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[2003] ZACAC 9
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Federal-Mogul Aftermarket Southern Africa (Pty) Ltd v Competition Commission (33/CAC/Sep03) [2003] ZACAC 9; [2004] 1 CPLR 25 (CAC) (3 December 2003)
IN THE COMPETITION APPEAL COURT
REPUBLIC OF SOUTH AFRICA
CASE NO: 33/CAC/Sep03
DATE: 3-12-2003
In the matter between:
FEDERAL-MOGUL AFTERMARKET SOUTHERN
AFRICA (PTY)
LTD Appellant
and
THE COMPETITION COMMISSION Respondent
J U D G M E N T
DAVIS,
JP:
This matter concerns an appeal
against two decisions of the Competition Tribunal ("the
Tribunal") under case number 08/CR/MAR01.
In its first decision
of 28 January 2003, the Tribunal found appellant had acted in
contravention of section 5(2) of the Competition
Act 89 of 1998 ("the
Act"). In its second decision of 21 August 2003, the Tribunal
ordered appellant to pay an administrative
penalty of R3 million
pursuant to the provisions of section 5(2) of the Act.
As
Mr
Unterhalter
,
who appears together with Mr
Wilson
on behalf of appellant stated in his heads of argument, the appeal
turns on three central contentions which were raised in the notice
of
appeal of 9 September 2003, namely:
1. The Tribunal was mistaken in law and in fact in finding that
appellant had contravened section 5(2) of the Act.
2. Section
59 of the Act is unconstitutional to the extent that it permits the
Tribunal as an administrative body to impose discretionary
pecuniary
penalties for contraventions of the Act and accordingly, the Tribunal
should not have exercised a power in terms of section
59 to impose a
penalty on appellant.
3. In
any event, the penalty of R3 million which was imposed by the
Tribunal on appellant was not an appropriate penalty, taking
into
consideration the factors listed in section 59(3) of the Act.
Prior
to dealing with these substantive matters, the question arises as to
whether the Minister of Trade & Industry, being the
appropriate
Minister insofar as the Act is concerned, should have been joined in
these proceedings. It appears to be common cause
that Mr
Marcus
,
who appears together with Mr
Chaskalson
,
in the capacity of
amicus curiae
at the invitation of this Court, raised this question with
appellant's counsel some weeks ago. Notwithstanding the caution by
Mr
Marcus
as to the necessity of joining the Minister, appellant chose to
proceed to prosecute the appeal this morning. Accordingly, before
deciding as to whether the matter should be heard, argument was heard
from all parties regarding the question of joinder.
The
contention placed before the Court by Mr
Marcus
turned on the necessity of joining the relevant Minister in
proceedings of this nature. In a number of cases the Constitutional
Court has dealt with this question,
inter
alia
, in
Jooste
v Score Supermarket Trading (Pty) Ltd
1999(2) BCLR 139 (CC) at paras 7-9, in which
Yacoob,
J
said:
"[7] It is undesirable for a court to make an order of
constitutional invalidity in relation to an Act of Parliament or
Provincial
Act unless the relevant organ of State which is not a
party to the proceedings has had an opportunity to intervene in those
proceedings.
Because Rule 6(2) had not been complied with, the
Minister of Labour, who is the relevant organ of State and who had
not been given
any opportunity to intervene in the case before the
High Court, was notified and given the opportunity to intervene in
the proceedings
before this Court. The Minister chose to intervene,
opposed the confirmation of the finding of the High Court and
presented helpful
argument in support of that opposition.
[8] It is, however, necessary to consider the
consequences arising from the matter having been determined by the
High Court without
notice to any organ of State.
It
was contended on behalf of the applicant that the Minister of Labour
had no direct interest in the proceedings and that there was
accordingly no need for an opportunity for intervention to have been
afforded to that office.
[9]
The
contention has no substance. The Compensation Act is important
social legislation which has a significant impact on the sensitive
and intricate relationship amongst employers, employees and society
at large.
The State has chosen
to intervene in that relationship by legislation and to effect a
particular balance which it considered appropriate.
Section 35(1) is
an element of that legislation and the
Minister,
as the representative of the State responsible for the administration
of this legislation, clearly had a direct, abiding
and crucial
interest in the outcome of the litigation.
This Court may well have
declined to confirm an order solely on the ground that notice of the
proceedings in the High Court was not
given to the Minister.
