Clover Industries (Pty) Ltd and Others v Competion Commission and Others; Clover Industries (Pty) Ltd and Another v Lewis NO (79/CAC/JUL08;103/CR/DEC2008) [2008] ZAWCHC 297 (17 November 2008)

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[2008] ZAWCHC 297
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Clover Industries (Pty) Ltd and Others v Competion Commission and Others; Clover Industries (Pty) Ltd and Another v Lewis NO (79/CAC/JUL08;103/CR/DEC2008) [2008] ZAWCHC 297 (17 November 2008)

IN
THE HIGH COURT OF SOUTH AFRICA
(CAPE
OF GOOD HOPE PROVINCIAL DIVISION
CASE
NO: 79/CAC/JUL08 & 103/CR/DEC2008
DATE: 17/11/2008
In
the matter between:
CLOVER
INDUSTRIES (PTY) LTD
1
st
APPELLANT
CLOVER
SA (PTY) LTD
2
nd
APPELLANT
LADISMITH
CHEESE (PTY) LTD
3
rd
APPELLANT
And
THE
COMPETITION COMMISSION
1
st
RESPONDENT
PARMALAT
(PTY) LIMITED
2
nd
RESPONDENT
WOODLANDS
DAIRY (PTY) LIMITED
3
rd
RESPONDENT
LACNEWOOD
(PTY) LIMITED
4
th
RESPONDENT
NESTLE
SA (PTY) LIMITED
5
th
RESPONDENT
MILKWOOD
DAIRY (PTY) LIMITED
6™
RESPONDENT
And
in the matter between:
CLOVER
INDUSTRIES LIMITED
1
st
APPELLANT
CLOVER
SA (PTY) LTD
2
nd
APPELLANT
And
DAVID
LEWIS, N.O. 1
st
RESPONDENT
JUDGMENT
(Application
for Leave to Appeal)
DAVIS.
JP:
This
is an application for leave to appeal against an order of this Court
of 19 September 2007, in which this Court, given the
urgency of the
proceedings, made an order against appellants, without reasons.
Reasons
were then handed down on 12 November 2008. On 19 September 2008;
this court received an application for leave to appeal.
Argument was
heard this morning.
There
are, in essence, two separate questions which are the subject of the
appear.
The
first turns on the question as to whether a letter from a dairy
farmer, Mrs Malherbe, constituted a complaint in terms of
section
49B(2) of the Competition Act 89 of 1998 ('the Act'), and if so,
whether the complaint had been investigated within the
prescribed
period of one year, as stipulated in terms of section 50(1) of the
Act.
The
second issue is an application for leave to appeal against a review
which was brought by the first and second appellants,
which turns on
the proceedings which the Competition Tribunal
(Tribunal)
is due to hear and which hearing flows out of a corporate leniency
agreement concluded between the Competition Commission
and first
appellant on 3 February 2006, the details of which are set out in
the principal judgment.
There
is, at the outset, the question of what approach should be adopted
to leave to appeal. It is important to emphasise that
the scheme of
the Act was to ensure expedition in the resolution of disputes. In
the very nature of the disputes which arise
from the Act, it is
important that these be resolved fairly, but with due expedition. As
a result, Parliament created an architecture
in which appeals from
the Tribunal would be heard by this court, which would be the final
court for all matters contained in
the Act.
Unfortunately,
the drafters of the Act omitted to consider the provisions of
S168(3) of the Constitution; in particular to whether
the Supreme
Court of Appeal could be excluded, especially from matters set out
in section 62(1) of the Act, read together with
section 62(3) of the
Act. These provisions of the Act were subjected to the scrutiny of
the Supreme Court of Appeal in
American
Natural Soda Ash Corporation v Competition Commission
.
2005(6) SA 158 (SCA). The Court found that the appellate
jurisdiction of the Supreme Court of
Appeal
could not be excluded by the Act.
The
Supreme Court of Appeal, by way of the judgment of
Cameron
and Nugent, J J A
,
further held that:-
"Leave
to appeal from the Supreme Court of Appeal is required before an
appeal may be prosecuted from the competition appeal
court on the
matters set out in section 62(1) of the Act, and special leave must
be sought accordingly."
Mr
Rogers, who appears on behalf of the second respondent, produced
extremely helpful and thoughtful argument with regard to the

