the appropriate
test which
governs a dispute of this particular kind. The Cyanamid test was
indeed, as
I
have
noted already, followed in
Ferreira
v Levin
supra.
However it was followed within a context of a dispute, pending a
determination of a constitutional matter by the Constitutional
Court. That case, therefore, dealt with the specific problem of a
stay pending a constitutional dispute to be determined by the
Constitutional Court, that is an allegation regarding the
constitutionality of legislation. See
Ferreira
v Levin NO
,
supra at 836 - 837.
This is an
entirely different matter concerning a stay application relating to
merger hearings. Were the same test to be adopted
in stay
applications such as the present, the low threshold, which is
inherent in the
Cvanamid
test,
coupled to the bifurcated jurisdiction as evident in the present
proceedings, would be subversive of the kind of expedition
sought to
be achieved by the Act in merger cases. In my view, the approach
adopted by the Tribunal in
Novartis
is
preferable when dealing with this kind of question. It, in effect,
advances a doctrine of proportionality, that is between
protecting
the legitimate interests of both sides and safeguarding the
integrity of the proceedings.
If this test
is applied, the first issue to be resolved is the question of the
reasonable prospects of success. It is interesting
in this
connection that, if an approach such as a
prima
facie
right
as adopted in interdict proceedings is considered, that focuses
considerable light on what could be considered to be a reasonable
prospect of success. In this connection, it is illuminating to refer
to the minority judgment of
Streicher
.
J in
Ferreira
v Levin
supra
(on a point which was not in any way rejected as being incorrect by
the majority) at 817F-H:
"It has
up to now been accepted that in order to establish a
prima
facie
right
entitling an application to an interim interdict, an applicant has
to make out a case that he is entitled to final relief.
If on the
facts alleged by the applicant and the undisputed facts alleged by
the respondent, a court would not be able to grant
final relief, the
appellant has not established a
prima
facie
right
and is not entitled to interim protection."
See also
Olympic
Passenger Service (Ptv) Ltd v Ramlaoan
1957
(2) SA 382
(D) at 383 and the similar arguments advanced by
Herbstein
& Van Winsen
,
The
Civil Practice of the High Court of South Africa
(
5
lh
Edition) at
1461-1462.
Mr
Van
der Nest
,
in my view, correctly contended that to determine reasonable
prospects of success in this kind of case, the test for
confidentiality,
as outlined by this court, in
American
Natural Soda Ash Corporation & Others v Botswana Ash &
Others
[2007]
1 CPLR 1
<CAC) was appropriate, that is appellant is obliged to
satisfy three requirements:
1. Was first respondent given
confidential information?
2.
Is the information still confidential?
3.
Is the information relevant to the merger?
In summary,
if a court is to determine reasonable prospects of success, the
least that can be expected from appellants is to show,
on the
papers, that, as
Streicher.
J noted,
when the facts as alleged by both sides are evaluated, the
prima
facie
right,
entitling the applicant to interim relief, would have been converted
into a basis for final relief, that is on these papers,
is there
prima
facie
case:
Expressed in
Ansae
terms: in
the papers is there a
prima
facie
case
that respondent given confidential this information, is this
information was still confidential and does the information
remain
relevant to the merger.
Application
of this Test
:
First respondent has provided a
detailed answer to all the appellants' allegations. Take the e-mail
of January 2009.
which I
should add. was pressed by Mr
Gauntlett
as
constituting the best report for appellants' case. As Mr
Unterhalter
.
who appeared together with Mr
Watt-Prinqle
and Ms
Le
Roux
on
behalf of the second respondent, submitted, the non-confidential
part of the Competition Commissions report on the merger,
contained
a detailed breakdown of market share, which cannot, on any stretch,
be considered to be confidential. In short, there
is no basis to
argue that this component of the e-mail raises any confidential
information, even on the test that I have outlined.
The balance of the information
in the e-mail regarding intellectual property, must have been known
to second and third respondents
independently, for. as is evident
from this e-mail, the latter parties were in a relevant relationship
with the appellant.
