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[2008] ZACAC 2
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Johnnic Holdings Limited and Another v Competition Tribunal and Others in re: Mercanto (Pty) Ltd v Johnnic Holdings Ltd [2008] ZACAC 2 (23 September 2008)
IN
THE COMPETITION APPEAL COURT OF SOUTH AFRICA
CT CASE NO: 78/LM/Aug05
In
the matter between:
JOHNNIC
HOLDINGS LIMITED
First
Applicant
MERCANTO
INVESTMENT (PROPRIETARY) LIMITED
Second
Applicant
and
THE
COMPETITION TRIBUNAL
First
Respondent
THE
COMPETITION COMMISSION
Second
Respondent
RUPERT
SMITH, N.O
Third
Respondent
In
re
:
The large merger between:
MERCANTO
INVESTMENTS (PROPRIETARY) LIMITED
and
JOHNNIC
HOLDINGS LIMITED
JUDGMENT
MAILULA,
JA:
1.
The present application relates to the implementation of the order
granted by the first respondent, the Competition Tribunal,
on 7
December 2005, in the large merger proceedings between the
applicants, Johnnic Holdings Limited and Mercanto Investments
(Proprietary) Limited, under case No. 78/LM/ Aug05. The applicants
seek to review and set aside the second respondent’s, the
Competition Commission’s refusal to approve the merger parties’
divestiture proposal pursuant to the Competition Tribunal
order, and
seek an order remitting the matter to the Competition Commission for
further consideration.
The
Parties
2.
At the hearing of this matter on 30 November 2007, this Court granted
an order a copy of which is hereto attached marked “ANNEXURE
A”. The reasons now follow.
3.
The first applicant is Johnnic Holdings Investment Limited
(“Johnnic”), a company duly incorporated in accordance
with the company laws of South Africa, with its principal place of
business at Suite 624, 6
th
floor, Office Towers,
Overport City, 430 Ridge Road, Durban.
4.
The second applicant is Mercanto Investments (Proprietary) Limited
(“Mercanto”), a company duly incorporated in accordance
with the company laws of South Africa, with its principal place of
place of business at Suite 624, 6
th
Floor, Office
Towers, Overport City, 430 Ridge Road, Durban. Mercanto is a wholly
owned subsidiary of Horsken Consolidated Investments
Limited (“HCI”).
5.
The first respondent is the Competition Tribunal (“the
Tribunal”), duly established and constituted in terms of
section 26
of the
Competition Act No 89 of 1998
, which conducts its
administrative functions at the DTI Campus, Mulayo (Block C), 77
Esselen Street, Sunnyside, Pretoria.
6.
The second respondent is The Competition Commission (“the
Commission”), duly established in terms of
section 19
of the
Competition Act No 89 of 1998
, which conducts its functions at the
DTI Campus, Mulayo (Block C), 77 Esselen Street, Sunnyside, Pretoria.
7.
The third respondent is Rupert Smith N.O, an adult male attorney
practising at 73 Tyrwhitt Avenue, Birdhaven, Johannesburg. The
third
respondent was appointed as a trustee pursuant to the Tribunal order
referred to above and to which this application relates.
He is cited
in his capacity as such and I shall hereinafter refer to him as “the
Trustee”.
Background
8.
On 7 December 2005 the Tribunal approved the merger between Mercanto
and Johnnic subject to the divestiture condition. Paragraph
2 of the
order reads:
“2.
DIVESTED BUSINESS
2.1
The merging parties merging shall divest the following business:
2.1.1
the business of the Gallagher Estate Exhibition and Convention Centre
as a going concern; and/or
2.1.2
the entire shareholding of Johnnic in Gallagher Estate Holdings
Limited.”
9.
In terms of the order the divestiture was to be implemented within 12
(twelve) months of the date of the order or within such
further
period as the Tribunal may approve. Further, the order provided for
the appointment of an independent trustee to monitor
and execute the
order. In the event the applicants were unable to transfer legal
title of the divested business within 12 (twelve)
months of the date
of the order or within such extended period as the Tribunal may
direct, the Trustee would have an exclusive
mandate and power of
attorney to sell the divested business within a period of 3 (three)
months, at no minimum price.
10.
The Tribunal directed the Commission to monitor and pre-approve the
divestiture proposal by the parties to the merger. It is
stipulated
in paragraph 7 of the order that:
“7.1
When the merging parties have reached an agreement with a proposed
purchaser [of the divested business] it will submit
to the trustee
and the Commission a fully documented and reasoned proposal enabling
the Commission to:
7.1.1.
Verify in consultation with the trustee that the proposed purchaser
is a suitable purchaser of the divested business.
7.1.2.
Grant any approvals require under these commitments with respect to
any ancillary arrangements.
7.2.
….
7.3.
The Commission will approve or reject the merging parties’
proposal in writing. The approval of the proposal shall
not be
unreasonably withheld.
7.4.
.…”
The
Applicants’ Case
11.
The applicants opted to dispose of the business and not of Johnnic’s
entire shareholding in Gallagher Estate Holdings
Limited. The reasons
advanced are that Gallagher Estate Holdings Limited is a trading
company that owns numerous subsidiaries with
a complex suite of
assets and liabilities, including properties elsewhere in the
country, and that it was in the circumstances
not commercially
feasible to dispose of Johnnic’s shareholding therein, given
the limited time period stipulated for the
disposal in terms of the
Tribunal order. Further, that there would be significant tax
implications in dismantling the structure.
12.
The applicants did not manage to dispose of the business and to
fulfil the divestiture condition within the stipulated 12 (twelve)
month period. On 14 November 2006, they applied to the Tribunal for
an extension of time (for divestiture) as contemplated in terms
of
the order. This application for the extension of the time period was
heard on 28 November 2006. The Tribunal subsequently granted
a 3
(three) month extension period (which expired on 8 March 2007).
13.
After securing a purchaser for the business and pursuant to the
Tribunal order, the applicants submitted a divestiture proposal
to
the Commission for approval.
13.1
Initially the applicants approached the Commission on an informal
basis. A meeting was held between the applicants’
legal
representatives and the Commission on 26 January 2007, where the
divestiture proposal was discussed. The applicants
proposed to
dispose of the business by selling the business to the proposed
purchaser for a nominal consideration and to enter
into a five year
renewable lease agreement with the purchaser in respect of the
property from which the business is run. The
existing Gallagher
Estate Exhibition and Convention Centre management and employees were
to be transferred with the business
and Johnnic undertook not to
re-enter the Exhibition and Convention Centre business. They further
explained that the proposed
purchaser is independent of the merger
parties (the applicants) and that the purchaser would be well placed
to operate a viable
business. The applicants undertook to provide
the Commission with a fully documented and reasoned proposal in due
course and
requested “initial clearance to proceed with [the]
formal proposal”.
