Summary of Judgment

1. Introduction

These proceedings were an appeal to the Competition Appeal Court against an interlocutory order made by the Competition Tribunal relating to access to the record in a pending large merger matter and, specifically, access to information claimed to be confidential.

The appellant was the Competition Commission of South Africa. The respondents were Unilever PLC (first respondent), Unifoods, a division of Unilever South Africa (Pty) Ltd (second respondent), Robertsons Foods (Pty) Ltd (third respondent), and Robertsons Food Service (Pty) Ltd (fourth respondent). The dispute arose in the context of a large merger in which the Commission had made a recommendation to the Tribunal.

The procedural history was central to the judgment. The Commission had delivered its recommendation to the Tribunal and provided the merging parties with a version from which certain portions were blacked out on confidentiality grounds. The respondents then sought disclosure of information and documents underpinning the recommendation so as to consider whether to challenge the confidentiality claims. At a prehearing conference on 18 January 2002, the respondents applied to the Tribunal for an order compelling disclosure, and the Tribunal granted relief requiring the Commission to provide the parties’ legal advisers access to the full record, including information claimed confidential, subject to confidentiality undertakings.

The Commission approached the Competition Appeal Court seeking to stay compliance with the Tribunal’s order pending final determination of its own application to the Court (brought in terms of section 45(3) of the Competition Act). On 22 January 2002, an interim order was issued granting restricted inspection of the record at the Commission’s offices and prohibiting reproduction, with costs reserved. The appeal against the Tribunal’s order was heard on 31 January 2002, after which the Court set aside the Tribunal’s order and substituted it with a differently framed order granting limited access, imposing confidentiality undertakings, and requiring service on confidential-information providers if an application under section 45 were launched. The present judgment provides the reasons for that substituted order and the associated costs orders.

The general subject-matter of the dispute was the interaction between confidentiality protections in competition proceedings and the merging parties’ entitlement to procedural fairness in preparing to challenge confidentiality claims under section 45 of the Competition Act.

2. Material Facts

The court treated as material, and largely undisputed, the sequence of steps through which the confidentiality dispute arose. On 14 December 2001, the Commission, acting under section 14A of the Competition Act, forwarded to the Tribunal a written recommendation with reasons in relation to the large merger between the respondents. The recommendation was that the merger be approved subject to certain conditions, including a condition requiring the second respondent to divest its entire product portfolio marketed under specified brands.

A copy of the Commission’s recommendation report was supplied to the respondents, but with certain portions removed by blacking out passages. As a result, the respondents did not have access to certain information on which the Commission purported to rely in formulating its recommendation to the Tribunal.

On 20 December 2001, the respondents’ legal representatives requested that, insofar as the blacked-out portions were based on claims of confidentiality, the Commission provide copies of the relevant CC7 confidentiality claim forms, to enable the respondents to consider challenging the confidentiality claims under section 45(1). On 3 January 2002, the respondents’ attorneys expanded the request, seeking a list of persons who had made representations to the Commission, the nature and contents of the information submitted, any additional CC7 forms, and any sourced documents used by the Commission in preparing its report.

On 4 January 2002, the Commission refused to make certain requested information available, asserting that it was confidential.

At a prehearing conference on 18 January 2002, the respondents applied to the Tribunal for an order directing the Commission to make available to them the information in its possession, including information relied upon in its report, so that the respondents’ legal representatives could consider whether the confidentiality claims were valid. The Tribunal granted an order requiring access to the full record supplied to the Tribunal, including information claimed confidential, subject to confidentiality undertakings and with further directions concerning any expansion of the class of persons granted access, and any contestation of confidentiality claims.

The Commission then sought a stay and appealed. On 22 January 2002, an interim order from the Competition Appeal Court permitted access by way of inspection at the Commission’s offices and prohibited reproduction of the record, with costs reserved. After hearing the appeal on 31 January 2002, the Court replaced the Tribunal’s order with a substituted order allowing inspection by the respondents’ legal representatives at the Commission’s offices, prohibiting reproduction, requiring confidentiality undertakings, and directing that if an application under section 45 were brought, the respondents must serve the notice of motion and affidavits on each person who had provided confidential information within five days of filing.