To the
extent that appellants considered, as they aver, that confidential
information was at risk of being disclosed to third
parties, it is
then instructive to analyse the relief which was sought by
appellants in the other two
fora
As Mr
Unterhalter
submitted,
the question which arises is why the appellants failed to protect
its claim of confidential information by applying
to the High Court
for urgent interim relief, pending a final order and, further, why
it chose to apply to the Tribunal for interim
relief in the form of
a stay. Mr
Unterhalter
submitted
that the answer was clear: this was a stratagem to obtain an open
ended stay in the Tribunal, pending a lengthy legal
dispute in the
High Court, which would then prevent the resolution of the merger
dispute. In his view, the clue to understanding
appellants' conduct
in engaging in forum arbitrage, lay in a proper consideration of the
relief sought in both cases.
It is significant that the
appellants did not seek an order to suspend the attorney/client
relationship between second respondent
and first respondent, nor did
it seek to prevent first respondent from continuing to consult with
second respondent, take instructions
for the purposes of preparing
witness statements nor expert reports nor engage in any other form
of preparation short of procedural,
such as filing papers and
pursuing interlocutory applications, pending the hearing in
September 2011.
However, Mr
Gauntlett
contended,
so long as there was a reasonable apprehension of some risk to
appellant, a stay should be granted. In this connection
it is
instructive briefly to refer again to the case relied on by
appellants, namely
Freshfields
.
In this case the facts are demonstrably distinguishable. In
Freshfields
,
the same firm is asked to act for a consortium which seeks to
takeover a company for whom
Freshfields
acts. That
is clearly distinguishable from the present case.
Far more
compatible is the case, referred to by first respondent, of
Russell
McVeagh v Tower Corporation
[1998]
3 NZLR 641
(CA). In this case McVeagh had acted for Tower
Corporation in a tax dispute. A new client approached McVeagh to act
for it in
a takeover bid of Tower. McVeagh considered that it was
able to act. When the new client presented its proposal. Tower found
that McVeagh had acted for the new client and, therefore, objected.
The New
Zealand Court of Appeal found no absolute prohibition, even in the
case where both parties were clients (which is significantly
different from the present case).
Henry
,
J said:
"It is difficult to
identify where the conflict arises, other than in the realm of
possession of confidential information.
What is now under discussion
is frequently described as a separate matter situation, namely one
where the retainer covers quite
distinct and unrelated issues. There
is nothing incompatible between the interests of Tower, which were
or are concerned with
the taxation dispute and the interest of GPG
which were or are concerned with the takeover procedure. Separate
matter conflicts
will generally arise and probably only arise where
possible problems resulting from possession of confidential
information exists."
Henry
,
J continued thus:
"Absent the risk of
disclosure of Tower's confidential information to GPG... it is
difficult to see whether any conflicts
could arise. No other
continuing duty owed to Tower was identified."
In summary, on this component
of the case, this court is confronted with a relationship between a
former attorney and a client
in circumstances where the proceedings
sought to be stayed, are not those in which the former client is a
party. Further, in
none of the five examples given (which represent
the entire case presented to this court as contained in the papers),
is there
any indication to be gleaned, on a reasonable basis, why
the information remains confidential. At the very least much has
been
known by second and third respondents and for a long time.
Further, to the extent that information was not so known, it now
forms
part of the Competition
Commission's
non-confidential component of its report on the merger. It is
difficult, on the basis of a reading of the Competition
Commission's
report, why any of the information so averred, remains relevant to
the merger proceedings. In short, on the test
adopted of reasonable
prospects of success, being mediated through the
Ansae
test, it
cannot be concluded that appellants' case passes muster.
That still leaves the question
of balance of convenience and the interests of justice.
In the
exercise of determining whether there are reasonable prospects of
success, of course the
prima
facie
inquiry
with which this court is engaged, can never be definitive of a
matter still to be argued and considered by another court.
Hence
this court is required to evaluate the prospects of success in terms
of the approach that I have outlined, and then weigh
this evaluation
with a further assessment to the balance of convenience, so as to
arrive at a final conclusion. To the extent
that the interests of
justice are so involved, they surely require this exercise of
balancing of interests.
