It
compe liliontribunal
SOIJTri,\J"I\CA
COMPETITION TRIBUNAL OF SOUTH AFRICA
Case No.: IR029JUN2023
In the interim relief application between:
Streamlight FX (Pty) Ltd
Iron Ice (Pty) Ltd
And
Genesis One Lighting (Pty) Ltd
First Applicant
Second Applicant
Respondent
Panel G Budlender (Presiding Member)
T Vilakazi (Tribunal Member)
Heard on
Order issued on
Reasons issued on
L Mncube (Tribunal Member)
24 April 2024
18 June 2024
18 June 2024
ORDER AND REASONS FOR DECISION
INTRODUCTION
1. This is an application for interim relief in terms of section 49C of the
Competition Act, 89 of 1998, as amended (the "Act"). The applicants,
Streamlight FX (Pty) Ltd ("Streamlight") and Iron Ice (Pty) Ltd ("Iron Ice"),
contend that the conduct of the respondent, Genesis One Lighting (Pty)
Ltd ("Genesis") in the market for the supply and distribution of lighting
products and services constitutes a prohibited practice in contravention of
sections 4(1 )(a) and (b)(ii) of the Act.
2. The parties have been involved in civil litigation in the Gauteng Division of
the High Court (Johannesburg). This application arises from an interdict
("the restraint")1 which the High Court issued in the course of that litigation.
THE INTERIM RELIEF APPLICATION
3. On 31 January 2023, the applicants lodged a complaint with the
Competition Commission ("Commission") in respect of the conduct of
Genesis. The complaint alleges that Genesis seeks to enforce a restraint
against Streamlight and Iron Ice which, the applicants contend, constitutes
a prohibited practice as contemplated in section 4(1 )(b )(ii) of the Act. 2
4. The complaint alleges that the restraint is a concerted practice that
constitutes market division in that it allocates specific customers and
suppliers to competitors as contemplated in section 4( 1 )(b )(ii) of the Act.
The complaint further alleges that the restraint operates to divide the
lighting market as it precludes Streamlight and Iron Ice from participating
1 Attached as annexure "Y" to the notice of motion.
2 In the present application, the applicants also relu on section 4(1 )(a) of the Act. However , the
complaint which was lodged with the Commission does not refer to section 4(1 )(a). Nothing turns
on this for (present purposes.
2
in the market in respect of the protected customers and protected suppliers
listed in the restraint.
5. On 3 March 2023, The Commission advised Streamlight and Iron Ice that
the matter is being investigated. On 18 May 2023, the complaint was
transferred to the cartels division of the Commission for further
investigation. The Commission has since requested an extension of
twelve months until January 2025 to complete its investigation.
6. On 9 June 2023, Streamlight and Iron Ice filed this application for interim
relief with the Tribunal. The notice of motion does not refer to urgency, but
there are paragraphs in the founding affidavit that seek to make out a case
of urgency.3
7. In this application, the applicants seek the following orders:
7 .1 The respondent is interdicted and restrained from enforcing the
restraint issued by the High Court, and/or from requiring that the
applicants abide by the restraint;
7.2 The operation of the restraint is suspended;
7.3 The relief sought in paragraphs 7.1. and 7.2 above operates and/or
remains in force until the earlier of -
3 Applicants' Founding Affidavit at para 40, pg 21 of the consolidated hearing bundle.
3
7.3.1 A final determination of the applicants' complaint in terms of
the Act that the restraint (and enforcement of the restraint)
constitute a prohibited practice as contemplated in terms of
section 4(1 )(b)(ii) and is declared void; or
7.3.2 A date that is six months after the date of the granting of the
order sought in paragraphs 7.1 and 7.2 above.
7.4 During the period of the interdict:
7.4.1 any profits that accrue to the applicants as a result of this
order will be put into a separate trust account to be held by
the applicants in favour of the respondent; and
7.4.2 the applicant must keep a record of all sales and purchases
to customers and suppliers respectively listed in the restraint
(the 'record').
