COMPETITION TRIBUNAL
REPUBLIC OF SOUTH AFRICA
Case No: 25/IR/C/Aug00
25/IR/Dec99
In the matter between:
Mainstreet 2 (Pty) Ltd t/a New United
Pharmaceutical Distributors (Pty) Ltd (UPD) First Applicant
Natal Wholesale Chemists (Pty) Ltd
t/a Alpha Pharm Durban Second Applicant
Midlands Wholesale Chemists (Pty) Ltd
t/a Alpha Pharm Pietermaritzburg Third Applicant
East Cape Pharmaceuticals Ltd t/a Alpha Pharm
Eastern Cape Fourth Applicant
Free State Buying Association Ltd t/a Alpha Pharm
Bloemfontein (KEMCO) Fifth Applicant
Pharmed Pharmaceuticals Ltd Sixth Applicant
AGM Pharmaceuticals Ltd t/a DOCMED Seventh Applicant
L’Etangs Wholesale Chemists CC t/a L’Etangs Eighth Applicant
Resepkor (Pty) Ltd t/a Reskor Pharmaceutical
Wholesalers Ninth Applicant
and
Novartis (SA) (Pty) Ltd First Respondent
Roche Products (Pty) Ltd Second Respondent
Boehringer Ingelheim (Pty) Ltd Third Respondent
Bristol Myers Squibb (Pty) Ltd Fourth Respondent
Abbott Laboratories SA (Pty) Ltd Fifth Respondent
ScheringBerlin (Pty) Ltd t/a Berlimed Sixth Respondent
SanofiSynthelabo (Pty) Ltd Seventh Respondent
MSD (Pty) Ltd Eighth Respondent
Bayer (Pty) Ltd Ninth Respondent
Eli Lilly SA (Pty) Ltd Tenth Respondent
Wyeth SA (Pty) Ltd Eleventh Respondent
Rolab (Pty) Ltd A Division of Novartis SA Twelfth Respondent
Hoechst Marion Roussel Ltd Thirteenth Respondent
International Healthcare Distributors
(Pty) Ltd (IHD) Fourteenth Respondent
ORDER & REASONS FOR THE TRIBUNAL’S DECISION
In this case the applicants have brought an application for interim relief
against the respondents in terms of section 59 of the Competition Act. At the
time the application was launched the Competition Commission, in terms of
a procedure provided for in its rules, had not accepted the complaint. The
respondents have asked us to dismiss the application on the basis that the
applicants have no standing to bring it. 1
Background
The facts of this case are common cause. On the 11 October 1999, the
applicants filed a complaint with the Commission. On the 20 December
1 Although the application currently before us to dismiss has been brought by the respondents we have of
for convenience referred to the applicants and respondents as they are in the interim relief application.
2
1999 the applicants filed their interim relief application with the Tribunal.
On the 17 th February 2000 the Commission accepted the applicants’
complaint. The respondents say that they only become aware of this
sometime in July 2000, when the Commission advised them in writing of the
date of acceptance.
At the date of this application (15 November, 2000) the Commission has yet
to refer the complaint to the Tribunal or to issue a notice of non referral.
Discussion
The respondents’ case is this. A person who brings an application for
interim relief must comply with section 59 of the Act, the section that
authorizes these types of proceedings. The relevant portion of section 59(1)
states –
“At any time, whether or not a hearing has commenced into an
alleged prohibited practice, a person referred to in section 44
may apply to the Competition Tribunal for an interim order in
respect of that alleged practice, and the Tribunal may grant
such an order if…”
It can be seen that the essential requirement for standing in terms of section
59 is that the applicant must be “ a person referred to in section 44 ”. Section
44 in turn states that –
“A complaint against a prohibited practice by a firm may be
initiated by the Commissioner, or submitted to the Competition
Commission by any person in the prescribed manner.”
Reading the two sections together we can conclude that when section 59
speaks of a person referred to in section 44 it means a person whose
complaint has been submitted to the Commission in the prescribed manner .
(Our emphasis)
Prescribed of course means prescribed by regulation and the regulations in
question are the Rules of the Competition Commission.
3
Rule 2 (f) (ii) of the Competition Commission’s Rules defines a complaint
as “ a matter that has been submitted to the Commission in terms of section
44 and accepted by the Commission in terms of Rule 17 .”
Rule 17 of the Rules goes on to give procedural substance to the bifurcated
definition of complaint. Rule 17(1) speaks to the filing of the complaint
when it says
“ A person other than the Commissioner, by filing a completed
Form CC1, may submit a matter to the Commission,
a) if the matter concerns a practice that meets both of the
tests set out in Rule 16 (a) and (b);
b) the submission is not frivolous; and
c) the Commissioner has not initiated or accepted a
complaint in respect of that practice.”
Rule 17(2) in turn provides for acceptance by the Commission.
“Upon receiving a submission in terms of subrule (1), the
Commission must either
a) accept the submission as a complaint in terms of section
44; or
b) notify the person who made the submission that the
Commission has rejected the submission as a complaint,
and provide a brief written explanation for that decision.
It is not disputed that the applicants' complaint survives the first requirement
of Rule 17(1). A complaint in the proper form was filed with the
Commission on 11 October 1999.
