About SAFLII
Databases
Search
Terms of Use
RSS Feeds
South Africa: Competition Appeal Court
SAFLII
>>
Databases
>>
South Africa: Competition Appeal Court
>>
2007
>>
[2007] ZACAC 4
|
|
Caxton & CTP Publishes and Printers Ltd v Naspers Ltd and Others (72/CAC/Aug 2007) [2007] ZACAC 4 (8 October 2007)
IN THE COMPETITION APPEAL
COURT OF SOUTH AFRICA
CASE
NO 72/CAC/Aug 2007
In the matter between :
CAXTON AND CTP PUBLISHERS AND
PRINTERS LIMITED ("Caxton") Applicant
and
NASPERS LIMITED ("Naspers")
First Respondent
ELECTRONIC MEDIA NETWORK LIMITED
("M-Net")
Second Respondent
SUPERSPORT INTERNATIONAL
HOLDINGS LIMITED
("Supersport")
Third Respondent
THE COMPETITION COMMISSION
Fourth Respondent
THE COMPETITION
TRIBUNAL
Fifth Respondent
Judgment
Delivered
on:
8
October 2007
LEVINSOHN AJA :
[1] For ease of reference I shall refer
to the parties to these review proceedings by their abbreviated
names.
[2] The salient background facts which have given
rise to the review
are in brief outline
the following.
[3] Naspers proposes to take
control of M-Net and Supersport. This is deemed to be a large merger
and requires
approval by
the Tribunal. The latter is scheduled to hold hearings on
8th to 12th October
2007.
[4] Caxton has applied to the Tribunal to intervene in
the said merger proceedings. In its founding affidavit Caxton averred
that
Naspers is the largest publisher of newspapers and magazines in
South Africa which fall under the direct
control of Media24.
[5] Caxton itself is a printer and publisher of books and
magazines. It controls one regional daily newspaper and many regional
and community newspapers.
[6] The applicant's deponent made the point that
Naspers and Caxton are competitors in the print market inasmuch as
they would be
competing for subscribers to their respective
publications and for advertisers.
The deponent
goes on to describe the
powerful position exercised by
the television networks, namely M-Net, Supersport and the various
Multichoice satellite channels.
[7] According to the allegations made by Caxton's deponent
Naspers's dominance in the market place would be considerably
enhanced
if the merger were to take place.
[8] Caxton makes the following averment :
-
"The applicant apprehends that Naspers will use its
new-found freedom of control to obtain an unfair advantage in the
various
print media markets in which it competes with the applicant.
In particular, the applicant anticipates that post-merger Naspers
will engage in cross-subsidisation, foreclosure and anti-competitive
bundling. I explain each of these concerns in turn."
[9] The deponent then goes on to describe the manner in
which the alleged anti-competitive behaviour will manifest itself
following
a merger. It is unnecessary to summarise these allegations
in any detail save perhaps to mention that the deponent avers
that the Commission has
misdirected itself in regard to the issue of
"foreclosure",
"bundling" and
"cross-subsidisation".
[10] The deponent makes the submission that Caxton has
a material interest, alternatively even if it does not have such an
interest,
it possesses the ability to assist the Tribunal in its
consideration whether or not to permit the merger.
[11] Importantly Caxton submitted it should be given
the "fullest possible rights" to participate in the
proceedings as
an intervening party.
[12] Naspers delivered an answering affidavit. At the
outset it made the point that it did not oppose Caxton's application
in terms
of section 53(1)(c)(v) of the Competition Act, No 89 of 1998
("the Act").
[13] However Naspers submitted that the Tribunal ought
not to permit Caxton to raise any issue it chooses to do in the
merger proceedings
but rather that the issues which Caxton may raise
be defined ; in short the ambit of the opposition to the merger be
circumscribed.
[14] Accordingly Naspers
averred that Caxton ought to be permitted to raise only the issues of
"bundling" and "foreclosure"
in the merger
proceedings.
[15] After a hearing on 23rd July 2007 the Tribunal
issued the following order : -
"1. The applicant is granted leave to intervene and
participate in the merger proceedings between the first, second and
third
respondents ("the merging parties"), in terms of
s53(1)(c)(v) of the Competition Act 89 of 1998 ("the Act"),
read with rule 46 of the rules of the Competition Tribunal, subject
to the scope of intervention being limited to the following
matters :
1.1. Foreclosure, but limited to the concerns
articulated in paragraph 29 of the Notice of
Motion.
1.2. Bundling as contemplated in paragraph 27 of the
Notice of Motion; save that bundling is not limited to
issues
of mixed bundling and may, if
appropriate, include such matters as full line forcing.