13.2
According to the applicants the proposed divestiture is structured as
the purchase of the business and a lease in respect
of the premises
from which the business operates because the property from which the
business is operated (i.e. the Gallagher
Estate Exhibition and
Convention Centre) is located on the same property as the Pan-African
Parliament Precinct, which is
described as a multi-tenanted office
building and approximately 16 hectares of vacant land. They state in
the founding affidavit
that It is at this stage not possible for
the property on which the business is situated to be carved out for
sale separately
from the remainder of the property. Further, that
numerous subdivision applications have been submitted in respect of
the Gallagher
land (in order to make the sale of different parts of
the property feasible) but that these will only be finalised in
approximately
30 months.
13.3
The Commission responded on 7 February 2007, expressing the view that
the informal proposal was inadequate and would not
comply with the
Tribunal order. The Commission stated that the informal proposal was
not acceptable for the following reasons:
“i.
It is apparent from a perusal of the Tribunal’s reasons and the
evidence led during the proceedings that in
the exhibition
business, the venue is the business….. Perhaps more telling is
the offer made by the acquiring firm to
the Tribunal as recorded
in paragraph 51 of the reasons ‘
HCI undertook to
divest of all its interest in Gallagher Estate Exhibition Centre
if the merger was approved’
….
ii.
It is evident from a perusal of the reasons for the decision that
what was contemplated by the parties and the Tribunal
was the
divestment by the merged entity of Johnnic’s interest in
Gallagher Estates. Accordingly, it is our view that
a sale of the
business of Gallagher Estates must of necessity entail the sale of
the venue itself i.e. the property. In this
regard, the proposed
lease agreement does not constitute a divestiture as the merged
entity will retain a significant and material
interest in the
business of Gallagher Estate. …[and the merged entity] would …
have sight of the tenant’s
management accounts. The added
complication to this proposed lease is that the merged entity, as
a competitor of the proposed
tenants of Gallagher Estates, will be in
the position of being able to dictate the largest portion of the
lessee’s fixed
costs, namely the rental. …. We point out
in this regard that it is our view that the rentals are pegged
too high as
variable costs have not yet been taken into account. This
is likely to have an impact on the ability of the business to
compete
effectively in the exhibition market. In conclusion, we
advise that, in our view, full compliance with the Tribunal’s
order requires a complete divestiture of Johnnic’s interest in
the exhibition and conferencing business of Gallagher
Estates,
which business comprises the venue as well as all assets and
customers.”
14.
Subsequent thereto the applicants submitted a formal proposal to the
Commission on 22 February 2007. On 2 March 2007 additional
information relating to the divestiture proposal, including signed
copies of the Sale of Business Agreement and the Lease and Option
Agreement were submitted to the Commission. The formal divestiture
proposal is, in brief, structured as follows:
a)
the business would be disposed of by means of an ordinary sale of
business agreement for a consideration equal to the
stock on hand
as at the effective date;
b)
both Johnnic and the seller, GE Property and Marketing (Pty) Ltd (a
wholly owned subsidiary of Gallagher Estate Holdings
which is, in
turn, a wholly owned subsidiary of Johnnic, which conducts the
Gallagher Estate Exhibition and Conference Centre)
gave an
undertaking that they will not directly or indirectly carry on or be
interested or concerned in the business of conducting
a
conference and exhibition business in competition with the divested
business within a radius of 3 km from Gallagher Estate
for as
long as HCI is a major shareholder in Johnnic and directly or
indirectly holds an interest in Sandton Convention Centre,
or for
a period of 3 (three) years from the effective date, whichever
occurs first;
c)
the lease agreement would be entered into for a period of at least 5
(five) years. (The applicants maintain that this
arrangement is
due to the fact that the property from which the business is operated
is purpose built and cannot at this stage
be sub-divided);
d)
the lease is renewable at the end of the term. It further provides
for cancellation of the agreement under certain circumstances,
and in particular, in the event of a breach of the provisions thereof
by the lessee;
e)
the purchaser is accorded the right and option to purchase, upon
subdivision and rezoning of the Gallagher property
(the
applicants gave an undertaking to submit a progress report on the
subdivision process to the Commission twice a year
until that
process is finalised);
f)
the lease agreement would be administered by an independent leasing
agent (apparently to assure the Commission that
they would not
have insight into the lessee’s business, including its
management accounts);
g)
the applicants advised that the purchaser would have the necessary
resources to maintain the divested business as a viable
and
active competitor to the applicants’ business i.e, the Sandton
Convention Centre.
15.
The applicants also submitted to the Commission that the proposal, in
their view, complies with the Tribunal order and that,
with regard to
the interpretation of the divestiture condition, the Commission ought
not to have recourse to extrinsic evidence
nor the Tribunal’s
reasons as the Tribunal order was clear and unambiguous. The
applicants’ contention is that the
order does not require the
divestiture of the property.
16.
The Commission, in its letter dated 7 March 2007 rejected the formal
divestiture proposal as not being in compliance with the
Tribunal
order mainly because “
the sale of the business of Gallagher
Estates must of necessity entail the sale of the venue itself, i.e.
the property.…,
the proposed lease agreement does not
constitute a divestiture.”
In addition the Commission
indicated the following:
16.1
that the cancellation clause that Johnnic could invoke upon breach of
the lease conditions by the lessee would result in the
lessee having
to vacate the premises and not being able to conduct its business.
Accordingly, it was unable to conclude that the
purchaser would be
able to comply with paragraph 6.5 of the Tribunal order, which
stipulates that the merging parties (the applicants)
need to maintain
the structural effect of the order and not directly or indirectly
reacquire influence over the whole or part of
the divested business;
and
16.2
that it was not clear from the formal divestiture proposal whether
the proposed purchaser is totally independent of the merging
parties,
and that the said purchaser will possess the financial resources,
proven expertise and incentive to maintain the divested
business as a
viable competitor in competition not only with the merger parties but
other competitors as well, as stipulated in
clause 6.2 of the
Tribunal order. It (the Commission) also pointed out that the
verifying affidavits pursuant to paragraph 6.4
of the Tribunal order
were outstanding.
17.
With regard to the latter concern the Commission was subsequently
provided with affidavits deposed to by the representatives
of the
proposed purchaser wherein they confirmed that:
17.1
the proposed purchaser is independent and not related to the merger
parties or any directly or indirectly affiliate member
of the
merger parties’ corporate group;
17.2
the proposed purchaser will possess the financial resources, proven
expertise and the incentive to maintain Gallagher
Estate as a
viable and active competitive force in competition with the merger
parties or any directly or indirectly affiliated
member of the
merger parties’ corporate group and other competitors; and
17.3
the information contained in the divestiture proposal submitted to
the Trustee and the Commission, on 22 February 2007
and 2 March
2007, is both accurate and correct. (The qualifications and business
experience of the representatives of the proposed
purchaser were
set out in their respective curriculum vitae and furnished to the
Commission together with the formal proposal).
