American Soda Ash Corporation CHC Global (Pty) Ltd and Another v Competition Commission of South Africa and Others (leave to appeal) [2003] ZACAC 7 (30 October 2003)

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[2003] ZACAC 7
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American Soda Ash Corporation CHC Global (Pty) Ltd and Another v Competition Commission of South Africa and Others (leave to appeal) [2003] ZACAC 7 (30 October 2003)

10
IN THE
COMPETITION APPEAL COURT OF SOUTH AFRICA
CASE 12/CAC/DEC01
In the
matter between
AMERICAN NATURAL SODA ASH CORPORATION
First Appellant
CHC GLOBAL (PTY) LTD
Second Appellant
and
COMPETITION
COMMISSION
OF SOUTH AFRICA
First Respondent
BOTSWANA ASH (PTY) LIMITED
Second Respondent
CHEMSERVE TECHNICAL PRODUCTS Respondent
THE MINISTER OF TRADE AND INDUSTRY
Fourth Respondent
JUDGMENT
DAVIS JP
This is an application for leave to appeal to the
Supreme Court of Appeal against the judgment of this Court delivered
on the 25th
of October 2002, dismissing an appeal of the applicant.
Briefly, this Court confirmed the decision of the Competition
Tribunal
(‘the Tribunal’), to the effect that the second and
third respondents had
locus standi
,
to approach the Tribunal for relief which they sought against the
Applicant. The Court further upheld the decision of the Tribunal,
that the wording of
Section 3(1) of the
Competition Act 89 of 1998
(The Act),
supported the conclusion that the Act applied to all economic
activity having an effect within the Republic and that
there was no
basis for reading the section narrowly by way of reading in the
qualification of any effect of a non-competitive nature.
The Court
also upheld the decision of the Tribunal to the effect that
Section
4(1)(b) of the Act
rendered unlawful
the setting of a selling price regardless of whether conduct which
fell within the section could be justified on
efficiency grounds.
The Applicant then sought to appeal this
judgement to the Supreme Court of Appeal. The matter was heard by
the Supreme Court of
Appeal, which handed down judgement on 2 June
2003.
Farlam JA
,
held (at paragraph 15) that "The objection raised by all three
respondents, namely that the present application must be dismissed
because the applicants did not first ask the Competition Appeal Court
for leave to appeal was well taken."
In short, the judgment of the Supreme Court of
Appeal, justifies the conclusion that the sole issue upon which
this Court is now
called to adjudicate, turns on the question as to
whether there is reason to grant leave to appeal to the Supreme Court
of Appeal.
The determination of the scope of the question before
this court is important in that applicants have urged this court to
opine
upon the issue as to whether an appeal lies in law to the
Supreme Court of Appeal. In my view, it does not appear to be
appropriate
for this Court to opine on whether in terms of
Section
62(1) of the Act
, the ouster of the
jurisdiction of the Supreme Court of Appeal is constitutional. The
crisp question for decision for this Court
this morning concerns
reasons to grant leave to appeal.
The
Court has been fortunate to be provided with extremely competent and
eloquent heads by Mr Brassey and Mr Cockrell on behalf of
the
applicants, and Mr Unterhalter and Mr Gotz on behalf of the second
and third respondents. Before dealing with the three issues
which
give rise to this application mention must be made of the arguments
placed before this Court regarding the appropriate test
for leave to
appeal.
In
general, as Mr Brassey correctly contended, the test that applies in
an application for leave to appeal is whether there are
reasonable
prospects of success on appeal. In other words the general
principal is that "leave is granted if there are reasonable
prospects of success",
Zweni v Minister of Law and Order
1993
(1) SA 523
(A) 531 C to D
.
The particular question which has been raised is
whether a stricter test should apply in the case of an appeal from
this Court; that
is, a test which generally applies when special
leave to appeal to the Supreme Court of Appeal is granted against the
judgment of
a full bench of the High Court, in terms of
Section
20(4) of the Supreme Court Act 59 of 1959
.
In the case of such an appeal it is not sufficient for an applicant
merely to show that there are reasonable prospects of success.
An
applicant is required in addition to show that there are special
circumstances that would merit a further appeal to a Supreme
Court of
Appeal.
The jurisprudence in regard to his test is
captured in
Westinghouse Brake and
Equipment (Pty) Ltd and Bilger Engineering (Pty) Ltd 1986 (2) SA555
(A)
. Given the approach which I adopt
to this matter, it is not necessary to make a final determination in
this regard. Suffice it
to say that although there is no textual
support in terms of
Section 62
to justify the application of the stricter test, the fact is that the
constitutional difficulty which has been raised by the applicant,
is
not one that was confronted by the drafters of the Act. The
constitutional problem turns on whether the ouster in terms of
Section 62
is valid in the light of
Section 168(3)
of the Constitution of the Republic of South Africa 108 of 1996
.
Thus the Act never envisaged the kind of deliberation with which we
are engaged this morning and hence I am not certain whether
the
absence of a textual basis for applying the strict test can be
definitive of the question. I might also add that the very structure
of the Act was designed to establish a hierarchy of decision-making
commencing with the administrative actions of the Commission,
the
determinations of the Tribunal and a right of appeal to this Court.