implications of these findings. In his view, where a matter falls
within section 62(2) of the Act, leave to appeal must be sought
in
the first instance from this court in terms of section 62(4). On the
other hand, if a matter falls within section 62(1) of
the Act (that
is the section which was subject to the forensic examination by the
Supreme Court of Appeal to which I have already
made reference)
leave must be sought directly from the Supreme Court of Appeal. In
such a case special leave will be the test.
In
Mr Rogers's view, the question in this particular case regarding the
complaint in terms of section 49B turned on whether the
Tribunal had
jurisdiction to entertain a complaint, in that the complaint
allegedly had not been timeously referred to it as
required by
section 50(2} of the Act. Accordingly, this matter fell within
section 62(2) and the ordinary test for leave to appeal
should
apply.
The
difficulty with this argument is that the submissions of the first
and second appellants as put forward this morning by Mr
Pretorius,
considered the issue to be an interpretive one, namely the meaning
of section 49B.
The
key question which vexed the Court in this case was whether the
so-called Malherbe letter constituted a 'complaint' as opposed
to
the provision of information' by a third party, in this case Ms
Malherbe.
The
basis of the Court's judgment was that a distinction had to be drawn
between section 49B(2)(a), where a person submits information

concerning an alleged prohibited practice to the commission and (b)
where there is a submission of a complaint against an alleged

prohibited practice in the prescribed form.
There
must be significance in the legislative distinction drawn between a
complaint and the submission of information, otherwise
part of the
section is redundant. Try as the appellants might by way of
reference to previous case law, it is impossible
to blur this
distinction to the extent that any submission of information to the
Commission will always constitutes a complaint.
This legislative
distinction informed the basis of this Courts finding. The Court
determined that Ms Malherbe was not a complainant.
If she was not a
complainant, there was no complaint. If there was no complaint, then
section 49B(2)(b) woufd not apply. The
logic may be simple, but in
my view, to an ordinary reader it is compelling.
This
dispute initiafly involved an interpretive question. Jf there is
distinction between a complaint and the submission of information,

and if the architecture of section 49B is to be maintained as this
Court determined, that in effect is almost the end of the
matter.
The only further question would be whether the letter from Ms
Malherbe, factually determined, constituted a complaint.
In
Glaxo
Welcome and Others v National Association of Pharmaceutical
Wholesalers
,
this Court, in the case of a complaint which had clearly been
intended to be a complaint, adopted a generous approach to whether

the complaint had to be produced in a prescribed form. It held;-
"While
the complaint need not be drafted with precision or even a reference
to the Act
r
the allegations of the conduct and the complaint must be cogntsably
linked to particular prohibited conduct or practice, there
must be a
rational recognisable link between the complaint referred to in a
complaint and the prohibitions in the Act, otherwise
it would not be
possible to say what the complaint is about and what should be
investigated."
The
Court, in effect, identified the document as a complaint and waived
the requirement for the document to be produced in the
prescribed
form.
In
this case, Mr Rogers sought to pull his argument from the boot
straps so as to attain his sought after principled elevation
of the
case by means of a submission that this dispute constituted a
vitally important jurisprudential point which was manifestly
in the
public interest; that is to determine whether section 49B of the Act
must be interpreted in the manner decided upon by
the Court. Hence,
only upon such an initial decision would the further, factual
determination be necessary. But, in my view,
the question for
determination turns primarily on a factual issue: did Ms Malherbe
initiate a complaint or did she not? Thus,
the question which has to
be determined is: what was her intention in generating the letter?
Furthermore,
were this Court to blur the distinction, as urged on the strength of
the
Glaxo
Welcome
case as interpreted by Mr Pre tori us, there would be no distinction
between information provided to the Commission and a complaint.
That
would certainly work to the disadvantage of the Commission in
investigating anti-competitive behaviour, for the Act would
then
refuse to recognise an informant who was not a complainant
If
this case depends on an analysis of the Act and then whether Ms
Malherbe was a complainant, the matter may well need to be
appealed
directly to the SCA for consideration, on the test of special leave.
If this court must give leave but decline the invitation
of Mr
Bhana, who appeared with Mr Coetzee and Mr Dalrymple that this court
should also apply a test of special leave, on the
ordinary test of
reasonable prospects of success I consider that, in this case, there
remains no basis to grant the application
for leave to appeal.
Simply stated, Mrs Malherbe was not a complainant as defined. Given
this finding, this is not the case to
deal with the question of the
forum for leave in an appeal based upon s62(1) read with s62(3) of
the Act.
The
second issue is far more problematic to the future of competition
litigation and the irritation shown by this Court this morning
is
reflective of comments that I wish to make after due consideration.
In
very useful heads of argument, Mr Bhana contended that this was a
case in which special leave is required. I did not take Mr
Pretorius
to object to that position. Again, the result should not be any
different to the ordinary test, and for the reasons
already
articulated, we have considered both situations.
Briefly
speaking, appellants were faced with a choice. They knew what an
immunity entailed, what was required, if the leniency
agreement was
signed and what the leniency policy entailed in this case. The
agreement was signed on 3 February 2006, some six
weeks after being
advised by this Commission of the conditions under which appellants
would be granted conditional immunity and,
after being advised in
respect of which conduct conditional immunity would and would not be
granted. There was no compulsion
to enter into the leniency
agreement and first and second appellants have no entitlement to
leniency, knowing that the Commission,
intended to investigate a
possible abuse of dominance by appellants, based on the sale of C
quota milk. Nonetheless they entered
into that agreement.
It
is abundantly clear from the agreement and the analysis thereof
undertaken by the Court that the Commission regarded the conduct