18.
In view of the Commission’s refusal to approve the divestiture
proposal the Trustee’s divestiture period would become
operative as and when the merger parties’ divestiture period
lapses on or about 8 March 2007. He has the exclusive mandate
to sell
the business at no minimum price within a period of 3 (three) months.
19.
Following the Commission’s decision to reject the divestiture
proposal the applicants brought this application for the
review of
the said decision under the provisions of
section 6(2)
or the
Promotion of Administrative Justice Act No 3 of 2000 (“PAJA”)
as well as on constitutional and common law grounds.
The grounds for
review relate to the issues of legality, irretionality and procedural
fairness and
may
be summarised as follows:
19.1
the decision was not taken by the Commission;
19.2
the Commission misinterpreted the Tribunal’s divestiture
condition and that in the circumstances the Commission’s
decision is therefore vitiated by a material error of law and is
ultra vires
the order;
19.3
the Commission took irrelevant extrinsic evidence into account in
interpreting the divestiture condition;
19.4
the Commission failed to adequately consult with the Trustee as
required by the Tribunal order, alternatively, failed to
have
proper regard for the views of the Trustee, regarding the
suitability of the proposed purchaser of the business in terms
of the
divestiture proposal;
19.5
the Commission exceeded its powers under the Tribunal order in that
it did not confine itself to assessing whether the
proposed
purchaser was a suitable purchaser of the business. The Commission’s
decision was therefore
ultra vires
;
19.6
the Commission did not take relevant considerations into account in
making its decision;
19.7
the Commission’s decision was irrational or unreasonable;
19.8
the Commission’s decision was taken in a manner that was
procedurally unfair. And
19.9
The reasons furnished by the Commission for its decision are at odds
with the record.
The
Commission’s Case.
20.
The Commission (the second respondent) is the only party that opposes
this application. In its answering affidavit, it takes
a
point
in limine
, that this Court does not have the requisite
jurisdiction to hear this matter. Reliance is placed on the
provisions of section
27 of the Competition Act No 89 of 1998 (“the
Act”) which deals with the functions of the Tribunal and
section 37 which
deals with the functions of the Competition Appeal
Court and provides for the review of the Commission’s decision
by the
Tribunal and, in turn, the Tribunal’s decision by this
Court.
21.
The Commission states further that at the hearing of the merger
proceedings before the Tribunal, there were competition concerns
raised in relation to the exhibition market. In a bid to address
those concerns Mercanto undertook to cause Johnnic to depose of
the
Gallagher Estate Exhibition and Conference Centre and/or its
(Johnic’s) entire shareholding in Gallagher Estate Holding
Ltd
within a specified period. The divestiture condition in the
circumstances was intended by the Tribunal to give effect to the
Mercanto’s undertaking. The proposal was in its view at
variance with the undertaking and the consequent divestiture
condition.
22.
The Commission concedes that it did not consult with the Trustee to
verify if the proposed purchaser was a suitable purchaser
as
envisaged in paragraph 7.1.1 of the Tribunal order. It avers however,
that it was impossible to do so as the information required
for that
purpose, had, at the crucial stage, not been placed before it. The
relevant affidavits on the suitability of the proposed
purchaser only
became available on or about 14 March 2007.
23.
It denies that its power to approve the merger was, in terms of the
Tribunal order, limited to assessing the suitability of
the proposed
purchaser.
24.
The Commission denies that it took irrelevant extrinsic evidence into
account in interpreting the divestiture condition. In
its view it is
proper to take into account both the evidence led at the Tribunal
proceedings as well as the reasons for the Tribunal’s
decision
as the intention of the Tribunal to impose the divestiture condition
is explained in its reasons, which reasons are, in
turn, informed by
the evidence. The undertaking given was part of what informed the
Tribunal to impose the divestiture condition
and therefore had to be
taken into account.
25.
According to the Commission if regard is had to the undertaking given
by Mercanto at the hearing before the Tribunal, the sale
of the
business must also include the sale of the property from which the
business is conducted. Otherwise, that would detract
from the
Tribunal order and would fail to ensure the structural separation
envisaged by the Tribunal.
26.
The Commission denies that the decision was taken in a procedurally
unfair manner. The formal proposal was submitted late in
the day, 22
February 2007 and supplemented on 2 March 2007, and the Commission
had to make a decision sooner. There wasn’t
sufficient time as
the extended divestiture period was due to expire on 8 March 2007.
27.
With regard to the complaint that the decision was not taken by the
Commission, its response thereto is that, the Commission
met on 6
February 2007 to discuss the divestiture proposal. At the conclusion
of the discussions it came to a conclusion that the
proposal did not
comply with the Tribunal order. This was subsequently communicated to
the applicants. The formal proposal was
in substance not different
from the initial proposal, save for more detail added, consequently
that “at its meeting of 7
March 2007, the executive committee
of the Commission, after having considered the divestiture proposal
aforesaid, endorsed the
decision which was taken by a properly
constituted meeting of the Commission that had considered and had
taken a decision regarding
the divestiture proposal”.
28.
It further denies that the Commission’s decision is at odds
with the record. It explains that the reason for the refusal
to
approve the divestiture proposal is that the said proposal does not
properly address the structural separation envisaged by
the Tribunal
in its order. Further, that what appears in paragraphs 16.1 and 16.2,
above, i.e., the cancellation clause in the
proposed lease agreement
and the independence of as well as the proposed purchaser’s
ability to compete in the relevant market,
respectively, were merely
observations (and not reasons for rejecting the divestiture
proposal). The Commission remarks that it
was not in a position to
remark on the suitability of the proposed purchaser as no such
information was forthcoming.
The
Applicant’s Reply.
29.
The applicant’s response to the point in limine may be summed
up as
follows:
29.1
that in terms of section 62(1) of the Act the Tribunal and the
Competition Appeal Court share jurisdiction in some respects
and
that it does not necessary follow that this Court is deprived of
jurisdiction in instances where the Tribunal is cloaked
with same.
29.2
that the decision by the Commission amounts to an administrative
action, the grounds for review of such action under section
6 of
PAJA are applicable in the present case.
29.3
further, that upon the reading of sections 33 and 166 of the
Constitution read with
section 36(1)(a)
,
62
(2) and
27
(1) of the
Competition Act this
court is cloaked with the necessary
jurisdiction to entertain this application. Save as aforesaid, the
applicants persist in
the application.
The
Point in Limine
30.