2. Subject to paragraph 1 above, the applicant is
entitled to participate in the merger hearing and the pre-hearing
procedures,
to the full extent of a party to such proceedings.
3.
There is no order as to costs."
[16] On 7th August
2007 following upon the issue of the
aforesaid order Caxton launched
urgent review
proceedings before this Court. It
claimed the following relief in
its notice of motion : -
"1. Authorizing this application be
heard as one of urgency and for the purpose dispensing with the rules
governing forms and
filing and disposing of the application at such
time and place and in accordance with such procedure as to the Court
seems meet.
2.
Reviewing and setting aside the order of the Competition Tribunal
dated 23 July 2007 to the extent
that it qualifies the
ambit and scope of intervention of the applicant.
3.
Substituting for
such order
the following
order :
a. 'The applicant is granted
leave to intervene and participate in the merger proceedings between
the first,
second and third respondents in terms of
s 53(1)(c)(v)
of
the
Competition Act 89 of 1998
read with
rule 4
6
of the Rules of the
Competition
Tribunal.
b.
There is no order as to costs.'
4. For
costs of suit."
[17] In its founding affidavit in support of the review Caxton's
deponent submitted that the Tribunal had committed a reviewable
irregularity by placing limits on the scope and ambit of the
intervention. The submission is that in doing so it strayed beyond
the scope of the powers conferred upon it by the Act.
[18] Caxton in paragraph
16.2 of the said
founding
affidavit makes the following submission : -
"In raising this objection, Caxton in no
sense
contends that it would not be precluded
from raising or traversing
issues in the
hearing that, by reason of their content,
would
fall beyond the scope of legal
relevance. Before such a
question can arise, however, Caxton must, through
the conventional processes of
discovery and interrogatory, be given
the opportunity to consider, examine and explore whatever issues
might appear to be relevant
to the grant or refusal of the merger
approval. At present Caxton is severely curtailed in this respect, as
is evidenced by the
fact that the legal representatives for the
merging parties have instructed the Commission to supply Caxton's
legal representatives
with a significantly expurgated version of the
record, and their discovery has been similarly limited."
[19] Counsel for Caxton in amplification of the foregoing
submission submitted principally
that ,once the Tribunal recognises the right of a party to
intervene, it
is
not entitled to curtail in
any way the scope of the
intervention by limiting
the issues such intervening party is entitled to raise.
[20] At the outset counsel for Caxton focused on
the
provisions of section
53 of the Act.This section
regulates the rights of persons to participate in various categories
of matters which come before the Tribunal.
For example, complaints which are regulated by part C of the Act
which relate to complaints in regard to
prohibited
practices. Then there
are hearings constituted in terms of section 10 of the
Act where an applicant
seeks an exemption within the meaning
of that section. Finally
there
are Chapter 3 proceedings which concern us herein.
[21] The subsection reads as follows : -
"53(1) The following persons may participate in a
hearing, in person or through a representative, and may put questions
to
witnesses and inspect any books, documents or items presented at
the hearing : -
(c) if the
hearing is in
terms of Chapter 3 -
(i)
any party to the merger;
(ii)
the Competition Commission;
(iii)
any person who was entitled to receive a notice in terms of section
13A(2) and who indicated to the Commission an intention
to
participate, in the prescribed form;
(iv)
the Minister, if the Minister has indicated an intention to
participate;
and
(v)
any other person whom the Competition Tribunal recognised as
a participant."
[22] It is self-evident that subsection (c) gives
the
Tribunal a discretion to "recognise" a person as
a
participant in merger proceedings. This discretionary power has
been affirmed by this Court in Anglo South Africa Capital (Pty) Ltd
and Others v Industrial Development Corporation of
South Africa and Another
2004 (6) SA 196
(CAC) where Jali JA at 208 E
said the following : -
"I agree with Mr Gauntlett's
submission that the Tribunal misdirected itself on the nature of the
applicable discretion. The
granting of leave to a party to
participate is discretionary. However, such discretion cannot be
unfettered. The discretion must
be exercised judiciously or according
to rules of reason and justice. (See Ismail and Another
v Durban
City Council
1973 (2) SA 362
(N)
at 371H - D372.)
If one considers the provisions of s
53(1)(c)(v)
which does not set any grounds
for participation, the
Tribunal
has a
wide discretion, albeit
to
be exercised
in a judicial manner."
[23] That is in
stark contrast to, for
example, the complaint procedure
where the test for
locus
to participate is the
complainant's interest. In the
case
of an intervenor, it
is said to
be a
"material interest".
[24] This Court has also
affirmed the principle
that the
right to participate in merger proceedings is not
based solely on the
criterion of
interest or
material interest. See the Anglo South Capital (Pty) Ltd case,
supra.