Furthermore the purpose behind the establishment of the
Tribunal and
this Court was to create suitably qualified for a to deal with this
extremely complex and novel area of law. In itself,
the role of
this court may well constitute a basis for the conclusion that the
stricter test is appropriate. However it is not
necessary to
determine this issue at this stage.
I turn to deal with the three matters of
substance.
Section 3 of the Act
,
as the judgment of this Court made clear is phrased in very clear
language. It provides that this Act applies ‘to all economic
activity within, or having an effect in, the Republic except -’
On the applicants argument the Competition
Commission, or indeed any party which brings a complaint, will have
to prove that the
economic activity of a party in the position of the
applicant has a substantial negative effect on competition within the
Republic
before the Tribunal can apply the substantive provisions of
the Act. It does not appear to be disputed that in this particular
case the applicants engage in "economic activity, which may have
an effect in South Africa". They seek to have words
read into
Section 3(1)
,
the phrase ‘have a deleterious or negative effect on competition’.
The applicants contend that the words "in effect"
in
Section 3(1)
should be read purposively to connote "an anti-competitive
effect".
A
purposive approach to interpretation is not merely a mantra to be
waived in desperation when an unsuccessful party is faced with
clear
and unambiguous words of a section. Agreed, words must be given a
meaning within a particular context but where the meaning
within the
context is clear, that is the end of the matter. In this particular
case, the legislature has expressed itself by way
of the employment
of a phrase which manifestly fits the purpose of the Act, namely that
the Act envisaged an application to a wide
range of activities, being
all economic activity which has an effect within the Republic. This
approach then allows the competition
authorities to have jurisdiction
to deal with questions, which may (or may not) finally be determined
in relation to anti-competitive
effects. Were the words to be
written into the Act by way of implication as urged by the
applicants, then, as the judgment of this
Court has already noted,
this form of wording would render the various tests contained in
Sections 4(1)(a) and 5(1)
redundant. In short, there would
have already been a determination of the anti-competitive effects in
terms of section 3,
long before
the investigation mandated by the specific section of the Act could
be instituted. The question must then be raised, why
would a
duplication of the anti competitive test be mandated by the Act?
This question poses an even more formidable hurdle for
applicants
when the clear words of the section crisply dictate a conclusion to
the contrary.
In my
view, the Act is clear and the judgment of this court interpreted the
section in a manner whereby there is no reasonable prospect
that
another court would come to a different interpretation, even on the
more generalised test for leave to appeal. The application
in this
regard must fail.
Turning to
Section
4
, there is a measure of curiosity in
the manner in which this application against the decision of the
Court in respect of this section
had been brought. In their
argument the applicants concede that the Tribunal defined the issue
which it had to decide as, "does
Section
4(1)(b)
allow for an efficiency
defence?" he Tribunal decided that the wording of the section
did not permit an efficiency defence.
The applicants concede in
their heads of argument, ‘ that the unsurprising conclusion on the
issue as so defined is "No”.
The conclusion is self-evident
in the distinction between the rule of reason analysis mandated by
s
4(1)(a)
and the
per
se
analysis implicit in the
prohibitions imposed by
Section
4(1)(b)
".
One
would have thought that was the end of the matter, but it is not.
The applicants seek to develop a range of further arguments
which
they say are definitive of the question. They argue that ,before as
opposed to once a transgression of
Section
4(1)(b)
can be established, the Court
must determine whether the conduct complained of falls within the
ambit of the section. This particular
argument which entails a
process of characterisation, would then result in a conclusion that
in the case of an open, transparent
and legitimate joint venture
corporation created to promote trade and achieve efficiencies (this
is the manner in which Applicants
have described their activities),
the competitive effects of this conduct would trump the complainant’s
contention that this form
of joint venture should be struck down.
Section 4(1)(b)
,
does entail some fact based analysis to conclude whether the
situation is one which is contemplated by the
per
se
prohibition. Once the conduct
envisaged in the section is determined there is no need for scrutiny
on the basis of the rule of
reason test in sub-section (a). This
statement requires some examination of the applicable section .
Section 4(1)
provides that
an agreement between, or
concerted practice by, firms, or a decision by an association of
firms is prohibited if it is between parties
in a horizontal
relationship and if –
it
has the effect of substantially preventing or lessening competition
in a market, unless a party to the agreement, concerted
practice
or decision can prove that any technological efficiency or other
pro-competitive gain resulting from it outweighs that
effect; or
it
involves any of the following restrictive horizontal practices:
directly or indirectly fixing a purchase or selling price or any
other trading condition;
dividing markets by allocating customers, suppliers or
territories or specific types of goods and services;
collusive tendering.
It is clear that the textual differences between
section 4(1)(a)
which contains an expressed proviso and
section
4(1)(b)
which does not manifest
incorporates a body of comparative competition law which in effect
can be termed the
per se
and
rule of reason approaches to competition law. In short,
section
4(1)(a)
incorporates within the context
of South African law, a rule of reason approach to these matters,
whereas
Section 4(1)(b)
envisages a
per se
approach
Where an impugned agreement falls within the
ambit of
Section 4(1)(b)
,
the Court has to ask the question prefigured in the express words of
the provision namely: ‘Does the agreement involve price
fixing,
the fixing of trading terms and conditions, a market sharing
arrangement or conducive tendering? If it does, then the agreement
is
hit by the prohibition in
Section
4(1)(b)
and the prohibition applies.