At the hearing of the matter, Counsel for the Commission argued, that
this Court is not possessed of the requisite jurisdiction
to hear
this form of review application as a court of first instance and that
it is a matter that should have properly been brought
before the
Tribunal. He submitted, that while the application relates to the
implementation of the order that was granted by the
Tribunal on 7
December 2005, under case number 78/LM/Aug05, the decision that is
sought to be reviewed and set aside, is a decision
of the Commission
(the second respondent herein), refusing to approve the divestiture
proposal in respect of the sale of the business
of the Gallagher
Estate Exhibition and Conference Centre, submitted by the applicants
to the Commission on 22 February 2007, and
supplemented on 2 March
2007.
31.
In support of this submission Counsel relied on the following
authorities:
a)
Section 26 of the Act. It provides for the establishment and
constitution of the Competition Tribunal.
b)
Section
27 of the Act which provides for the powers and functions of the
Competition Tribunal. Section 27(1)(c) provides that
the Tribunal
shall hear appeals from, or review of any decision of, the
Competition Commission that may, in terms of this Act,
be referred
to it.
c)
Rule 42 of the Rules for the Conduct of Proceedings in the
Competition Tribunal (hereinafter referred to as “the Tribunal
Rules”), which regulates the procedure with regard to
reviews:
d)
He submitted that, from a reading of both section 27 of the Act and
Rule 42 of the Tribunal Rules, there can be no doubt that
the
Tribunal is an adjudicative body of first instance not only in
relation to complaints regarding prohibited practices as well
as in
relation to requests for the approval of large mergers, but also
has what is essentially an appeal and review functions
in relation
to decision of the Commission regarding other matters. The review
of any reviewable decisions of the Commission therefore
lies only
with the Tribunal and that a decision of the Tribunal may be taken on
appeal or review to the Competition Appeal Court.
e)
In terms of section 166 of the Constitution, the judicial system
comprises of a number of courts, including “any other
court
established or recognised in terms of an Act of Parliament,
including, any court of a status similar to either the High
Courts
….” The Competition Appeal Court is a court
contemplated in section 166(e) of the Constitution. As a creature
of
statute it derives its jurisdiction, functions and powers from the
Act.
f)
Section 36 of the Act provides for the establishment and constitution
of the Competition Appeal Court. It specifically provides
that the
Competition Appeal Court is a court contemplated in section 166(e) of
the Constitution with a status similar to that
of a High Court. It
has jurisdiction throughout the Republic.
g)
Further, the Competition Appeal Court’s functions are provided
for in
section 37
of the
Competition Act, 1998
. It may -
“(a)
review any decision of the Competition Tribunal; or
(b)
consider an appeal arising from the Competition Tribunal in respect
of-
(i)
any of its final decisions, other than a consent order made in terms
of
section 63
; or
(ii)
any of its interim or interlocutory decisions that may, in terms of
this Act, be taken on appeal
h)
From the aforegoing, it is argued that, it is clear that the
functions of the Court are restricted under section 37 to hearing
appeals and reviews arising from the decisions of the Tribunal
subject to what is set out in paragraph 32 and 33 below.
32.
Counsel for the applicants submitted, further, that appeals and
reviews to the Competition Appeal Court are dealt with in section
61
of the Act which provides:
“(1)
A person affected by a decision of the Competition Tribunal may
appeal against, or apply to the Competition Appeal
Court to review,
that decision in accordance with the Rules of the Competition Appeal
Court if, in terms of section 37, the Court
has jurisdiction to
consider that appeal or review that matter”.
He
argued that this section (section 61), confirms that this Court’s
review jurisdiction is confined to the review of decisions
taken by
the Tribunal and that its review powers do not extend beyond the
powers conferred by section 37 of the Act. Such conclusion,
Counsel
argued, seems to find support in Rule 23(1) of the Rules of this
Court which regulates applications to review a decision
of the
Tribunal to the Competition Appeal Court. 33. He submitted further
that it may be argued that section 62 of the Act, could
be construed
as widening the scope of this Court as well as the appeal and review
jurisdiction, it provides for exclusive jurisdiction
in competition
matters. It provides:
“62.
Appellate
Jurisdiction.
(1)
….
(2)
In addition to any other jurisdiction granted in this Act to the
Competition Appeal Court, the Court has jurisdiction
over-
(a)
the question whether an action taken or proposed to be taken by the
Competition Commission or the Competition Tribunal
is within
their respective jurisdictions in terms of
this Act
;
(b)
any constitutional matter arising in terms of this Act;
(c)
the question whether a matter falls within the excusive jurisdiction
granted under subsection (1).
(3)
The jurisdiction of the Competition Appeal Court-
(a)
is final over a matter within its exclusive jurisdiction in terms of
subsection (1); and
(b)
is neither exclusive nor final in respect of a matter within its
jurisdiction in terms of subsection (2).…”
However,
he argued, the jurisdiction has not been extended to cover review
applications of this nature. In support of this submission
he
strongly relies on the following passages in:
33.1
In
Simelane
and Others NNO v Seven-Eleven Corporation SA (Pty) Ltd and Another,
2003(3)
SA 64 (SCA), Schultz JA observed with regard to the review of the
decision of the Commission:
“[2]
The reasons why the review application could be brought in the High
Court was that at the time of its institution,
the Act did not
confer review powers on the Tribunal, … Although the
Competition Appeal Court (also a creature of the
Act) had
exclusive appellata and review powers over the Tribunal’s
decisions (s65(4)), it also did not have review powers
in respect
of the Commission. Accordingly, the High Court at the time of the
institution retained its common–law review
jurisdiction.”
33.2
TWK Agriculture Limited v The Competition Commission and
Others,
where Davis JP observed:
“[21] Since the
decision in
Pharmaceutical Manufacturers of South Africa
and Others
: in re:
Ex Parte Application of
President of RSA and Others
2000(3) BCLR 241 (CC) at
par 50, it is clear that the source of judicial review is to be
found in the Constitution . As Mr Cockrell,
who appeared on behalf
of first respondent, noted section 33 of the Constitution of the
Republic of South Africa 108 of 1996
(the Constitution) reads:
“Everyone has the right administrative action that is
lawful, reasonable, and procedurally fair.”
[22]
Consequently, the approach contended for by Mr Brassey that acting
“within their respective jurisdiction” covers
all
grounds of review, at the very least, is not supported by PAJA
which has given legislative form to s33 of the Constitution
regarding the source of judicial review. That may not be the end
of the applicants’ argument, were the wording of the
Act to
afford clear contrary support.