To the extent there was a dispute, it was not about these events but about the legal basis for compelled disclosure and the proper procedural route for dealing with confidential information before a formal section 45 determination.

3. Legal Issues

The central legal questions concerned the source and scope of the Tribunal’s (and the system’s) power to compel disclosure of information claimed confidential, and the correct interpretation and operation of the confidentiality provisions of the Competition Act in the pre-determination stage.

The key issues the court was required to determine were whether, in the absence of a formal application by the respondents in terms of section 45, the Tribunal nonetheless had lawful power to order disclosure of the full record (including information claimed confidential) to the respondents’ legal advisers; and, relatedly, whether the statutory scheme required or permitted some form of limited disclosure to enable a party meaningfully to exercise its rights under section 45(1) to challenge confidentiality.

The dispute was primarily one of law (statutory interpretation and the existence of powers under the Act), combined with the application of legal principles to procedural facts, and it required an evaluative balancing between competing considerations: protection of confidential information on the one hand, and procedural fairness and the administration of justice on the other.

4. Court’s Reasoning

The court’s reasoning proceeded from the statutory framework governing confidentiality and access to information in merger proceedings. It referred to the Commission’s rules providing that information received during a merger investigation is treated as restricted information until the Commission, in a large merger, makes its recommendation to the Tribunal under section 14A. Once the recommendation is made, the restricted status falls away, subject to the continued protection of information for which a confidentiality claim has been lodged. The court noted that the statutory mechanism for challenging confidentiality is section 45(1), under which a person seeking access to information claimed confidential may apply to the Tribunal for a determination of confidentiality and, if the information is confidential, for an appropriate order concerning access.

The Commission’s principal contention was that disclosure of information claimed confidential could occur only through a formal section 45 process and that, because the respondents had not yet brought such an application, the Tribunal lacked power to order disclosure on 18 January 2002. The respondents’ position was that section 45 provides a right to challenge confidentiality, but that right could not be exercised meaningfully unless the party seeking to challenge confidentiality had some means of obtaining access to the information in dispute at least in a constrained way, so as to know what had been withheld, whether confidentiality had been properly claimed, and whether a challenge should be mounted.

The court accepted that the Act does not impose an absolute bar on disclosure of confidential information. It relied on section 69(2), which expressly provides that the offence provision relating to disclosure of confidential information does not apply to disclosures made for the purpose of the proper administration or enforcement of the Act, or for the purpose of the administration of justice, or at the request of specified officials or Tribunal members entitled to receive the information. The court treated this as a clear legislative recognition that disclosure can be permissible where needed for the administration of the Act and justice, which bore directly on whether limited disclosure could be ordered to facilitate a fair process under section 45.

A central element of the court’s reasoning was that, if the Commission’s interpretation were accepted, a party bringing a section 45 application could be placed in an untenable position: the hearing would proceed with access to the disputed information available to all parties except the very applicant seeking access, leaving that applicant unable to present a proper case and relying entirely on the Tribunal to determine the matter without adversarial assistance. The court regarded such a result as incompatible with fairness. It reasoned that the silence of section 45 on what disclosure is required to mount a challenge created a need to recognise a right to some disclosure that enables the statutory right to be exercised effectively, and that this recognition must be consistent with constitutional and common-law principles of a fair hearing.

In developing the fairness rationale, the court referred to constitutional values of fairness and openness, citing Pharmaceutical Manufacturers Association of S.A and Others: In re Ex parte President of the RSA and Others as authority for constitutional underpinnings relevant to statutory interpretation and lawful administrative action. Against this, it acknowledged the countervailing interest: information is often provided to the Commission on the basis that it will remain confidential, and there is a public and private interest in protecting such information, including to ensure that informants will continue to provide information in future investigations.

The court therefore framed the problem as requiring a balancing of competing rights and interests. It concluded that an order should provide access in the most restrictive manner possible that still permits the respondents to exercise their rights to challenge confidentiality, while recognising the importance of privacy and confidentiality protections. This balancing approach informed the substituted order’s limitations: inspection only by legal representatives, inspection only at the Commission’s offices, a prohibition on reproduction, and the requirement of confidentiality undertakings.