Appellant, from the outset,
suggested that the stay could be avoided by first respondent's
withdrawal and that, in any event,
a delay of a few months ('a short
stay') will not result in any material prejudice. By contrast,
second respondent, in terms
of an answering affidavit deposed to by
Mr Gorsche, sets out in some detail the prejudice that may be caused
to the respondents,
particularly second respondent and third
respondent, if the merger proceedings are stayed. I refer briefly
thereto:
'The nature of the industry in
which the proposed merger would take place, must also be understood
in order to confirm the prejudice
that will result from a delay in
the September hearing Seed sales to farmers are highly seasonable.
Farmers decide once a year
what May seeds to purchase and cultivate
generally between September and early October. Concomitantly seed
companies have generally
only one opportunity per year to make a
sale to farmers. Therefore, any delay from one year to the next has
significant repercussion
for the seed suppliers and/or revenue and
product."
He continues:
"In addition the
uncertainty created by a delay in the merger proceedings. affects
Pannar's employees job security, as well
as farmers risk assessment
when deciding from which supplier to purchase seeds if ongoing
supply and technical support might
be compromised. Delay also
lessens both parties competitiveness and ability to strategically
plan for the operations, all to
the advantage of Monsanto, which is
not similar hamstrung in its operation decision making or strategic
planning/
Merger
proceedings are by their nature very urgent, in that once parties
have agreed to a merger, they ought to be free to consummate
the
merger without unreasonable delay. The Act sets out a 60 day period
in respect of intermediate mergers as in the present
transaction(see
s14 of the Act). Second respondent has made it plain that any
postponement of the merger would be so destructive
of its interests
that indeed, as Mr
Unterhalter
observed, if
the stay was granted, second respondent would have to dispense with
the services of first respondent to its considerable
prejudice, in
that it would have, within some three weeks, to find fresh attorneys
to deal with the extremely complicated matter
of a merger.
It should
also be noted that the proceedings before the High Court will only
take place in October. There is no guarantee that,
having heard the
case which is set down for two days, a judgment will be delivered
immediately. It is, therefore, possible, given
that the case will be
heard midway through the fourth term, that judgment may only be
delivered towards the end of the year or,
in the first term of next
year, in which case the merger proceedings could be delayed for an
indefinite period, certainly not
the 'short delay' described by Mr
Gauntlett
.
In
considering the balance of convenience, it is also instructive that
Ms
Voruz
's
evidence, deposed to on behalf of appellant affords the court some
insight into the intention of appellants, I refer in particularly
to
her replying affidavit in which the following appears:
ul am most surprised,
therefore, that Bowman's would seriously suggest that the merger of
Monsanto's two largest competitors in
the region is in some way not
likely to affect the competitive or commercial interest of Monsanto.
Bowman's knows the truth.
Indeed in the merger filing itself, it is
clearly stated that the purpose of one of the benefits of the merger
is that it will
limit Monsanto's purported dominance in the region.
On Bowman's (indeed Pioneer and Pannar) own version, not only affect
but
also the purpose of the merger is to limit the commercial
interests of Monsanto. It will be recalled that the merging parties
indicate that one of the merger's benefits is that Pannar will no
longer need to rely upon bio traits bought from Monsanto: simply
put, the merger's aim and its potential effect is the removal of one
of Monsanto's major customers."
While this statement is not
definitive of appellant's motivation, it perhaps justifies, to some
extent, the forcible submissions
made by respondents with regard to
the intention of the appellants in this particular case.
This court does not need to go
so far. With regard to the balance of convenience, other than the
facts which were set out by the
respondents, it is important to
refer back to the relief which was sought by appellants. Had the
confidential information been
at such risk of being disgorged, and
the prejudice to appellants been so palpable, there was a clear
legal avenue available to
it, namely to approach the High Court as a
matter of urgency, or indeed to have approached the Tribunal and
then this court,
which, as events now indicate, would have disposed
of this case far before the October date and thus prior to the
merger hearing.
In short, when the lack of
specificity of information that could reasonably justify an
apprehension of risk is balanced with the
questions of convenience
to both sides and the court's obligation to consider the interests
of the parties, together with the
failure of appellants to act with
the kind of urgency which would have been compatible with the
description of their case, there
is, on the test that I have
outlined, no basis by which to uphold the appeal.
In my view, therefore, the
appeal is dismissed with costs, including the cost of two counsel.
DAVIS,
JP
Zondi JA and Ndita AJA
concurred