[23]
However, the attempt to locate the source of all review of the
Commission’s actions within section 62(2) of the Act
requires a strained interpretation of this provision. Given that
section 27(1)(c) and section 37(1) of the Act which provide
for
review powers to both the Tribunal and the Court in circumstances
where no such review power had existed prior to the
2000 amendment
to the Act, it places an anomalous construction on these sections to
contend that, when Parliament passed an
amending provision to
ensure that the Tribunal or this Court had review powers, it sought
to do no more than duplicate the very
review powers provided for
in section 62(2) of the Act. To extent that Mr Brassey contends that
s27(1 (c) is of no assistance
to respondents because in terms
thereof the Tribunal can only review a decision of the
Commission ‘that may in terms
of the Act, be referred to
it’ and that no such provision exists in the Act for such
referral, there are two clear responses
to this submission both of
which applicant was unable to counter: Firstly, as Mr Rogers
submitted, the phrase ‘this Act’,
as it appears in
section 27(1)(c), is a defined term which includes the regulations
and schedules (section 1(1)(i)). Rule 42(3)
of the Tribunal Rules
refers to the decision of the Commission that is being appealed
or reviewed. This rule clearly envisages
the possibility of a review
by the Tribunal of the decision of the Commission. Secondly, the
linguistic attack on s27 omits
to consider the foundational point,
being that s27(1)(c) specially employs the term ‘review’
which would make no
sense, were s62(2) to be interpreted to cover all
forms of review, which could conceivably be undertaken by the
Tribunal. Why
the need for two sections dealing with the same
power?
[24]
There is a further problem with the approach contended for by
applicants. As Mr Rogers correctly noted, the structure
of the
Act is designed to ensure that this Court is, as its name suggests,
an appeal court. Were Mr Brassey to be correct, this
court would
be a court of first instance insofar as the review of decisions of
the Commission were concerned. It would not
have the benefit of
the considered decision of a specialist body, being the Tribunal. In
this way, applicants’ interpretation
would undermine the
careful construction of the competitions as provided for by the
Act.……
[33]
To sum up: for the reasons already advanced in this judgment, this
Court is not possessed of the requisite jurisdiction
to hear
this form of application for review a as court of first instance.
This is a matter that should have been brought properly
before the
tribunal.”
as well as, inter alia,
33.3
In
Old
Mutual Propriety (Pty) Ltd and Another v Competition Tribunal and
Others
,
Malan, AJA, as he then was, emphasised the fact that the
Competition Appeal Court being a creature of statute derives its
jurisdictional powers form the four corners of the statute.
34.
From these passages, it was argued that, in terms of the
TWK
judgment
this Court is deprived of jurisdiction in the present circumstances.
35.1
In
Simelane
and Others NNO v Seven Eleven Corporation
,
supra, the court dealt with the review of the decision by the
Commission to refer a matter to the Tribunal (section 50 of the
Act). The remarks by Schultz are self explanatory. The key phrase
is “at the time of institution”. In that decision
the
court referred to the period before the amendment of the Act.
35.2
I agree with the submission by Counsel for the applicants that the
facts in
TWK
supra are distinguishable from the present
matter. In that case the applicants sought the review of the
Commission’s decision
relating to merger proceedings, a purely
competition issue. The applicants relied on section 62 (2)
alternatively section 62(1)
of the Act. The Court held that it did
not have jurisdiction to hear the matter as a court of first
instance. In casu, the applicants
rely on the provisions of section
62(2)(b). The review sought by the applicants relating to the
decision of the Commission is
based on constitutional grounds.
Section 1(c) of the Constitution entrenches the supremacy of the
Constitution and the rule of
law, and the right to just
administrative action in Section 33 thereof. PAJA is
constitutionally mandated legislation contemplated
in Section 33(3)
of the Constitution. Section 6 of PAJA provides for circumstances
under which an administrative action may be
subject to review. The
present application is not a competition but a constitutional
matter. See:
Hoexter, Administrative Law in South Africa
at
114.
36
.
It
is common cause that the Commission’s decision is an
administrative action. The Commission unequivocally concedes this
point. Accordingly, as Navsa JA, observed in Z
Sidumo
and Another v Rustenburg Platinum Mines Ltd and 2 Others
case
No. CCT 85/06
[2007] ZACC 22:
“[80]
The Supreme Court of Appeal found that PAJA applies. It took the view
that because PAJA was the national legislation
passed to give
effect to the constitutional right to just administrative action, was
required to “cover the field”
and purported to do so,
it applied to awards by commissioners. In this regard it relied on
decisions of this Court in
New
Clicks
and
Bato
Star
.
It did not examine the nature of a commissioner’s function by
reference to section 33 of the Constitution, nor did it
explore
whether PAJA provided an exclusive statutory basis for the review
of all administrative decisions.(footnote ommited).
[81]
In
President
of the Republic of South Africa and Others v South African Rugby
Football Union and Others
,
the following appears:
“In
s 33 the adjective ‘administrative’ not ‘executive’
is used to qualify ‘action’.
This suggests that the test
for determining whether conduct constitutes ‘administrative
action’ is not the question
whether the action concerned
is performed by a member of the executive arm of government. What
matter is not so much the
functionary as the function. The
question is whether the task itself is administrative or not.…
[89]
Section 33(3) of the Constitution provides that national legislature
must be enacted to give effect to the right to
administrative
action that is lawful, reasonable and procedurally fair. ….
[91]
Nothing in section 33 of the Constitution precludes specialised
legislative regulation of administrative action such as
section
145 of the LRA alongside general legislation such as PAJA. Of course,
any legislation giving effect to section 33 must
comply with its
prescripts.
[92]
In
Bato
Star
the
following appears:
“The
provisions of s 6 divulge a clear purpose to codify the grounds of
judicial review of administrative action
as defined in PAJA. The
cause of action for the judicial review of administrative action now
ordinarily arises from PAJA,
not from the common law as in the
past. And the authority of PAJA to ground such causes of action
rests squarely on the Constitution.
It is not necessary to
consider here causes of action for judicial review of
administrative action that do not fall within
the scope of PAJA
.
As PAJA gives effect to s 33 of the Constitution, matters
relating to the interpretation and application of PAJA will of
course
be constitutional matters.(emphasis added)(footnote omitted)
PAJA is a codification of the common law grounds of review.
It is
apparent, though, that it is not regarded as the exclusive
legislative basis of review.”
The
Merits
37.
The decision was not taken by the Commission.
37.1
This Court is empowered by the provisions of section 62(2) (b) of the
Act to hear applications of this nature as a court
of first
instance. It confers jurisdiction in respect of “any
constitutional matter arising in terms of the Act”.
37.2
Section 6 of PAJA provides that an aggrieved party “may
institute proceedings in a court or a tribunal for the judicial
review of an administrative action”. The words “court”
and “tribunal” are both defined in PAJA.
Neither
definition includes the Competition Tribunal. The definition of
“court” includes “a High Court or
another court of
similar status”. As stated hereinbefore, this Court is of
similar status as a High Court. It therefore
follows that this court,
and not the Tribunal, is cloaked with the requisite jurisdiction.