underlying the third complaint as separate and distinct from the
conduct underlying the sixth complaint There can be no doubt
that
appellants were aware thereof. When appellants entered into the
agreement they were also aware that they might find themselves
in a
position of having to co­operate with the Commission on one
complaint referral and face prosecution on another. That
possibility
is foreseen by a reading of the agreement. Throughout the process
they were represented by an impressive, highly
skilled legal team.
They were faced with a choice: take the immunity in respect of the
surplus removal scheme and risk prosecution
on the C quota milk and
assume the consequences that flow therefrom, or decline the immunity
and defend all charges brought.
It must have been a hard choice, but
one which they were legitimately entitled to make on a voluntary
basis. Having eEected to
take the immunity in respect of the surplus
milk scheme, the consequences of having to co-operate with the
Commission on one
complaint and being immune from the other, flowed
from these actions. That was also the basis of the finding of the
Court.
That
of course leaves open the question as to whether it is a matter
which is appropriate for leave in the first place, given
that,
notwithstanding all of the protestations over lack of fairness and
sudden discovery of constitutional obstacles, as was
set out
eloquently by my brother,
Patel,
J A
in the main judgment, it is difficult to know what consequences as
to fairness will flow until the substantive matter is heard
by the
Tribunal.
In
my view, there can be no prospect of success, neither because the
dispute is of great importance to the parties as determined,
because
of, the (arguably) interlocutory nature of the appeal, and secondly
because this question is not of great public importance
to the
public, save, that the prosecution of cartel behaviour is of great
public importance. But even on the ordinary test for
leave, the
agreement is clear and speculation about fairness is not required
for immediate determination. That therefore leads
me reluctantly to
make the following remarks.
The
most egregious form of anti-competitive behaviour is cartel
behaviour. Whatever the differences between the Chicago and the

ordo-liberal schools of competition law, on one issue there is
unanimity: the prohibition of cartel behaviour and price-fixing.

Price-fixing must be rooted out. In a country such as South Africa,
where food prices have risen at an alarming rate
r
and where mat-distribution of wealth continues to be blight on this
nation, such behaviour is unconscionable.
That
a party enters into a leniency agreement, admits certain egregious
uncompetitive behaviour and accepts the consequences thereof,
but
later seeks effectively to resile therefrom by way of a range of
technical arguments, should not be countenanced, particularly
having
been advised by experienced lawyers in the first place.
There
is a more general problem affecting the South African legal system
at present, which is that aH too many cases are run in
every singte
available court on the basis of all manner of conceivable technical
arguments that a lawyer can imagine so as to
ensure that matters are
never brought to finality.
The
entire dispute of which the agreement is but a part is a case that
requires determination by the Tribunal. Of course, I do
not opine on
the merits of the case before the Tribunal. But there has been an
agreement and certain admissions have been made.
An attempt is now
made effectively to circumvent
(his
agreement.
This approach raises a problem upon which this Court should comment.
Competition law must be prosecuted in this
country with
fairness but at so with expedition. The legal community, which
appears both in this court and the Tribunal,
owe their clients a
paramount duty, but they also owe, as officers of the Court a duty
to the integrity of the legal system.
There needs to be a debate in
the legal profession of South Africa as to the role of lawyers in
relation to balancing the interests
of clients and duty as officers
of the court enjoined to uphold the integrity of the system without
which there can be no rufe
of law. Given the conclusions of the
Court, there is no need to deal with the question of the right of
the late comer appellants',
to joint the fray at this stage.
For
all of these reasons, the application for leave to appeal is
DISMISSED
WITH COSTS, INCLUDING COSTS OF TWO COUNSELS.
DAVIS,
JP
Agreed
MAILULA,
JA and PATEL, JA agreed.