If it is found that the agreement does not involve any of these
activities, then the conduct is not
immune to scrutiny and falls to
be assessed under the rule of reason in terms of
Section
4(1)(a)
.
Were
this Court to adopt the approach urged upon us by the applicants, it
would in effect be blurring the distinction between
per
se
and rule of reason and effectively
render
Section 4(1)(b)
a form of the rule of reason approach. A court would first have to
investigate whether there were justifications for the practice
and
then conclude, if there were not, that it was
per
se
prohibited. That however is not
the way
per se
jurisprudence
works, nor does it reflect the clear intention of the Act which
adopted a clear policy choice. The policy choice it
made was to
highlight three separate forms of activity being price fixing,
dividing up of markets and collusive tendering, which,
as with much
comparative competition law, are regarded as egregious activities of
a kind, which competition authorities must prohibit
. There is
nothing odd about this policy. A division and the section is clearly
unambiguous in its establishment of these set of
principle
In my view, there is no basis by which another
Court could reasonably come to a different interpretation to the
structure of
Section 4(1)(a) and (b)
so as to justify the arguments which have been urged upon us by the
applicants.
I now turn to the third issue, which is the
question of the
locus standi
.
Section 53
of the
Act provides
inter alia
that:
(1) The following
persons may participate in hearing the person or through a
representative and may put questions to witnesses in
respect of any
documents or items presented at the hearing.
(a) The hearing is terms of Part C –
(ii) the Complainant if:
the Complainant referred the complaint the Competition Tribunal;
in the opinion of the presiding member of the
CompetitionTribunal, the Complainant's interests is not adequately
represented by
another participant and then only to the extent
required for the Complainant's interest to be adequately
represented.
It is trite that in common law, the test of a
direct and substantial interest in the subject matter of the action
is decisive. Our
Courts have followed this approach, particularly as
articulated in
Henri Viljoen (Pty) Ltd v
Awerbuch,Brothers 1953(2) SA 151 (O) Act 169
,
namely an interest in the right which is the subject matter of the
investigation, which in common law does not mean merely a financial
or commercial interest.
Section 53(1)(a)
does not require that a complainant show a direct and substantial
interest or indeed a material interest in the sense adopted in
common
law. It contemplates a showing of an interest not adequately
represented by another participant and then only to an extent
required for the Complainant's interest to be adequately represented.
The second and third respondents are complainants and they
submitted a complaint against the Applicant. To show an interest,
as Mr Unterhalter correctly submitted, the applicant for leave
to
intervene must establish some interest in the outcome of the
proceedings. It must establish that it has an interest, cognisable
by
the competition authorities, which may be effected by the Tribunal's
decision regarding the matter. It therefore follows that
the Act
recognises that there is a need, on occasion, to protect an interest
different from the general public interest. That interest
must be an
anti-trust one .It necessary follows that the Act serves not just to
protect the general public interest but will express
the anti-trust
interest of different class of persons including customers,
competitors, suppliers and consumers, as envisaged in
Section
2 of the Act
, which also includes the
interest of the historically disadvantaged.
Even were this Court to adopt the test of Patz v Greene 1907TS 424,
where a reading of the Act or from such a reading within the
context
of the likely surrounding circumstances, it can be concluded that an
act is prohibited in the interest of the class of persons,
any member
of that class may seek the intervention of a Court to enforce the
prohibition without proof of special damages, for the
damage will be
presumed.
In my view,
Section
4(1)(b)
is clearly designed to protect
the interest of several classes of persons, namely customers,
competitors and suppliers, from such
forms of agreement.
Section
53
confirms that such interests are
cognisable under the Act and for this reason whether on an
interpretation of
Section 53
,
or by application of the rule articulated in Patz v Greene, the
second and third respondents have a right to approach the competition
authority, including the Tribunal and this Court. For this there
is, in my view, is no reasonable prospect that another Court would
adopt the kind parsimonious approach to standing, as urged upon us by
the Applicants.
For these reasons the application for leave to appeal on all three
grounds, should be dismissed, whether or not this court were
to adopt
the generalised, as opposed to the stricter test for leave to appeal.
The application for leave to appeal is dismissed, and the costs of
this appeal which in the case of the second and third respondents
includes the costs occasioned by the employment of two councils are
to be borne by applicants
Davis JP
Jali JA and Malan AJA concurred.
30
October 2003
APPEARANCES
:
For the Applicant:
Adv M S M Brassey SC
instructed by J Y Meijer of Cliff Decker Inc
For
the First Respondent:
Adv W Pretorius
instructed by the Legal Services Division of the Competition
Commission
For
the Second and Third Respondents:-
Adv D Unterhalter SC and Adv A Gotz
instructed by Martin Versveld of Webber Wentzel Bowens