38
.
One
of the grounds upon which the applicants challenge the Commission’s
decision not to approve of the divestiture proposal
is that the
decision has been taken by a body which is not competent to do so. It
is only the Commission which could take such
decision in terms of the
Tribunal order.
39
.
Section
19(2) of the Act provides that “the Competition Commission
consists of the Commissioner and one or more Deputy Commissioners”.
It follows that it is the Commission (consisting of the Commissioner
and one or more Deputy Commissioners) that was required to
take the
decision in terms of paragraph 7.3 of the Tribunal order. From the
answering affidavit, as well as the Record of Decision
there is
nothing to indicate that the Commission (i.e. the Commissioner and
one or more Deputy Commissioners) took the impugned
decision. On the
contrary, the record of decision makes it clear that the impugned
decision was made by Exco on 6 March 2007. The
Commissioner was not
present at this Exco meeting. Exco is not a body that is established
in terms of the Act.
40.
Further,
there is nothing in the record of the decision to indicate that the
Commission had delegated the relevant decision-making
power to Exco.
The Commission’s answering affidavit admits that the impugned
decision was made by Exco and not by the Commission.
It avers,
however , that the informal divestiture proposal had been considered
by the Commission at a meeting held on 6 February
2007, and that the
Exco decision of 7 March 2007 merely “endorsed” the
decision of 6 February 2007.
41
.
I
agree with Counsel for the applicants that this explanation cannot be
accepted for the following reasons:
41.1
The meeting of 6 February 2007 was not a meeting of the Commission.
The minute describes it in express terms as a meeting
of Exco.
41.2
The answering affidavit states that “the Commission, as defined
in the Act, was present at the first meeting held on
6 February
2007”. It is not apparent from the minute whether at least one
Deputy Commissioner was present at the Exco
meeting of 6 February
2007. But even if a Deputy Commissioner was present, this would not
serve to convert a meeting of Exco
into a meeting of the
Commission.
42.1
Further, counsel for the applicants submitted that the Commission
iswrong when it avers that “the decision made on
the 7 March
2007, does not differ to that of the 7 February 2007, since the
proposal itself did not change significantly in nature”.
The
formal divestiture proposal differed in fundamental respects from
the informal divestiture proposal. He pointed out the following:
a)
the purchase price is stipulated.
b)
the merged entity will not have any insight into the business of the
tenant. It has no access to the management accounts,
financial or
other information of the lessee. An independent leasing agent will be
appointed to ensure that the lessor does
not exercise ant
oversight in respect of the lessee;
c)
the purchaser will have an option to purchase the Gallagher Estate
Exhibition and Conference Centre premises as soon as
the re-zoning
and subdivision has occurred; and
d)
the sale of Business Agreement contains a restraint of trade clause.
42.2
These seems to me to be differences of substance. Even accepting that
the two proposals did not materially differ, nowhere
in the minute
does Exco intimate it is endorsing a previous decision. To the
contrary it (Exco) makes a finding. It in any event
has no powers
in law to endorse a decision by the Commission.
43
.
In
my view the submission by counsel for the applicants that the
administrator who purported to take that decision (Exco) was not
authorised to do so by the empowering provision (within the meaning
of section 6(2)(a)(i) of PAJA) is valid. Consequently the decision
ought to be set aside on this ground.
44
.
The
Commission did not consult with the Trustee.
44.1
Paragraph 7.1.1 of the order stipulates that the Commission must
verify “in consultation with the Trustee” that
the
proposed purchaser is a suitable purchaser.
44.2
The purchaser of the divested business must be independent and not
related to the merger parties (para 6.1 of the order)
and must
possess “
the financial resources, proven expertise and the
incentive to maintain the divested business as a viable and active
competitive
force in competition within the [merger] parties or any
directly or indirectly affiliated member of the [merger] parties’
corporate group and other competitors”
(para 6.2 of the
order).
44.3
Paragraph 6.5 states as follows:
“[in]
order to maintain the structural effect of this order, the [merger]
parties or any directly or indirectly affiliated
member of their
corporate group, will not subsequently directly or indirectly
reacquire influence over the whole or part of the
divested
business”. The order requires that the purchaser be totally
independent of the applicants.
44.4
It is common cause that the impugned decision was not taken in
consultation with the Trustee. This is also borne by the
record of
decision.
44.5
The Commission contends that its failure to consult with the Trustee
is irrelevant since the decision that is sought to be
reviewed is
“the rejection of the divestiture proposal and not the
suitability of the purchaser”. But this contention
is
manifestly incorrect. The reasons furnished (which the Commission
says it is merely observation) make it plain that the Commission
rejected the formal divestiture proposal on the ground that there
was insufficient evidence to establish the suitability of
the
purchaser.
44.6
The Commission further contends that it was impossible to consult
with the Trustee as required by paragraph 7.1.1 of the
order since
the applicants had failed to furnish the relevant information to the
Commission. This contention is also incorrect.
The formal
divestiture proposal placed some information before the Commission to
enable it to assess the independence and the
suitability of the
proposed purchaser. Whatever the Commission’s opinion is, it
clearly had to consult with the Trustee.
44.7
Even if the applicants had failed to furnish sufficient information
to the Commission, this would not have absolved the
Commission
from its obligation to consult with the Trustee before taking a
decision in terms of paragraph 7.1.1 of the order.
The duty to
consult with the Trustee is a jurisdictional requirement for the
exercise of the Commission’s powers under
paragraph 7.1.1.
Legally, the Commission could not exercise that power unless and
until it had consulted with the Trustee. Accordingly
the impugned
decision ought to be set aside as the mandatory and procedural
condition was not compiled with (within the meaning
of section
6(2)(b) of PAJA). It was not authorised by the empowering provision
within the meaning of section 6(2) (f)(i) of PAJA.
45.
The
Commission exceeded its powers
45.1
Paragraph 7.1 of the order provides that the Commission will have the
power to verify that “the proposed purchaser
is a suitable
purchaser of the divested business”; and “to grant any
approval required under these commitments with
respect to any
ancillary arrangement”.
45.2
Counsel for the applicants submitted that the powers to approve with
respect to ancillary arrangement is not relevant for
the present
purposes. The only relevant power vested in the Commission is the
power to verify the suitability of the proposed
purchaser having
regard to the considerations contained in paragraph 6 of the order.