RELEVANT FACTUAL BACKGROUND
The parties and their businesses
8. Streamlight was established in 1994. It conducts business in the lighting
industry, which is inclusive of lighting design, import/export, product
development, supply and after sales goods and services. It distributes
imported lighting solutions, fixtures and lamps. Its primary business
4
includes the supply of lighting fixtures, including the distribution and re
sale of imported light emitting diode (LED) lamps.
9. Iron Ice was established in 2018, and closed down in October 2022. It was
established for the primary purpose of importing LED lighting products for
supply to its customers (wholesale and retail), as well as to invest in LED
technology and development in the South African market.
10. Genesis is a supplier of premium LED lamps, luminaries and lighting
fittings. Its products are sourced primarily from suppliers and
manufacturers in China.
The relationship between the parties
11. During January 2015, Genesis employed Bradley Lloyd Jamieson
("Jamieson") as a sales representative and with responsibility for new
business development.
12. On 18 August 2015, Genesis and Jamieson concluded a confidentiality
agreement. In terms of that agreement, Jamieson was required and
undertook to keep confidential and not to disclose confidential information
of Genesis without the prior written consent of Genesis.
13. Jamieson was appointed as a director of Genesis early in 2018. He
tendered his resignation as a director on 29 May 2018. On 22 January
5
2019, he resigned from his employment at Genesis. However , he
remained a shareholder.
14. It is alleged that Jamieson disseminated Genesis's confidential information
to Streamlight, which was both a customer and a competitor of Genesis. It
is further alleged that Jamieson and the directors of Streamlight set up a
company, Iron Ice, to conduct business in competition with Genesis. It is
further alleged that Jamieson used the information gained from his
employment and involvement with Genesis to assist Iron Ice.
15. Prior to the establishment of Iron Ice, Streamlight was a customer of
Genesis, in that it purchased LED bulbs from Genesis. Iron Ice was
established for the purposes of distribution of LED lighting products.
According to Streamlight, it purchased LED bulbs directly from Iron Ice
from approximately November 2019 until October 2022 when Iron Ice
closed its doors.
The High Court civil litigation between the parties
16. On 30 January 2019, Genesis instituted an urgent application to the
Johannesburg High Court in which it sought an urgent interdict against
Streamlight, Iron Ice and their directors.4
4 High Court Ca se Number 3212/19.
6
17. The application was based on the common law doctrine of unlawful
competition. Genesis sought orders interdicting and restraining
Streamlight and Iron Ice from utilising its confidential information, and an
order for the return of such confidential information, and ancillary relief.
18. Streamlight and Iron Ice opposed the application.
19. On 18 March 2019, the High Court (per Mohalelo J) granted an interdict in
favour of Genesis. Streamlight and Iron Ice (and their associated persons
and entities) were prohibited from inter alia:
19.1 dealing in any manner whatsoever with 160 named customers of
the parties for the sale of any and all lighting products ("the
protected customers"); and
19.2 procuring lighting products from 27 named suppliers ("the protected
suppliers").
20. The restraint was imposed pending the final determination of an action to
be instituted by Genesis.
21. Streamlight and Iron Ice applied for leave to appeal against the restraint,
and also applied in terms of section 18(2) of the Superior Courts Act5 for
an order suspending the operation of the order of 18 March 2019. On 31
May 2019, the High Court granted Stream light and Iron Ice leave to appeal.
5 Act 10 of 2013.
7
The Court did not address the application in terms of section 18(2) of the
Superior Courts Act.
22. Genesis then launched an urgent application for declaratory relief as to the
status of the order. The Court advised that the parties should request
clarity from Mohalelo J, who had heard the application for leave to appeal.
It appears that the parties did not take any steps in this regard.
23. Streamlight and Iron Ice filed a notice of appeal, but failed to prosecute the
appeal.
24. On 23 July 2021, Genesis applied for an order declaring that the appeal
by Streamlight and Iron Ice had lapsed. That order was granted.
25. Genesis has instituted contempt proceedings against Streamlight and Iron
Ice, alleging that they have failed to comply with the restraint. Those
proceedings are pending.
