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[2010] ZACAC 2
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Competition Commission v Pioneer Foods (Pty) Ltd (91/CAC/Feb10) [2010] ZACAC 2; [2010] 2 CPLR 195 (CAC) (15 October 2010)
IN THE COMPETITION APPEAL COURT
CAC Case No: 91/CAC/Feb10
CT Case Nos: 15/CR/Feb07
50/CR/May08
In the matter between:
THE COMPETITION COMMISSION
…........................................
A
ppellant
and
PIONEER FOODS (PTY) LTD
…..................................................
Respondent
JUDG M E N T
Delivered on 15
th
October 2010
WALLIS AJA (DAVIS JP AND PATEL JA concurring)
[1] The
appeal in this case was set down in June 2010 to be heard on
21 September 2010. On 13 September 2010 the Registrar
received a
letter from the attorneys representing the Commission in the
following terms:
‘
2
The Competition Commission and Pioneer Foods (“the parties”)
are in settlement discussions. As a result they have
agreed to
postpone the hearing of the appeal
sine
die
pending the
finalisation, signing and filing of the settlement agreement before
the Tribunal.
3
Please let us know whether it will be necessary for counsel to appear
on 21 September to postpone the matter.’
The
contents of the letter gave rise to concern on the part of the member
of the Court as to the scope of any possible ‘settlement’
between the Commission and Pioneer and the proper approach to be
taken by this Court to requests of this nature. In those
circumstances
we decided that the question of settlement and possible
postponement of the appeal, as well as any matters arising from a
settlement,
should be addressed in open court consistently with the
constitutional requirement that court proceedings take place in a
public
hearing. In the result both parties were represented before us
by senior and junior counsel and after the hearing they furnished
us
with supplementary written submissions.
[2] We
were informed by counsel that Pioneer has agreed to accept the
determination by the Tribunal and the Commission has in turn
agreed
to withdraw its appeal against the quantum of the administrative
penalty imposed by the Tribunal. In those circumstances
the parties
no longer sought a postponement of the proceedings but leave to
withdraw the appeal and cross-appeal respectively.
On enquiry we were
given the assurance that this arrangement has been arrived at
strictly and solely on the basis that the Tribunal’s
determination will remain intact in its entirety and be complied with
by Pioneer. We were also given the assurance that there is
no
additional or alternative
quid pro quo
that has been offered
or given by either party in return for the conclusion of this
arrangement. In other words no other consideration
has passed between
the parties in order to induce them to conclude the arrangement.
1
It is on that basis alone that we were asked to give the parties
leave to withdraw the appeal and cross-appeal and we did so. These
are our reasons for granting that leave.
[3] Rule
19(4) contemplates that a prospective appellant may withdraw an
appeal prior to the delivery of the appeal record and will
be deemed
to have withdrawn the appeal if it fails to deliver the appeal record
timeously. Where there is such a withdrawal or
deemed withdrawal and
the respondent has noted a cross-appeal the respondent is faced with
an election under rule 19(4) either
to deliver notice of its
intention to pursue its cross-appeal, in which event it becomes to
all intents and purposes the appellant
and assumes responsibility for
the delivery of the record, or to abandon its cross-appeal.
[4]
Apart from these provisions the rules do not contemplate the
postponement or withdrawal of an appeal. Once the record has been
delivered the registrar, in consultation with the Judge President
2
makes arrangements for a date for the hearing of the appeal and gives
a notice of set down.
3
At that stage the Court is seized of the appeal. In our view once
that occurs the appeal must proceed on the date allocated and
can
only be postponed or withdrawn with the leave of the court. There are
a number of reasons why this should be the case, some
practical and
some concerning the nature of these proceedings.
[5] In
the first instance at the level of procedure, once an appeal is
before the Court and a date for hearing has been allocated,
the
records are distributed to the judges who start preparing the appeal.
As they are drawn from several different divisions of
the High Court
and are not removed from their normal duties whilst engaged in
preparation this is work that needs to be undertaken
in the course of
other judicial work. If the parties are free to postpone cases at
will, even very shortly prior to the hearing,
that work will be
wasted.
4
If it then becomes necessary for the court to reassemble on some
other occasion to deal with the case the preparation will have
to be
undertaken all over again. That is wasteful of scarce judicial time
and resources. Here the reason advanced for the postponement
was an
attempt to settle the case but if parties are permitted
mero motu
to agree to postponements there would be nothing to prevent them
from doing so for other reasons, such as the non-availability of
a
favoured legal representative. Those practical reasons dictate in
both the Constitutional Court and the Supreme Court of Appeal
that
postponements are not to be had for the asking and that postponements
cannot be secured merely by agreement between the parties.
