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[2002] ZACAC 4
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Anglo South Africa (Pty) Ltd and Others v The Industrial Development Corporation of South Africa Ltd and Others (24/CAC/Oct02) [2002] ZACAC 4 (15 November 2002)
IN
THE HIGH COURT OF SOUTH AFRICA
(The Competition Appeal Court)
CASE NO
:
24/CAC/Oct02 25/CAC/Oct02
45/LM/Jun02
46/LM/Jun02
DATE: 15-11-2002
In the matter between:
ANGLO
SOUTH AFRICA (PTY) LTD
First
Applicant
ANGLOVAAL
MINING LIMITED
Second
Applicant
ANGLO
AMERICAN HOLDING LTD
Third
Applicant
KUMBA
RESOURCES LIMITED
Fourth
Applicant
and
THE INDUSTRIAL DEVELOPMENT
CORPORATION
OF SOUTH AFRICA LTD
First
Respondent
MANOIM
N.N.O.
Second Respondent
THE
COMPETITION TRIBUNAL
Third
Respondent
MERLE
HOLDEN N.O.
Fourth
Respondent
FREDERICK
FOURIE N.O.
Fifth
Respondent
THE
COMPETITION COMMISSION
Sixth
Respondent
SIMON
ROBERTS
Seventh Respondent
JUDGEMENT
DAVIS,
JP:
On
20 June 2002 a merger notification was filed with the sixth
respondent with respect to the proposed acquisition by first
applicant
of the controlling interest in the second applicant. At the
same time, a separate merger notification was filed in respect of the
proposed acquisition by the third applicant of the controlling
interest in the fourth applicant. The transactions were considered
together by the sixth respondent which, on 6 September 2002,
recommended to the third respondent that the proposed acquisitions
be
approved unconditionally. At three pre-hearing conferences held
respectively on 19 September, 8 October and 15 October 2002,
second
respondent in his capacity as a member of third respondent, made
certain rulings pertaining to first respondent’s
application to
intervene, as well as ancillary matters.
The applicants have come
before this Court on appeal and review to have
these rulings set aside.
There are four contested
rulings:
The
decision of second respondent to permit first respondent to
intervene (“the intervention decision”).
The
order of second respondent to define the scope of first respondent’s
intervention (“the decision as to scope”).
The
decision of second respondent to grant first respondent access to
confidential documents (“the confidential information
decision”).
The
decision of second respondent to appoint and instruct an expert
(“the expert decision”).
For the purposes of this
judgement the intervention decision, the decisions as to the scope
and confidential information can be
classified separately from that
of the expert decision.
It is common cause
between the parties who appear before us that there are two sections
of the
Competition
Act 1998
which are applicable to this dispute. The first relates
to
section
53(1)(c)
of the Act which provides that if the hearing is in
terms of Chapter 3 (a merger transaction) the following persons may
participate:
any
party to the merger;
the
Competition Commission;
any
person who is 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;
the
Minister, if the Minister has indicated an intention to participate;
any
other person whom the Competition Tribunal recognizes as a
participant”
(my
emphasis)
Applicants
contend that
Rule
46
of the third respondent’s Rules qualifies
section
53(1)(c)(v)
in that a person admitted under this subsection must
have “a material interest” in the relevant matter. The
essence
of applicants’ argument is that first respondent does
not have a material interest of a kind which permits it to be
regarded
as a participant.
The
other relevant position concerns the power of third respondent to
hear matters, including decisions to be made in terms of
section
53(1)(c)(v).
Section
31(1)
of the Act requires that the chairperson must assign each
matter to the Tribunal to a panel composed of any three members of
the
Tribunal. In terms of
section
31(2)
at least one of the three must be a lawyer and the
chairperson must also
“
designate a member of the
panel to preside over the panel’s proceedings”.
Section
31
permits an order to be made by a single member of the panel
only in one respect, namely extension or reduction of the period
prescribed
by the Act and condonation of late performance
(sub-section (5)). Such a decision is deemed to be decision of the
Tribunal (sub-section
(6)).
