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[2010] ZACAC 3
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Senwes Ltd v Competition Commission of South Africa (87/CAC/FEB/09) [2010] ZACAC 3 (3 February 2010)
IN
THE COMPETITITION APPEAL COURT OF SOUTH AFRICA
CASE
NUMBER
:
87/CAC/FEB/09
DATE
:
3 FEBRUARY 2010
In
the matter between:
SENWES
LIMITED
APPLICANT
and
THE COMPETITION COMMISSION
OF
SOUTH
AFRICA
RESPONDENT
JUDGMENT
Application for Leave to
Appeal
DAVIS,
JP
:
This
is an application for leave to appeal to the Supreme Court of Appeal
against an order of this Court of 13 November 2009, in
which the
Court upheld a decision of the Tribunal and thus dismissed the
appeal, which was prosecuted by the appellant. The appellant
has now
proceeded to this Court for leave to have the matter heard by the
Supreme Court of Appeal.
In
essence, the submissions made by Mr
Brassey
, who appears
together with Ms
Enqelbrecht
on behalf of the appellant as to
why leave should be granted, turn on two fundamental issues:
1.
That the decision of the Tribunal, and subsequently the Court,
disregarded in a fundamental way, the requirements of due process,
because appellant was 'condemned' on the basis of a case that was not
properly pleaded, and further a case, to the prosecution
of which
appellant repeatedly raised objection.
2.
It was argued that the evidence to support the conclusion that
appellant was guilty of a margin squeeze which formed the basis
of
the decision of both the Tribunal and the Court is so manifestly
inadequate that a court, on appeal, would conclude that no
case on
the facts had been made out against the appellant.
It
is trite that the requirements for leave in a case such as the
present, must meet the test of special leave. That test has been
canvassed on numerous occasions by this Court, most recently in the
case of
Woodlands Dairy (Pty) Limited, Milkwood Dairy (Pty)
Limited v The Competition Commission
(unreported decision of the
CAC 7 December 2009).
To
briefly recapitulate, the requirement of special leave means that, in
addition to the ordinary requirement of a reasonable prospect
of
success, special circumstances must exist before a further appeal can
take place before the Supreme Court of Appeal. In particular,
and
viewed objectively, there exist the requirements of the importance of
the matter to the parties and, further, to the public
interest. See
American Natural Soda Ash Corporation v The Competition Commission
2005(6) SA 158 (SCA) 172-173. It is also important to again reflect
upon the reasons for the test of special leave. In the
Woodlands
case supra, the Court outlined the background to an appeal from this
Court to the Supreme Court of Appeal and the reasons therefore;
this
bears repetition.
The
Supreme Court of Appeal itself was aware of its role as an appellate
body which must hear appeals from a specialist court such
as The
Competition Appeal Court. Thus in
Numsa v Fry's Metals
2005(5)
SA 433 (SCA), admittedly in an appeal from the Labour Appeal Court,
but, in my view, equally applicable to this court,
the SCA said:
"It is in the interest of
justice required that special leave be imposed, for if appeals were
allowed without trammel, the
expeditious resolution of disputes would
be unconscionably delayed and the justified objects of the statute
impeded."
At
para 19.
Mr
Brassev
has raised what I would consider to be a perception that this Court
is opposed to granted leave to appeal on "technical issues".
Nothing could be further from the truth. This Court has expressed the
view, similar to the dictum of the SCA, in
Fry's
Metals
that the
purpose of the Competition Act, is to ensure an expeditious
resolution of disputes. When it comes to interlocutory matters,
the
Court has, on occasion, taken the view that interlocutory
applications, brought on what in the colloquial term is now called
the 'Stalingrad' approach to jurisprudence, subverts this object of
the Act and, therefore, these arguments must be scrutinised
with
extreme care. Nonetheless, all applications for leave to appeal have
to be dealt with in terms of the principles of special
leave, whether
'technical' or more substantive. In my view, the question of an
expeditious resolution of disputes is a matter of
public interest,
particularly when it comes to competition matters; hence it too is an
important factor in the overall assessment.
So much for preliminary
observations.
Mr
Brassev
has submitted that this is a case which manifestly
falls within the test of special leave, primarily because the
requirements of
due process were not met. In short, he argued that
when the respondent refers a complaint to the Tribunal, it must be
framed with
sufficient specificity, so that a party as appellant,
knows precisely what case it is called upon to answer. In short, when
this
Court sought to balance the requirements of the inquisitorial
powers granted to the Tribunal against the principles of due process,
Mr
Brassey
submitted that the balance had been struck
incorrectly and hence subverted a foundational constitutional
principle of due process.
There
can be no doubt that in principle, a case brought on the grounds of
due process, as I have outlined it, should meet this test
of special
leave. The problem in each case, is whether on the
fact
s of
the case viewed holistically, the appeal meets the requirements as I
have outlined.
Applied
to the facts of this case, the question which arises is whether, on
the basis of the complaint and, therefore, the form
of pleadings as
employed under the Act, appellant's rights to due process were
undermined in the manner in which Mr
Brassey
has submitted.
That requires an examination, albeit briefly, of the concept of
margin squeeze and its application to facts of the
case.
Admittedly
the word 'margin squeeze' does not appear in section 8 of the Act nor
in any other section thereof. But,
as found by this
Court, the terms of the Act are widely couched and exclusionary acts
are defined in such a manner that it can
surely not be contended, on
the basis of the reasoning set out in the principle judgment, that a
margin squeeze cannot form part
of section 8 of the Act.