5
It is appropriate for us to lay down the same rule and the same
approach in relation to appeals before this Court.
[6] In
regard to the withdrawal of appeals other considerations may come
into play. These flow from the special nature of the jurisdiction
exercised by the Tribunal. It is not like a court adjudicating civil
disputes. Whilst those may raise matters of great public importance
they are first and foremost disputes between the parties themselves.
Generally speaking therefore if the parties no longer wish
to pursue
the litigation they are free to withdraw from the fray. In addition
any private arrangements they may make in regard
to the terms of
withdrawal are for them to determine.
[7] The
letter sent to the registrar of this Court on 13 September appeared
to proceed on the footing that a similar approach can
be adopted to
an appeal to this Court from a determination by the Tribunal. It was
that approach that prompted disquiet among the
members of the Court
and in case it reflects a view held by practitioners in the field of
competition law it is as well to dispel
it.
[8]
The Competition Tribunal is a tribunal of record established for the
purpose
inter
alia
of
adjudicating upon conduct that is said to constitute a contravention
of the provisions of Chapter 2 of the Act and, if such conduct
is
found to have occurred, to impose any remedy provided by the Act.
6
It deals with
matters that are placed before it by way of a complaint and its
jurisdiction is acquired from and determined by such
complaint. The
conduct that can form the subject of a complaint is conduct that the
Act prohibits, sometimes absolutely, as in
the case of contraventions
of s 4(1)(b), 8(a) to (c) and 9 of the Act, and sometimes
subject to an efficiency defence, as
with contraventions of
s 4(1)(a), 5 and 8(d) of the Act. The Tribunal has the power to
impose administrative penalties that
can be substantial as
illustrated by the present case where the total penalty amounted to
R
195 718 614. The Supreme Court of Appeal has recently said in passing
that administrative penalties imposed by the Tribunal bear
a close
resemblance to criminal penalties.
7
This
should not be taken as detracting from the decision by this Court
8
that
proceedings before the Tribunal are not criminal proceedings for the
purposes of the Constitution, but is merely a reflection
of the fact
that in their amount, their intended deterrent purpose and undoubted
punitive effect and the fact that they are paid
into the Consolidated
Revenue Fund they bear a resemblance to fines, as reflected in the
language of s 59(4)
.
[9]
There is provision in the Act
9
for
a party accused by the Competition Commission of having engaged in
prohibited conduct to reach an agreement with the Commission
and for
a consent order to be sought without the need for an adjudication by
the Tribunal on the merits of any complaint, beyond
the Tribunal
determining whether to make the proposed order, indicate whether it
requires changes to the order or refusing to make
the order.
10
That
occurs during or after completion of the investigation of a
complaint. It is unnecessary for present purposes for us to consider
whether such an order may be sought during the course of a hearing
before the Tribunal on an allegation that prohibited conduct
has been
committed or whether it can only be sought prior to the referral of a
complaint. What is clear however is that such an
order cannot be
sought or granted after the Tribunal has adjudicated on a complaint
referred to it and made an order. Once that
has occurred the Tribunal
has discharged its statutory function and its jurisdiction in regard
to the complaint is exhausted. In
technical legal parlance it is
functus
officio.
The
situation is no different from that which arises once a court has
rendered its judgment. That is reinforced by the fact that
any
decision, judgment or order of the tribunal is enforceable as if it
were an order of the High Court.
11
[10]
It follows that it is not open to the Commission and a party against
which the Tribunal has made a determination that they
have
contravened provisions in Chapter 2 of the Act to enter into an
agreement subsequent to the determination altering its content
or
effect and then place it before the Tribunal to obtain its
imprimatur
,
which appeared to be the intention as conveyed in the letter if 13
September. In the absence of any statutory provision authorising
such
a proceeding it is impermissible as it amounts to a request that the
Tribunal alter its earlier decision, something that it
has only
limited power to do.
12
Under
the structures established by the Act it is only this Court that has
the power to alter a determination by the Tribunal and
then only in
the exercise of its powers in terms of s 37(2) of the Act after
due consideration of an appeal against that determination.