Section
27
of the Act gives third respondent the authority to exercise
certain functions, which include authority to adjudicate on any
matter
that may, in terms of the Act, be considered by it, as well as
in terms of the
section
27(1)(d)
, the power to make any ruling or order necessary or
incidental to the performance of its functions in terms of the Act.
The key question in the present
application concerns the power of second respondent to make the
rulings to which I have already
referred. Manifestly, the sections of
the Act which I have cited contain no provisions which empower one
member of the tribunal
(who may not even be a member of the
designated panel) to make the decisions which are the subject of this
application.
The only possible source for second
respondent’s powers to so act is to be found, not in the Act,
but in
Rule
46(2)
of the third respondent’s Rules, which provides:
“
No more
than 10 business days after receiving a motion to intervene a member
of the Tribunal assigned by the Chairperson must either:
make an order allowing the
applicant to intervene, subject to any limitations;
necessary to ensure that the
proceedings will be orderly and expeditious; or
on the matters with respect to
which the person may participate or the form of their participation;
or
deny the application if the
member concludes that the interests of the person are not within the
scope of the Act or are already
represented by another participant
in the proceedings.”
Rule
46(2)
cannot supplant the provisions in the Act; hence when an
Act does not empower a single member of the tribunal, who may not be
a
member of the designated panel, to make these kind of
determinations, the Rule itself cannot then empower the single member
to
do that which is not expressly or by necessary implication
provided in terms of the Act.
On this basis, the three related
determinations, being the intervention decision, the determination as
to scope, and the decision
as to confidential information, were made
by
second respondent in circumstances
which are
ultra vires
the Act. In short, there is
nothing in the Act which empowered second respondent to make these
determinations and
they therefore must stand to be
declared invalid.
The question now arises as to the
fourth ruling, that is regarding the expert. There are in essence two
critical flaws in second
respondent’s decision to appoint the
expert, being seventh respondent:
Applicants,
who at that stage were participants in these proceedings, were not
afforded any notification of the decision to
appoint an expert, nor
given any opportunity to be heard before it was made.
The
scope of the referral itself is unacceptably wide.
The brief which second respondent
purported to give seventh respondent (Dr Roberts) reads as follows:
“
We
would like you to provide us with a report on whether in your opinion
the merger is likely to substantially prevent or lessen
competition
in the relevant markets, having regard to the factors set out in
section
12A(2)
of the Act, focusing specifically on the Iron ore, the
Zinc and the Manganese product markets.
Should you come to the
conclusion that it does you would then be asked to consider if the
merger is likely to lead to any technological
efficiency or other
competitive gain which outweighs the anti-competitive effect as
contemplated in
section
12A(1)(a)(i)
of the Act. Your brief is an open one and you are
free to reach your own conclusions on any of these issues.”
The
wording of this particular ruling purports, in effect, to supplant
third respondent’s own decision-making powers and to
abrogate
its own powers to the expert. An expert, in this case seventh
respondent, is being asked to make a determination of the
kind which
the Act mandates third respondent to so make.
In these circumstances the ruling
is unacceptably wide by reason of the scope of instructions given to
seventh respondent. This
conclusion provides a second basis for the
finding that the ruling must be set aside.
The
appropriate relief
Until
this point there was very little difference between the various
parties who appeared this morning to argue the matter. None
of the
parties contended that second respondent
was empowered to make the necessary
rulings. The dispute turned on the nature of the relief. Mr
Loxton
,
who together with Mr
Unterhalter
and Mr
Gotz
appeared on behalf of the
first applicant, Mr
Gauntlett
and Mr
Fagan
who appeared on behalf of the second applicant, and Mr
Coetzee
,
who appeared on behalf of the sixth respondent, all submitted that
this Court should make a decision
to refuse the intervention of the first respondent, that is not to
remit the matter to third respondent,
but to dispose of the matter
itself. Mr
Loxton
correctly referred to the powers
granted to this Court to function in this fashion in terms of
section
37(2)
of the Act.