THE APPLICANTS' CASE IN THIS TRIBUNAL
26. Streamlight and Iron Ice contend in their founding affidavit that the restraint
contravenes sections 4(1 )(a) and 4(1 )(b)(ii) of the Act. As we have noted,
they have however not filed a complaint in respect of section 4(1 )(a) with
the Commission. At the hearing of this application, counsel for Stream light
and Iron Ice stated that they longer wish to pursue their claim in terms of
8
section 4(1 )(a).6 We therefore do not address the allegation of a breach
of section 4(1 )(a).
27. Streamlight and Iron Ice allege that they and Genesis are competitors as
they are all in the market for the supply and distribution of lighting products
and services, and that they are therefore in a horizontal relationship for the
purposes of section 4 of the Act.
28. They further contend that the restraint and its enforcement by Genesis
amount to an agreement or concerted practice in that:
28.1 They necessitate compliance by the parties;
28.2 The restraint is an enforceable arrangement, understanding, plan
or decision that:
28.2.1 limits commercial freedom by means of mutual action or
abstention from action in the relevant market; and
28.2.2 binds the parties, and is regarded by the parties as binding
on them;
28.2.3 is the product of a dispute between the parties, by which the
parties regard themselves as bound; and
6 Transcript, page 43, lines 10-20.
9
28.2.4 reduces and indeed eliminates uncertainty as to the conduct
to expect of the other in the market.
29. Under section 4(1 )(b)(ii), Stream light and Iron ice contend that the restraint
divides markets between the competitors by way of allocating suppliers
and customers. The restraint prevents Streamlight and Iron Ice from
dealing with any mutual customers of the parties.
30. Streamlight and Iron Ice argue that the Tribunal is empowered by section
65(2) of the Act to hear this application, and that the Tribunal has
jurisdiction to adjudicate the interim application prior to the determination
of the High Court matter since the relief sought in the High Court is
contingent upon the order made by the Tribunal. 7
GENESIS'S CASE
31. Genesis contends that the order of the High Court is binding between the
parties. The order originated in a contractual and common law dispute
7 Section 65 (2) provides that:
If, in any action in a civil court, a party raises an issue concerning conduct that is
prohibited in terms of this Act, that court must not consider that issue on its merits, and-
(a) if the issue raised is one in respect of which the Competition Tribunal or
Competition Appeal Court has made an order, the court must apply the
determination of the Tribunal or the Competition Appeal Court to the issue; or
(b) otherwise, the court must refer that issue to the Tribunal to be considered on
its merits, if the court is satisfied that-
(i) the issue has not been raised in a frivolous or vexatious manner ; and
(ii) the resolution of that issue is required to determine the final outcome
of the action.
10
between the partes in which the High Court found that Streamlight and Iron
Ice were unlawfully competing with Genesis by using its confidential
information.
32. Genesis further contends that the High Court order is not an agreement
between competitors. It is an order that grants relief concerning the misuse
of confidential information pending finalisation of an action. The order
does not allocate markets by consensus. The listed entities were identified
by Genesis as its customers or suppliers.
33. Genesis further contends that the order does not have the object or effect
of substantially preventing or lessening competition.
34. Genesis further submits that while the Tribunal has the power to adjudicate
competition matters under the Act, it does not have jurisdiction over civil
courts, and that the Tribunal cannot override a valid judicial order.
35. Genesis contends further that the appropriate remedy for Streamlight and
Iron Ice is to approach the High Court or a competent appeal court, and to
seek a variation or rescission of the interdict.
36. Genesis contends that the order of the High Court is valid until it is set
aside. It submits that Court orders are binding and must be obeyed even
if they may be wrong.
11
THE JURISDICTION OF THIS TRIBUNAL
37. This application raises the question whether this Tribunal can suspend or
otherwise prevent the operation of an order which has been made by the
High Court exercising its powers under the common law, on the basis that
the implementation of the High Court order would result in a prohibited
practice in terms of the Competition Act.
38. The Act contemplates that situations may arise in which an alleged
prohibited practice is relevant to an action8 in a civil court. The
constitutional section 34 right of access to courts means that it must be
possible for a party to raise the Competition Act issue, and have it
determined by the Tribunal or the Competition Appeal Court, which have
exclusive jurisdiction in that regard. The question is how that is to be done.