45.3
It seems to me that the Commission has more powers than to merely
approve the purchaser. In my view it has to do more than
that. It
has to monitor the divestiture as per the Tribunal order. Paragraph
7.3 of the order envisages that the Commission will
“approve
or reject the merging parties’ proposal”. In my view this
means that the Commission has to monitor the
divestiture order and
to ensure compliance therewith, including the structural
independence. This objective cannot be achieved
if the
Commission’s power is limited to determining the suitability
of a purchaser in terms of paragraph 7.1.1. Same is
true of the other
paragraphs the Commission relies on. Paragraphs 5.1 and 5.9 deal
with the appointment of a Trustee subject
to the approval by the
Commission. The Commission has in terms of clause 5.12 the powers to
reject the Trustee. It also has in
terms of clause 6.3 to approve
of the acquisition of the divested business (which is to be granted
to the purchaser). Clause
7 deals with approval of the purchaser
and of “any ancillary matter of the commitments under the
order”. It has
to. The mere fact that the applicants
approached the Commission for approval of the divestiture proposal is
indicative of the
appreciative of the Commission’s role in
policing or monitoring compliance. In my view, this would include any
aspect
to ensure full and proper compliance with the order.
46.1
It is important to note that the reasons for the Tribunal imposing
the divestiture condition were to:
46.1.1
remove any anti-competitive concerns that might exist in relation to
the activities of the applicants in the exhibition
facilities
market (since the merger parties both held interest in the Sandton
Convention Centre and Johnnic owned the Gallagher
Estate
Exhibition and Conference Centre)
.
and
46.1.2
address concerns that the merger entity might amend the terms and
conditions of bookings already confirmed at the Gallagher
Estate
Exhibition and Conference Centre, and/or that a new owner could
convert the Gallagher Estate Exhibition and Conference
Centre
into a non-exhibition venue, leaving the industry with the Sandton
Convention Centre as the only comparable exhibition
centre in the
region. In my opinion the Commission would have to look at the
proposal as a whole to determine if there is compliance
in sense
of truly transferring the divested business (as a going concern) to
an independent purchaser who is in a position to
compete in the
conference and exhibition market.
47.
The business as a going concern.
47.1
In terms of the order the applicants were required to dispose of the
business as a going concern. The order defines the
business as:
“’The
divested business’ – means the business as referred to in
clause 2 of the order”
47.2
Cause 2 reads that: “the merging parties shall divest the
following business:
“21.1
the business of the Gallagher Estate Exhibition and Conference Centre
as a going concern; and/or
21.2
the entire shareholding of Johnnic Holdings in Gallagher Estate
Holdings Limited.”
48.
The Commission refused to approve the divestiture proposal on the
grounds that the sale of the business must of necessity include
the
sale of the venue and that the proposed lease agreement did not
comply with the Tribunal Order.
49.
In
General
Motors SA (Pty) Ltd v Besta Auto Component Manufacturing (Pty) Ltd
and Another
1982(2)
SA 653 (SECLD), one of the issues the Court had to decide was
essentially the interpretation of a contract of sale. Kannemeyer,
J
observed at page 657H – 658D:
“Now
the business that the first claimant sold as a going concern was
engaged in the manufacture of components for motor
cars. It was in
operation as such when it was sold. Part of its operation was the
manufacture, under contract, of toolings and
components for the
applicant. It was bought as a business which was “active and
operating” in its field. It was sold
as a going concern so
that “the trade may not be broken up and dispersed”. It
was bought as one “in actual
operation”. In my view this
must mean that the intention of the parties was that the purchasers
would be entitled to continue
with any operations which were in
progress at the time of the sale for their account. The surrounding
circumstances, the factual
background known to the parties coupled
with the insertion of the restraint of trade clause in the agreement
leads me to the
conclusion that it was intended by the parties to
the agreement that contracts in the process of being performed at the
time
of the sale were part and parcel of the business sold as a
going concern. Further support for this view can be found in the
conduct
of the parties subsequent to the signing of the contract….
I thus come to the conclusion that on a proper interpretation
of the
contract in question the sale of the business as a going concern
includes work that was in the course of execution but
not yet
complete when the business was sold. The fact that clause 1 (a) of
the agreement which states that the business is sold
by the first
claimant to the purchasers as a going concern for R200 000, also
recites that the R200 000 represents the purchase
price of the
goodwill and the listed machinery and equipment is not intended to
limit the
res vendita
to the goodwill and the
equipment to the exclusion of the work in hand which, in my view,
forms part of the concept of a business
sold as a going concern”.
50.
In
NEHAWU
v University of Cape Town and Others
[2002]4
BLLR 311 (LAC) the Court dealt with the interpretation of
section 197
of the
Labour Relations Act 66 of 1995
and its application to
outsourcing. Zondo JP, albeit in the minority judgment, after
extensive comparative analysis of the meaning
of the phrase “business
as a going concern”, observed at paragraphs 64 and 65:
“[64]
Furthermore, I am of the view that the question of whether in a
particular case a business has been transferred as
a going concern
is a matter for objective determination. This does not mean that the
intention of the parties are irrelevant
but it does mean that the
say-so of the parties cannot be conclusive. In my view there are a
number of factors that are relevant
in determining whether or not a
business has been transferred as a going concern. These may include
what will happen to the
good-will of the business, the
stock-in-trade, the premises of the business, contracts with clients
or customers, the workforce,
the assets of the business, the debts
of the business, whether there has been interruption of the operation
of the business
and, if so, the duration thereof, whether same or
similar activities are continued after the transfer or not and
others. I do
not think that the absence of anyone of these will on
its own mean that the transfer of the business has not been one as a
going
concern. I would align myself with the approach adopted by
the European Court of Justice when, in paragraph11,12 and 13 of its
judgment in the
Spijker
s case, it said:
“[11]
… It appears from the general structure of directive 77/187
and the wording of Article 1(1) that the directive
aims to ensure
the continuity of existing employment relationships in the framework
of an economic entity, irrespective
of a change of owner. It
follows that the decisive criterion for establishing the existence of
a transfer within the meaning
of the directive is whether the
entity in question retains its identity.
[12]
Consequently it cannot be said that there is a transfer of an
enterprise, business or part of business on the sole
ground that
its assets have been sold. On the contrary, in a case like the
present, it is necessary to determine whether what
has been sold
is an economic entity which is still in existence, and this will be
apparent from the fact that its operation
is actually being
continued or has been taken over by the new employer, with the same
economic or similar activities.
[13]
To decide whether these conditions are fulfilled it is necessary to
take account of all the factual circumstances of
the transaction
in question, including the type of undertaking or business in
question, the transfer or otherwise of tangible
assets such as
buildings and stocks, the value of intangible assets at the date of
transfer, whether the majority of the staff
are taken over by
the new employer, the transfer or otherwise of the circle of
customers and the degree of similarity between
activities before
and after the transfer and the duration of any interruption in those
activities. It should be made clear,
however, that each of these
factors is only a part of the overall assessment which is
required and therefore they cannot be
examined independently of each
other.”