The ordinary course in such a
dispute is to refer a matter such as this back to third respondent
because a Court is slow to assume
a discretion which has been granted
by the Act to a tribunal (see
Johannesburg
City Council v Administrator, Transvaal & Another
1969
(2) SA 72
(T) at 76)
Case law supports the conclusion,
however, that a reviewing court will itself correct a decision of a
tribunal, notwithstanding
the general approach where the result is a
foregone conclusion, where further delay may cause undue prejudice,
or where the Tribunal
or functionary has exhibited bias or
incompetence which would render it unfair to expose a party to the
very same jurisdiction.
This approach has been confirmed in
Erf
167 Orchards CC v The Greater Johannesburg Metropolitan Council
1999(1) SA 104 (SCA) where
Ngoepe, AJA
held at 109C-F:
“
In
approving the plan in question, the first respondent was discharging
its administrative functions. When setting aside such a
decision, a
court of law will be governed by certain principles in deciding
whether to refer the matter back or substitute its
own decision for
that of the administrative organ. The principles governing such a
decision have been set out as follows:
‘
From
a survey… of the decisions it seems to me possible to state
the basic principle as follows; namely, that the Court has
a
discretion to exercise judicially upon a consideration of facts of
each case and that although the matter will be sent back if
there is
no reason for not doing so, in essence it is a question of fairness
to both sides.’ (
Livestock &
Meat Industries Control Board v Garda
1961(1) SA 342 (A)
at 349G…
The general principle is,
therefore, that the matter will be sent back unless there are special
circumstances giving reason for
not doing so. Thus, for example a
matter would not be referred back where the tribunal or functionary
has exhibited bias or gross
incompetence, or when the outcome appears
to be foregone.”
I propose
to deal with the three exceptions to the general rule as set out in
the
Erf 167 Orchards CC
case. In my view, the result in this dispute is not a foregone
conclusion. Questions arise as to the power of third respondent,
acting in terms of
section
53
, to admit a party to merger proceedings of this kind. In
particular, reference can be made to the various objectives of the
Act
in terms of
section
2
, including that small and medium size enterprises have an
equitable opportunity to participate in the economy (52(e)); the
promotion
of a greater spread of ownership, in particular to increase
the ownership stakes of historically disadvantaged persons (52(f)).
The decision as to who should be appropriately admitted as a
participant must be made with reference to the Act as a whole,
including
its purposes, two of which I have outlined.
In the circumstances of this
dispute it cannot be said that it is a foregone conclusion that
either first respondent should be refused
rights of intervention, or
admitted as a participant.
The second question turns on the
question of further delay, which may cause undue prejudice. In my
view, there is some measure of
prejudice which would be caused by
delay in remitting the matter back to the third respondent. However,
to a substantial extent,
the question of undue delay which causes
prejudice, can be dealt with by an appropriately drafted order. The
same conclusion applies
to the further issue as to whether, if the
tribunal has exhibited incompetence, it would be unfair to expose an
applicant to the
same jurisdiction.
This is a case which has sufficient
complexity on the specific facts for it to be referred back to the
appropriate body, namely
third respondent, for an expeditious
determination of the various disputes. The question arises as to
costs. Having regard to the
issues which I have outlined in this
case, and the manner in which the parties have approached this
appeal, it would not be appropriate
to make any order as to costs.
For these reasons the following
order is made:
The
decision of second respondent made on 20 September 2002, that first
respondent was entitled to intervene in the merger proceedings;
the
decision on 9 October 2002 by the second respondent to appoint and
instruct an expert economist, the seventh respondent,
to assess the
merger in terms of
section
12A
of the Act; the decision on 18 October 2002 by second
respondent to make a decision regarding the scope of first
respondent’s
intervention and on the same day the decision to
grant access to first respondent to confidential documents contained
in the
hearing record, are hereby set aside.
The
application of first respondent to intervene shall be heard by the
Tribunal, in particular, by a panel to be appointed in
terms of
section
31
of the Act, such panel to be selected with a view to an
urgent hearing and not to include second respondent.
The
chairperson of the Tribunal is requested to ensure that the
application of first respondent to intervene be heard as a matter
of
urgency.
There
is no order as to costs.
DAVIS,
JP
JALI
& SELIKOWITZ, JJA agreed