39. Section 65(2)(b) of the Act provides that if in any action in a civil court a
party raises an issue concerning conduct that is prohibited in terms of the
Act, that court must not consider the issue on the merits. If the issue is not
one in respect of which the Tribunal or the Competition Appea l Court has
made an order, the court must refer that issue to the Tribunal to be
considered on its merits, if the court is satisfied that:
39.1 the issue has not been raised in a frivolous or vexatious manner;
8 Which we assume , w ithout deciding, includes an application.
12
39.2 the resolution of that issue is required to determine the final
outcome of the action.
40. The Act seems to contemplate that where a party which is engaged in civil
litigation wishes to raise an issue concerning conduct that is prohibited in
terms of the Act, that party should raise the issue in the civil court, and the
court must then refer that issue to the Tribunal, subject to the exceptions
which we have noted.
41. It is not at all clear that a party may participate in civil litigation, not raise in
that litigation any issue concerning a prohibited practice that may bear on
whether the court may make an order of the kind which is sought, and then,
after the court has made an order, institute proceedings in the Tribunal for
an order effectively nullifying the order made by the court.
42. This question raises profound questions as to the role of the Tribunal and
its obligations under the Constitution. We are mindful of the fact that in
terms of section 165(3) of the Constitution, no organ of State may interfere
with the functioning of the courts. And we are also mindful of the fact that
section 165(4) requires organs of state to assist and protect the courts to
ensure their independence, imparticlity, dignity, accessibillity and
effectiveness.
43. We also note that section 165(5) provides that an order issued by a court
binds all persons to whom it applies.
13
44. It is not necessary to decide whether the Tribunal, an administrative body,
could have the power to suspend an order made by a court. That is so
because for the following reasons, the applicants have in any event failed
to make out a prima facie case under the Act.
CONCERTED PRACTICE
45. Genesis sought an interdict in the High Court, and the High Court granted
the interdict. The applicants contend that if they comply with that interdict,
they will be engaging in a "concerted practice" which would be a prohibited
practice in terms of the Competition Act, and that they should not be
required to do so. Accordingly, this Tribunal should suspend the interdict.
46. In our opinion, when a party has opposed the making of an order against
it, that order has nevertheless been made, and the party then reluctantly
complies with it, the party is not engaging in a "concerted practice".
Rather, it is complying with section 165(5) of the Constitution, which
provides that an order issued by a court binds all persons to whom it
applies.
47. In the Sekunja/o case,9 the Competition Appeal Court held10 that in the
process of identifying a concerted practice, it is necessary to identify wha t
9 Mercantile Bank, A division of Capitec Bank Limited and Others v Surve and Others
(206/CAC/Oct22; 208/CAC/Oct22; 209/CAC /Oct22; 210/CAC /Oct22; IR153Dec2 1) [2023)
ZACAC 2; [2023) 3 CPLR 33 (CAC).
10 Para [36).
14
the object of the concertation was. The Court found that the Tribunal had
in that case erred in conflating an outcome - exclusion from the market -
with an anti-competitive effect.11
48. There are no doubt many possible forms of concerted practice. What they
will all have in common is that the parties voluntarily act in a co-operative
or co-ordinated manner in order to achieve their mutual benefit. In this
matter, the applicants' (alleged) compliance with the order was not
undertaken to achieve a benefit for them , except to the extent that it
prevents them being pursued in contempt of court proceedings. Where a
person undertakes an action (or refrains from an action) as a result of
coercion, which is created by an order of court which it opposed, that is
not concerted conduct. To hold that this is a "concerted practice" would
be to do violence to the natural meaning of that term, and to the purpose
of the provision.
49. In this case, there can be no sensible suggestion that the applicants and
Genesis co-ordinated their conduct. To the contrary, they were and are at
at loggerheads in that regard. Genesis wants the applicants to stop
carrying on their business in certain ways, whereas the applicants wish to
continue doing so, and insist that they are entitled to do so. The High Court
made an order interdicting the applicants from carrying on their business
11 Para [38].
15
in that manner. The applicants then attempted to appeal against that
order. If they have now complied with that order (a matter which is in
dispute), it can hardly be said that in doing so, they acted in concert with
Genesis. Rather, they did what they did not wish to do. They complied (if
they did so) not to further their own business, but to avoid being held in
contempt of court and subject to sanction in that regard.