[11]
In civil proceedings before the High Court none of this would matter
because it would generally speaking be open to the parties
to
compromise their dispute on such terms as they saw fit. However it
does not seem to us that it is correct to treat proceedings
arising
from a complaint being referred to the Tribunal by the Commission as
standing on the same footing as a conventional civil
suit. First the
proceedings are directed at adjudicating on conduct that is
prohibited by the Act, in other words, on conduct that
the
legislature has seen fit to outlaw in the public interest. Second the
Commission is representing the public interest and acts
as ‘claimant
cum prosecutor’.
13
The
public interest is that interest that all South Africans have in open
and unfettered competition in our economy.
The
Commission is assigned to this task because of the difficulties
facing ordinary citizens in pursuing anti-competitive conduct
through
normal court channels. Third the determination by the Tribunal
results, at least when an administrative penalty is imposed,
in an
order that resembles a fine imposed in criminal proceedings. As we
have previously observed the proceedings before the Tribunal
are a
hybrid between criminal and civil proceedings
14
or to use the
felicitous description of Lord Bingham of Cornhill they are
‘adjudicative procedures of a hybrid kind, not criminal
but not
civil in the ordinary sense either: proceedings in which one or more
parties may suffer serious consequences if an adverse
decision is
made”.
15
Overall, on the
issue of the ability to alter by agreement the determination by the
Tribunal of an administrative penalty, the closer
analogy is with
criminal proceedings rather than civil proceedings and it is clear
that the outcome of a criminal trial cannot
be overcome or avoided by
subsequent private agreement. In our view it is not open to the
Commission and a party on which the Tribunal
has imposed an
administrative penalty to abandon, compromise or alter the Tribunal’s
determination or the penalty that it
has imposed and in the
Commission’s supplementary submissions this was accepted.
[12]
As it was unclear from the letter of 13 September that the Commission
and Pioneer Foods appreciated that the scope for them
to negotiate a
settlement of this dispute was narrow we required them to appear
before us to deal with the basis of the withdrawal
of the appeal and
cross-appeal. We were then given the assurances that are described in
paragraph [2] of these reasons. In the
light of those assurances we
gave leave for the appeal and cross-appeal to be withdrawn. As cases
such as this may arise again
in the future we take this opportunity
to give guidance to the Commission and the legal profession who act
in the area of competition
law in regard to the proper approach where
it is proposed to withdraw an appeal that has been set down for
hearing. In such cases
the registrar should be informed that the
appellant (and where applicable the cross-appellant) wish to withdraw
the appeal (and
where applicable the cross-appeal). If the withdrawal
involves any arrangement between the parties going beyond the fact of
withdrawal
the details of such arrangement need to be furnished to
the registrar in order for the Court to be satisfied that the basis
upon
which the appeal is to be withdrawn is one that is permissible
in terms of the Act and in particular that it does not involve any
impermissible departure from the terms of the Tribunal’s
determination and order. It is unnecessary in the present case to
consider in what circumstances this Court would refuse leave to
withdraw an appeal.
[13]
Leave was given to the Commission to withdraw its appeal and to
Pioneer Foods to withdraw its cross-appeal. In view of that
it would
not be appropriate for us to express any views on the issues raised
by the appeal and we refrain from doing so.
APPEARANCES:
APPELLANT:
D N UNTERHALTER SC (with him K H SHOZI)
RESPONDENT
S BURGER SC (with him E FAGAN SC and K PILLAY)
1
The
Commission’s supplementary submissions gave further detail of
the settlement that confirmed what we had been told in
the course of
the hearing.
2
The
Judge President assigns the case to a court in terms of s 38(2)
of the Competition Act 89 of 1998 (‘the Act’).
3
Rule
22.
4
This
has occurred previously in the experience of the court in a case of
an appeal by SAA against a determination by the Tribunal.
5
National
Police Service Union and others v Minister of Safety and Security
and others
2000 (4) SA 1110
(CC) at 1112C-f and
McCarthy
Retail Ltd v Shortdistance Carriers CC
2001 (3) SA 482
(SCA)
para [28].
6
S 27(1)(a)
of the Act.
7
Woodlands
Dairy and another v The Competition Commission
[2010]
ZASCA 104
, para [10].
8
In
Federal-Mogul Aftermarket Southern Africa (Pty) Ltd v The
Competition Commission
[2005] 1 CPLR 50
(CAC).
9
S
49D.
10
S 49D(2).
11
S 64(1).
12
S 66(1).
13
Woodlands
Dairy and another v The Competition Commission
[2010]
ZASCA 104
, para [8].
14
Sappi
Fine Paper v The Competition Commission
[2003] 2 CPLR272 (CAC),
para [47]
15
Tom
Bingham
The Rule of Law
90.