[25] I think it is important to emphasise that
subsection (c) uses the phrase "whom the Competition
Tribunal
recognised". In this context
"recognises" means to acknowledge; to treat as valid; as
having existence or is entitled
to consideration; to take notice (a
thing or person) in some way. (See the Shorter Oxford English
Dictionary, Third Edition,
page 1764.)
[26] In the instant case Caxton and Naspers
placed
information before the Tribunal by way of affidavit and
that is of course a necessary preparatory ingredient to the proper
exercise
of the Tribunal's discretion. The Tribunal ,after assessing
that information, accorded recognition to
Caxton.
It could now participate
in the merger proceedings, and it was permitted
to
canvass the issues which are set forth in the Tribunal's order. It is
evident that in doing so the Tribunal took the view that
the defined
issues were of importance and would assist
it in making the determination
whether the merger is likely to
substantially prevent or lessen competition within the meaning of
section 12A.
[27] Counsel for Caxton contends that in making
the
aforesaid determination the Tribunal is enjoined
to
consider all the factors which appear in section 12A. This in effect
means that there may well be a whole array of factors which
fall to
be considered beyond those that were raised in the affidavits.
Therefore to the extent that Rule
46 of the
Tribunal rules requires a proposed intervenor to set forth the
matters in respect of which such intervenor will make
representations, it is contended by Caxton that this requirement is
ultra vires the Act.
[28] Now section 52 of the Act provides that the
Tribunal must conduct a hearing into every matter which is referred
to it and,
importantly, in terms of section 52(2)(b) it "may
conduct its hearings informally or in
an inquisitorial manner". It seems to me
therefore that the Tribunal is not simply a passive
decision-maker waiting upon the parties in an
adversarial-like manner to place evidence before it and then
arrive
at a decision.
The Act intends that it play an active and if
necessary an interventionist role and I think, more importantly, it
ought to control
and regulate its own
proceedings.
To my mind that is
a necessary incident of section 52(2)(a) and
(b).
[29] In my view rule 46 of the rules of the Tribunal
have been framed to achieve the objectives to which
I have
alluded above.
[30] If Caxton's contentions are correct and it
would,
as it were, have "open season" at the hearing,
that in my view, would not be in the interests of an orderly and
expeditious
hearing. The parties to the merger it seems to me as a
matter of common sense must at least be apprised of what is said to
be the
anti-competitive implications of the
merger. In
that regard it would
be able to marshal
its witnesses,
particularly its experts, and produce documents. If it were
otherwise, in my view, far from promoting
an expeditious
hearing there would be delays resulting I believe in a cumbersome and
chaotic hearing.
[31] Thinking my way through Caxton's argument there is
yet
another very undesirable consequence that flows therefrom. If the
matters to be raised are not circumscribed Caxton would presumably
be
entitled to a wide-ranging discovery of documents from
the merging parties.
There would be no limit on which
documents, confidential or otherwise, are to be produced.
In ordinary
High Court litigation the right to obtain documents from one's
opponent is in general limited by
relevance arising from the
defined issues. Notwithstanding that merger proceedings take place
without pleadings , it remains of
the utmost importance that the
Tribunal exercise
control over the proceedings to ensure that the
evidence led is relevant to the issues raised as to the
approval of the merger.
This
is yet another reason why the Tribunal
ought to be entitled to control and rein in what may turn out to be a
very unruly
horse.
[32] Of course if it turns
out during the course of the
hearing that an issue arises which
falls outside
the ambit of the Tribunal's order and the
Tribunal
considers that such issue to be of substance
and
importance and therefore should be weighed in its assessment,
there appears to me to be no reason why the Tribunal cannot at that
stage permit Caxton to canvass
such matters. As I have suggested above that
would be
part and parcel of the Tribunal's inherent right to control its own
proceedings.
[33] It follows that in my opinion Caxton has not shown
that the Tribunal in making the aforesaid order acted ultra vires,
exceeded
its jurisdiction or improperly exercised its discretion. The
review must accordingly be dismissed with costs such costs to include
the costs consequent upon the employment of two counsel.
DAVIS JP :
MAILULA AJA
:
DATE OF
JUDGMENT :
OCTOBER 2007
DATE OF
HEARING :
10 SEPTEMBER 2007
COUNSEL FOR THE
APPLICANT:
MR S. SYMONS SC with him MR M
WESLEY
INSTRUCTED BY
:
DENEYS REITZ INC, SANDTON
COUNSEL FOR FIRST, SECOND
AND THIRD RESPONDENTS :
MR D. N. UNTERHALTER SC, with him MR N. H. MAENETJE
INSTRUCTED BY
:
WERKSMAN INC, SANDTON