[65]
In my view the position is that there will be cases where the
transferor and the transferee agree that the workforce will
be
taken over by the transferee but the transaction cannot be
described as a transfer of the business as a going concern if many
of the other factors that are relevant to a transfer being one as a
going concern are absent and there will be transactions
where the
transferor and the transferee will agree that the workforce will not
be taken over but the transaction will still amount
to a transfer
of a business as a going concern because of the presence of many or
all of the other factors that go to making
a transfer of a business
to be one as a going concern. Accordingly each transaction must, in
my view, be considered on its own
merits in the light of all the
surrounding circumstances of the transaction before a determination
can be made whether it
constitutes a transfer of a business as
going concern.”
In
the majority judgment by Van Dijhorst, AJA observed at paragraphs
[104] and [105] that “A going concern is one “in
actual
operation” and that “purchasers and sellers of businesses
as going concerns are at liberty to define what is
included in that
concept” and that they, in practice generally do.”
51.
Even though the decisions in
General
Motors
and
Nehawu
cases,
supra, deal with contract and labour issues, respectively, the
principles enunciated in these cases are apposite to the
determination of ‘dispose of the business as a
going
concern’ as it is applicable in the present dispute..
52.
In my view the term “business as a going concern” in the
context of the present matter means the economic entity
which is in
existence and in operation i.e. the conference and exhibition
business. The venue is included only to the extent of
location and
facility not that the property itself is included. The parties
clearly did not envisage that the property be sold
as the agreement
reflects. The business is distinct from the property itself. As it
will become clear hereunder, it is in any event
impossible to sell
the venue on its own, that is, apart from the rest of the land, as it
is not subdivided from the rest of the
Gallagher land. The fact that
the property is not included does not mean the transaction is not one
“as a going concern”.
The operation of the particular
economic entity is transferred to a new owner. For instance the
stock, the contracts, as well as
management and staff are transferred
to the new owner who will continue running the same type of business
from the same premises.
53.
Procedural unfairness.
53.1
It is common cause that after the applicant’s lodged their
formal divestiture proposal with the Commission on 22 February
2007, and supplemented on 2 March 2007, the impugned decision was
taken on 6 March 2007 and communicated to the applicants
on 7
March 2007.
53.2
The Commission states in its answering affidavit that the formal
divestiture proposal placed it under severe time constraints.
The
parties’ divestiture period was due to expire on 8 March 2007.
There was in the circumstances no time to afford the
applicants an
opportunity to address the concerns raised. I accept that there was
in effect 6 days for the Commission to consider
the proposal before
the parties’ divestiture period was due to lapse. However, the
concerns raised – the independence
as well as the ability of
the proposed purchaser to compete in the relevant market – were
apparently raised in the Commission’s
internal memorandum
which is dated 2 March 2007. These surely could have been
communicated to the merger parties before a decision
is finally
taken. Failure to do so renders the proceedings procedurally unfair
within the meaning of
section 6(2)(c)
of PAJA. For this reason
alone the proceedings ought to be set aside. The decision is in my
opinion procedurally unfair. The
Commission did not convey its
concerns to the parties. It should have given the applicants a
hearing before taking its decision.
54.
Irrationality.
54.1
The decision by the Commission to reject the proposal on the grounds
that the property itself ought to form part of the sale
is, as
correctly submitted by Counsel for the applicants, vitiated by
unreasonableness.
54.2
For reasons set out in paragraphs 49 to 53 above, it is clear that
the Commission is mistaken in law in its conclusion that
the
property ought to be disposed of as well.
54.3
As it can be gleaned from the site map and the layout of the
Gallagher estate, as well as correspondence attached to the
founding papers, the Gallagher land comprises a number of
properties, including the property where the Pan African Parliament
is situated, and that the land has yet to be subdivided. Several
applications fro subdivision have been lodged. At present the
land
is not severable. It could not have been the intention of the
Tribunal that the applicants should sell the Gallagher land
as a
whole, as the vast portion thereof has nothing to do with the
conference and exhibition business and consequently market.
To impose
such a condition is incongruent with the “competitive”
harm intended to be addressed as that portion of
land is totally
unrelated to the particular market. Such outcome would be
unreasonable. The decision is irrational. The venue
cannot be sold
without subdivision of land.
54.4
There is nothing in the Record of Decision to show that the
Commission applied its mind to the suitability of the purchaser.
To
the contrary the internal memorandum of 2 March 2007 indicate that it
was at that stage unable to comment as it did not
have sufficient
information. The Commission states in the answering affidavit that it
could not have considered this aspect
including the question of
the lease agreement as it did not have such information. It follows
therefore that the decision cannot
be rationally connected to the
evidence within the meaning of
section 6(2)(f)(ii)
of PAJA.
55.
Irrelevant and/or extrinsic evidence
.
55.1
The Commission concedes that in arriving at its decision it took
account of the evidence which was led at the hearing
before the
Tribunal, the undertaking the merger parties gave at that hearing as
well as the reasons by the Tribunal.
55.2
In
Firestone
South Africa (Pty) Ltd v Gentiruco AG
1977(4)
SA 298(A) Trollip JA observed at 304 E-G:
“
The
basic principle applicable to construing documents also apply to the
construction of a court’s judgment or order:
the court’s
intention is to be ascertained primarily from the language of the
judgment or order as constructed according
to the usual,
well-known rules…. Thus, as in the case of document, the
judgment or order and the court’s reasons
for giving it
must be read as a whole in order to ascertain its intention. If, on
such a reading, the meaning of the judgment
or order is clear and
unambiguous, no extrinsic fact or evidence is admissible to
contradict, vary, qualify, or supplement
it. Indeed, it was
common cause that in such a case not even the court that gave the
judgment or order can be asked to state
what its subjective
intention was in giving it. Of course, different considerations
apply when, not the construction, but
the correction of a judgment or
order is sought by way of appeal against it or otherwise…..
But if any uncertainty
in meaning does emerge, the extrinsic
circumstances surrounding or leading up to the court’s
granting the judgment or
order may be investigated and regarded in
order to clarify it; for example, if the meaning of a judgment or
order granted on
an appeal is uncertain, the judgment or order of
the court a quo and its reasons therefor, can be used to elucidate
it. If,
despite that, the uncertainty still persists, other
relevant extrinsic facts or evidence are admissible to resolve it”
55.3
In casu, the order granted by the Tribunal is clear and unequivocal/
unambiguous. There is therefore no need to resort to
extrinsic
evidence to resolve its meaning. The Commission therefore, erred in
law in taking into account e.g. the evidence led
at hearing before
the Tribunal. The decision therefore falls to be reviewed and set
aside. (See:
Section 6(2(d)
of PAJA).
56.
COSTS
In
my opinion costs must follow the event.
MAILULA,
JA
Davis,
JP and Levinsohn, AJA concurred.