But there is no need to consider this course of action any further
because these proceedings can be disposed of on more substantive
grounds without any prejudice to the State."
(emphasis
added)
It
appears from this
dictum
in
Jooste's
case that, where a dispute comes before a court and turns on a
question of the constitutional validity of a piece of applicable
legislation,
the appropriate Minister should be joined.
Mr
Unterhalter
submitted that a declaration of constitutional invalidity was
not,
in effect, what the appellant sought in these proceedings. He
submitted that the issue for decision by this Court was whether
the
Tribunal, taking account of the Constitution, should have declined to
apply the provisions of section 59 of the Act and, therefore,
refused
to impose any administrative penalty on the grounds that the
empowering section conflicted with the Constitution. In this
way Mr
Unterhalter
sought to negotiate his case past the obstacle of the argument
relating to joinder, by contending that, in the final analysis, this
Court was not required to invoke powers in terms of section 172 of
the Constitution of the Republic of South Africa, Act 108 of 1996
("the Constitution"); in order to declare section 54 to be
unconstitutional; hence the
dicta
cited from
Jooste's
case were inapplicable to the proceedings before this Court.
This
argument can be rebutted on a number of grounds. Suffice it to say
that in
Mkangeli & Others v Joubert
& Others
2001(2) SA 1191 (CC) at
paras 9-10,
Chaskalson, P
(as he then was) disposed of this argument thus:
"In dealing with these issues and
whether an order for eviction is appropriate in the circumstances of
this case,
Flemming, DJP
gave detailed consideration to the constitutionality of the Act and
concluded that its provisions are inconsistent with the Constitution.
In their application for a certificate under Rule 18 of the Rules of
the Constitutional Court, the applicants contend that this
finding
was made despite the fact that the constitutionality of the Act had
not been raised as an issue on the papers and that no
argument had
been addressed to the Court on that issue.
In
the judgment in which he furnished a negative certificate,
Flemming,
DJP
does not suggest that this
averment is incorrect. Having reached the conclusion that the Tenure
Act was unconstitutional,
Flemming,
DJP
considered it unnecessary to
make a formal declaration of invalidity - this despite the provisions
of section 172(1) of the Constitution
which requires that a court,
when deciding a constitutional matter within its jurisdiction 'must
declare that any law or conduct
that is inconsistent with the
Constitution is invalid to the extent of its own consistency.' If the
constitutionality of the legislation
was not relevant to his
judgment, the learned Judge ought not to have considered that issue;
if it was relevant, he ought to have
taken steps to have had the
Minister responsible for the administration of the Act joined as a
party to the proceedings. He ought
then to have heard argument from
the parties on that issue and if he found the Act to be inconsistent
with the Constitution, he ought
to have made a declaration to that
effect as required by section 172(1) of the Constitution."
Notwithstanding
an attempt by Mr
Unterhalter
to distinguish this case from the present dispute there is, in my
view, no valid distinction that can be so drawn.
The
implication of this
dictum
is plain. If this Court decides that section 59 of the Act is
unconstitutional for one of a range of reasons which have been
advanced
by appellant in its very learned heads, the Court, on the
strength of the
Mkangeli
case, would be obliged to consider, in terms of its powers of section
172, whether the Act was unconstitutional and, if so, declare
it to
so be. This case cannot be reduced to a
quasi
-
constitutional dispute, namely that the Court would decide that the
section was unconstitutional and simply leave the relevant section
hanging in the jurisprudential air. The consequences for competition
law in general and the system of administrative penalties as
provided
for in the Act would be serious in that the law would be left in
uncertainty.
As
Mr
Kennedy
,
who appeared together with Ms
Kathree
and Mr
Maenetje
on behalf of the respondents, correctly noted, the Minister would
have two very significant interests in dealing with such a
constitutional
attack, namely, in defending the constitutional
validity of legislation which is his responsibility, and defending
the very enforcement
mechanism which is contained within the Act.
This would be a direct consequence of the declaration this Court
would be required to
make were appellant to succeed, namely a
declaration that section 59 of the Act was constitutionally invalid.