The court also addressed directly the Commission’s submission that the Tribunal lacked a legal basis to make the order because no express provision authorised it. It rejected this by pointing to the Tribunal’s residual power under section 27(1) of the Act to “make any ruling or order necessary or incidental to the performance of its functions in terms of” the Act. The court held that granting restricted access to the respondents’ legal representatives was necessary or incidental to the Tribunal’s function of determining confidentiality under section 45, and thus within the Tribunal’s competence.

Finally, on costs, the court reasoned that the respondents had been confronted with the Commission’s refusal to comply with the Tribunal’s order and were compelled to approach the Competition Appeal Court for interim relief on 22 January 2002 to obtain some access. Because the respondents succeeded in obtaining such relief, the court considered that they were entitled to the costs incurred in that interim application. The court likewise ordered costs against the Commission for the appeal hearing itself, including the costs of two counsel.

5. Outcome and Relief

The Competition Appeal Court set aside the Competition Tribunal’s order of 18 January 2002 and replaced it with an order compelling the Commission to provide the respondents’ legal representatives access to the entire record in the merger proceedings, but only on strictly limited terms. Access was confined to inspection by the respondents’ legal representatives at the Commission’s offices, the legal representatives were prohibited from reproducing the record, and they were required to furnish confidentiality undertakings before access was granted.

In addition, the substituted order directed that if the respondents brought an application in terms of section 45 of the Competition Act, they had to serve the notice of motion and affidavits on each person who had provided confidential information to the Commission within five days after filing.

The court ordered that the costs of the interim application heard on 22 January 2002, including the costs of two counsel, were to be paid by the Commission, and that the costs of the appeal hearing itself, also including the costs of two counsel, were likewise to be paid by the Commission.

Cases Cited

Pharmaceutical Manufacturers Association of S.A and Others: In re Ex parte President of the RSA and Others 2000 (2) SA 674 (CC).

Legislation Cited

Competition Act 89 of 1998 (as amended), including sections 1, 14A, 27(1), 44, 45(1), 45(3), and 69(2).

Rules of Court Cited

Competition Commission Rules, including Rule 14(1)(c)(ii) and Rule 15 (including Rule 15(4)).

Held

The court held that the statutory scheme, read consistently with principles of fairness and the Constitution, permits and requires a mechanism of restricted disclosure so that a party can meaningfully exercise the right under section 45 to challenge confidentiality claims. Denying any access to the disputed information would render a section 45 process fundamentally unfair.

The court further held that the Competition Tribunal was not confined to express powers in section 45 and had authority under section 27(1) to make rulings or orders necessary or incidental to performing its functions, including facilitating a fair confidentiality determination under section 45 through restricted access arrangements.

The Tribunal’s order was therefore replaced with a more tightly controlled access regime (inspection by legal representatives only, at the Commission’s offices, no reproduction, confidentiality undertakings), coupled with a direction ensuring notice to confidential-information providers if a section 45 application were instituted, and with adverse costs orders against the Commission.

LEGAL PRINCIPLES

The confidentiality provisions of the Competition Act do not create an absolute prohibition on disclosure. Section 69(2) recognises that disclosure of confidential information may be permissible where required for the proper administration or enforcement of the Act or the administration of justice, supporting a contextual and functional approach to confidentiality in competition proceedings.

A statutory right to challenge confidentiality under section 45(1) must be capable of meaningful exercise. Where the statute is silent on the disclosure necessary to enable such a challenge, the Act must be construed in a manner consistent with procedural fairness so as not to reduce the section 45 procedure to an unfair process in which the applicant is unable to present a case.

The Competition Tribunal possesses a residual or incidental power under section 27(1) to make orders necessary or incidental to the performance of its statutory functions. This includes authority to fashion restricted access arrangements to confidential information to facilitate a fair determination under section 45, balancing the protection of confidential information with the affected party’s right to a fair hearing.

Where competing interests arise between confidentiality and fairness, the appropriate approach is a balancing exercise that seeks to protect confidentiality while granting the minimum necessary access to ensure fairness, such as limiting access to legal representatives, restricting inspection to controlled premises, prohibiting reproduction, and requiring confidentiality undertakings.