The
question is, whether on the basis of the complaint and these
pleadings viewed as a whole, appellant's rights to due process
were
undermined, because it was not appraised properly of the case which
was brought against it.
Margin
squeeze is defined by Richard Whish,
Competition Law
(6th Edition)
at 744 as follows:
"A vertical margin squeeze
can occur where a firm is dominant in an upstream market and supplies
a key input to undertakings
that compete with it in a downstream
market. In such a situation, the dominant firm has a discretion as to
the price it charges
for the input, and this could have an effect on
the ability of firms to compete with it in the downstream market."
Compare
this definition to what was placed before the appellant by respondent
when it generated the complaint. In particular,
I refer to
the referral
affidavit reproduced at paragraph 16 of
the
principal judgment,
and the further affidavit deposed to by
Mr Maphumulo. In the referral
affidavit
the following is stated:
"Senwes abuses its
dominance in the handling and storage of grain market by charging in
effect lower storage fee to a producer,
who agrees to sell the grain
stored in Senwes' silos to Senwes. Producers who sell their products
to third parties that compete
with Senwes downstream, pay a higher
fee for the storage of grain. CTH alleges that this practice has made
it virtually impossible
for it to compete with Senwes in a trading
market within the relevant geographical area."
Mr
Maphumulo's affidavit includes the following averment:
"Senwes' pricing policy for
grain storage is such that it favours or facilitates a situation
whereby it would not be financially
feasible for a farmer to sell his
or her grain to a competitor of Senwes. This practice gives Senwes an
unfair advantage over its
competitors in the grain trading market.
This conduct constitutes an inducement to suppliers and customers not
to deal with Senwes'
competition. The effect is to impede new firms
from entering into the grain trading market or to impede existing
firms from expanding
within that market."
Furthermore,
the following appears in the complaint:
"Senwes' practice of
charging differential tariff fees for storage is exclusionary. It has
an anticompetitive effect as
it impedes or prevents CTH and
other grain traders, who would compete with Senwes, from expanding
within the downstream market
for grain trading and thus is in
contravention of section 8(c) of the act."
I
return thus to Professor Whish's definition. In the present case, it
was found that appellant was dominant in the upstream market.
It
supplied storage, a key input in the downstream market. The fact that
it charged differential prices, which had an effect on
the ability of
firms to compete with it in a downstream market, is what Professor
Whish refers to as a margin squeeze. There is
no magic in this term.
It is clear, and well known in competition jurisprudence. It may not
have appeared in the Act, but that
does not mean that it is not part
of the Act. A careful reading of the particular pleadings would
have alerted any qualified
person in competition law to the fact
that, in broad terms, the complaint referred to a margin squeeze.
Mr
Brassey
submits that it is unfair to introduce the notion of
expertise into the reasonable reader of the pleadings. But in this
particular
case, the appellant was advised by very experienced and
extremely knowledgeable counsel as to the case against it. If
appellant
was uncertain about it, then shortly thereafter when
counsel read the witness statement of Dr Theron, which was produced
before
the hearing, they could have had no difficulty or illusion
that a margin squeeze was contained within the framework of the
complaint.
In
short, this is a case where, on a reasonable reading of the complaint
and the documentation pursuant thereto, the facts, as alleged,
fell
squarely within the clear and simple definition of margin squeeze as
I have cited it from the leading work of Professor Whish.
Were this
not to have been the case, were none of these averments to have been
contained within the complaint or witness statements,
were appellant
not to have been advised by such skilled counsel, it may have been an
entirely different case and then constitutional
arguments may have
had application. But they do not have application in this case,
because the case must be judged purely and exclusively
on the facts
of the present dispute as they emerged before this Court.
Further,
this is a case where appellant chose to conduct its defence in the
manner it did. It now comes before the Court to say,
notwithstanding
that this is a reasonable reading of the complaint and witness
statements viewed within an established jurisprudence
of margin
squeeze, its rights of due process have been compromised. Were this
particular line of argument to be allowed, it would
play havoc with
the outcome of any case which comes before the Tribunal, because the
argument could be that ignorance of the law,
or alternatively a risky
litigation choice that is, not to have taken a particular cause of
action, has now resulted in a conclusion
which undermines due
process. That can surely not be the conclusion which is justified in
terms of the facts.
Once
this particular conclusion is reached, the fact that appellant raises
a whole range of evidential issues as to what evidence
it might have
been able to bring in order to show that a margin squeeze did not
exist, is irrelevant. There was more than sufficient
evidence which
was adduced by the respondent as set out in the principal judgment,
to justify the conclusion that a margin squeeze
existed in this case.
Mr
Bhana
, who appeared together with Mr
Dalrymple
on
behalf of the respondent is correct. Appellant chose a particular
cause of action, (not to object formally to the case of a
margin
squeeze) that course of action has now resulted in an adverse
judgment. It is not for this Court to give appellant a second
opportunity to reargue an entire case, on the basis that it chose the
wrong approach at the time.
On
these reasons, therefore, the test for special leave cannot be met on
these facts, no matter how imaginative Mr
Brassey
sought to
elevate the case to that of constitutional principle. It is the facts
of this case which ultimately are decisive of the
decision of this
Court. Accordingly the application for leave to the Supreme Court of
Appeal is
DISMISSE
D, together with costs, including costs of
two counsel.
DAVIS, JP
MAILULA
& MALAN JJA agreed