Mr
Unterhalter
contended further that this matter of joinder had never been raised
before the Tribunal either by the respondents or the
amicus
and, accordingly, there was no reason why it should have been raised
in the proceedings before this Court. Again this argument can
be
disposed of on a number of bases. Suffice it to say that, where a
third party, as in this case (being the Minister) has a direct
and
substantial interest in any order the Court might make in
proceedings, or if the order cannot be sustained or carried into
effect
without prejudice in that party, he or she is a necessary
party and should be joined in the proceedings unless the Court is
satisfied
that he or she has waived his right to be so joined
(
Amalgamated Engineering Union v
Minister of Labour
1949(3) SA 637 (A).)
Joinder
is not simply a question of a provision of a set of court rules. It
is part of our common law and Mr
Marcus
was correct to contend that, even if the parties had not raised the
question of joinder, this Court would have been so required to
do as
is evident from the Constitutional Court's jurisprudence, to which I
have already made reference. It is not a sustainable
argument to say
that the matter was not dealt with in the Tribunal and accordingly
all the parties, including the Minister, are deemed
to have waived
their rights, nor is it correct to suggest that some correspondence
which might have been generated between appellant's
attorney and an
individual in the Department of Trade and Industry is sufficient to
meet the requirement of joinder.
In
short, the Minister ought and should have been joined in these
proceedings and the relevant constitutional question cannot be
considered without that step having been taken.
The
further question then arises as to whether, as Mr
Unterhalter
has urged upon the Court, the substantive questions relating to
section 5(2) of the Act, namely whether the appellant engaged in
retail price maintenance can be considered separately from the
constitutional questions to which I have already made reference.
In
general the approach taken by appellate courts is not to hear an
appeal in a piecemeal manner (See
Hassim
v Commissioner of South African Revenue Services
2003(2) SA 246 (SCA) at para 11 and other cases cited in this
passage).
The
question arises as to whether this approach should be adopted in the
present dispute. Mr
Unterhalter
correctly contended that the request to dispose of an appeal in a
piecemeal fashion is not a rule which must be applied without any
consideration of the particular dispute. Are there then some
exceptional circumstances which would justify hearing this matter on
a piecemeal basis? In my view, there are not. The matter is not
pressingly urgent. The complainant is already out of business.
Appellant appeals against an order to make payment of a fine. It is
not alleging that its own business is now under threat. The
further
question arises as to how the matter would be decided if the section
5(2) question was heard separately. For example, what
would occur
insofar as the issues pertaining to the penalty are concerned, absent
the constitutional questions inherent therein?
Must the Court divide
the matter between the price maintenance question and the dispute
relating to penalties? If so, issues which
are of a factual nature
would then have to be recanvassed when the Court dealt with the
question of the penalty. That is an inconvenient
course of action.
There does not seem to be any reason why this case should not be
heard in its totality at one sitting. For this reason, it is not
appropriate to hear this matter in various parts. Appellate Courts
should not have to engage in litigation in the form of a chain
novel.
In this case no pressing argument has been put up as to why that
approach should be altered.
The
final question, therefore, turns on the issue of costs. Mr
Kennedy
,
somewhat optimistically, asked for costs of three counsel. There
does not appear to me to be any reason why the appellant should
be
mulcted in so lavish a manner in which the respondents have sought to
arm themselves. The more difficult question relates to
whether in
fact costs should be awarded on a punitive scale, that is on an
attorney and client scale, given, as Mr
Kennedy
has submitted, that the respondent has been brought to court in
circumstances where this matter could not have been heard today given
that the Minister was not joined: Had appellant acted at the stage of
Mr
Marcus'
warning and joined the Minister, he may have decided to allow
proceedings to continue without any objection; or, alternatively,
asked
for a postponement to be suitably prepared to make a
contribution to the debate.
It
appears from the record that the only party who did raise the issue
of joinder was the
amicus
.
There does not appear to be any indication that the respondents
adopted the approach that the matter should not be heard today,
nor
is there any evidence that they approached appellant on this basis.
Therefore, there does not appear to me to be any basis by
which a
punitive order of costs in their favour would be justified.
For
these reasons, the matter is postponed to a date to be arranged
between the parties and the Registrar. The costs of today's
proceedings insofar as those costs which have been incurred by
respondent are concerned are to be paid by appellant, such costs to
include those of two counsel.
This
Court wishes to thank Mr
Marcus
and Mr
Chaskalson
for their invaluable contribution.
DAVIS,
JP
:
HUSSAIN,
JA & PATEL, AJA
: Concurred.