50. The applicants have accordingly failed to make out a prima facie case of
a "concerted practice" in breach of section 4(1) of the Act.
UNLAWFUL COMPETITION
51. The premise of the order of the High Court is that the applicants engaged
in unlawful competition. The Court exercised its common law power to
prohibit unlawful competition. The present applicants appealed against
the order of the High Court, but did not pursue their appeal.
52. The delict (civil wrong) of unlawful competition is long-established in our
common law. The courts will interdict unlawful competition, and will order
the wrongdoer to pay damages to a person who suffers a loss as a result
of unlawful competition.
16
53. The then Appellate Division explained the basis of liability for unlawful
competition in Schultz v Butt, 12 as follows:
"As a general rule, every person is entitled to carry on his trade or
business in competition with his rivals. But the competition must
remain within lawful bounds. If it is carried on unlawfully, in the
sense that it involves a wrongful interference with another's rights
as a trader, that constitutes an iniuria for which the Aquilian action
lies if it has directly resulted in loss".
54. The High Court has the power to decide cases of alleged unlawful
competition under the common law. In the High Court litigation between
Streamlight and Genesis, the Court decided that the present applicants
were competing unlawfully with the present respondent, and interdicted
the applicants from continuing that activity. The applicants obtained leave
to appeal, but allowed the appeal to lapse. The result is that the order of
the High Court is final. It is res judicata13 that the applicants had been
engaging in unlawful competition with the respondent.
55. In this application, the applicants in effect ask this Tribunal to make an
order that it is entitled to continue conduct which the High Court has found
12 1986 (3) SA 667 (A) at 678.
13 A matter that has been adjudicated by a compe tent court and therefore m ay not be pursued
further by the same parties.
17
constitutes unlawful competition. The jurisdiction of this Tribunal arises
from the Competition Act. That Act prohibits various forms of statutory
unlawful competition which are defined in the Act. It does not purport to
legalise conduct which is unlawful under the common law. It is not the
purpose of the Act to enhance and promote unlawful competition.
56. The Act prohibits various forms of conduct which would not be unlawful
under the common law. This power of the Tribunal to prevent statutory
unlawful competition does not extend to the power to authorise conduct
which the courts have found to be unlawful under the common law.
57. One can test this proposition by reference to what would happen if a party
brought proceedings in the High Court for an order to interdict a
respondent from passing off its products as the products of the applicant.
Where a court grants such an interdict, in one sense it may be said to be
limiting competition: it is preventing the respondent from competing as
effectively as it would wish, by passing off its products as the products of
the applicant. We cannot conceive that the Tribunal would make an order
which has the effect that a party has the right to engage in unlawful or
unfair competition, by (for example) passing off its products as the
products of its competitors - or by appropriating the business of its
competitor by unlawfully obtaining and using confidential information of the
competitor.
18
58. For this reason, too, this application m ust fail. The applicants have not
met the first requirement for obtaining interim relief in terms of section 49C
of the Act, nam ely that they must show that they have a prima facie right.
The applicants have not made out any right to continue the unlawful
competition which was found by the H igh Co urt.
CONCLUSION
59. In the circumstances, the application for interim relief is dismissed.
ORDER
60. The application for the interim relief order is dismissed.
61 . Each party must bear its own costs.
Signed by GEOFF BUD LENDER
Signed at:2024-06-18 12: 15:58 +02:00
Reason:Witnessing GEOFF BUD LENDE
corns an es:
Adv. Geoff Budlender SC
Presiding Member
18 June 2024
Date
Concurring: Prof.Thando Vilakazi and Prof. Liberty Mncube
Tribunal Case Man ager: Nomkhosi Mthethwa-Motsa
For the applicants: Adv Ivan Miltz SC and Adv Roxanne Blumenthal
Instructed by Hadar Inc
For the respondent: Adv CB Garvey Instructed by Otto Krause Inc
19