Nor is it disputed that Rule 17(2) had not been complied with at the time
interim relief was applied for in December 1999. The respondents argue that
this means that the requirements for a valid complaint did not exist prior to
the launching of the application and ergo the applicants have no standing to
bring this application. The applicants retort that the flaw in the respondents’
argument is a “ misplaced reliance upon the applicability of Rule 17(2) ”.
4
They argue that the statute does not require that a complaint be accepted in
order for an applicant to acquire locus standi to bring an interim relief
application, all that is required is that the complaint must have been filed.
A lengthy debate ensued between the applicant and the sixth respondent as
to the correct interpretation of section 44. Its resolution depends on an
assessment of whether the Rules on acceptance are intra or ultra vires the
statute. In brief the applicants argued that what section 44 contemplates with
the language of “submission” is a unilateral act by a complainant who lodges
or files the required form with the Commission. The additional hurdle of
acceptance created by Rule 17(2), they argue exceeds the regulatory ambit
authorized by the section. According to the affidavit filed by the applicants’
attorney,
“In the premises, and to the extent that Rule 17 purports to do
so, it is ultra vires its empowering statute and therefore void. In
particular Rule 17 cannot be used to cut down or enlarge the
meaning of sections 44 or 59 of the Act. The Act does not
require that “the complaint would have had to be accepted” by
the Competition Commission before the interim application
could be lodged.”
The sixth respondent contended with equal vigour that the regulation is intra
vires the section and that the use of the word “submission” is itself
suggestive of an acceptance process. Both parties relied on literal, textual
and contextual interpretations of the Act and Rules to support their
interpretations as to whether the statute should be interpreted as authorizing
an ‘acceptance” or merely a “lodgment”, scheme for the submission of
complaints to the Tribunal. Both also claimed support for their respective
interpretations in the wording of the amendment to the present section 44,
contained in section 49B(2)(b) of the Competition Second Amendment Bill
contained in section 49B(2)(b) of the Competition Second Amendment Bill
(B 41B –2000).
This brings us to the essence of the difficulty we have with the applicants’
argument in this matter. What the applicants are asking us to do is to ignore
the clear language of the Rule because the statute does not authorize it. That
this amounts to an argument that the Rule is ultra vires the statute is
5
something they skillfully avoided conceding in argument, although they do
suggest this in their answer as we indicated above in the quote from the
affidavit of their attorney. The reason for this circumlocution is that the
applicants are perfectly aware that the Tribunal as a creature of statute only
has those powers that the legislature seeks to confer upon it.
As the High Court has stated in Minister of Public Works v Haffejee NO
1996 (3) SA 745 (A) at 751 :
“Where a tribunal is a creature of statute with no inherent
powers (such as compensation court), it cannot by its own
ruling or decision confer a jurisdiction upon itself which it does
not in law possess.”
The Tribunal’s functions are described in section 27 of the Act and the
nature of the relief it can grant is set out in section 60. Neither section
expressly or by necessary implication confers such a power on the Tribunal.
The power to declare rules of the Commission ultra vires is accordingly not
within our competence and no one has argued otherwise. Yet the implication
of the applicants’ argument is that we must ignore Rule 17(2) even if we
cannot set it aside. The legal effect of this approach amounts to the same as
finding them to be ultra vires. If an administrative Tribunal is given Rules it
must follow them. In the case of Mosaka and others v Eiselen NO 1951 (4)
SA 504 (T) it was held that:
“It seems to me that there must be a special approach to a
problem such as this where the body concerned is a statutory
body. Once regulations have been framed as to the procedure
those regulations have the force of law. It may be that if the
regulations are not comprehensive, and a matter arises which
is not dealt with by the regulation the Council itself would have
the right to decide upon the procedure. But if there is a
regulation dealing with the matter the provisions of that
regulation dealing with the matter the provisions of that
regulation must be carried out.”
In doing so we are not using the Rules to interpret the statute, which the
Courts have held one may not do. 2 Rather the statute mandates the use of
2 See Hamilton Brown v Chief Registrar of Deeds 1968 (4) SA 735 and Moodley and Others v Minister of
6
regulation to provide the procedure for the manner of submission of
complaints. In any event we cannot treat the rules of the Commission as if
they were invalid. This is the prerogative of the High Court should it ever be
required to consider this issue.
Accordingly we find that on an interpretation of the rules, acceptance by the
Commission is a prerequisite for a valid complaint and that the application
was launched prematurely.
Apart from the clear language of Rule 17(2), when read with the definition
of a complaint contained in Rule 2(f)(ii), the purpose of this Rule also
supports the respondents’ interpretation that acceptance must have taken
place at the time the application was launched.
A prospective complainant must come along to the Commission and file a
complaint in Form CC1. This action does not confer the legal status of a
“complaint” on the filing until the Commission has accepted it in terms of
Rule 17(2). The acceptance procedure is intended to serve as an initial
screening to see whether the submission meets the standard set out in Rules
16 and 17(1) viz.
Rule 16:
“The Commissioner may initiate a complaint at any time, if
a) it concerns a matter that is within the jurisdiction of the
Act; and
b) it concerns a matter that constitutes a permitted
complaint in terms of section 67.
Rule 17(1):
A person, other than the Commissioner, by filing a completed form
CC1, may submit a matter to the Commission, if
a) the matter concerns a practice that meets both of the tests
set out in Rule 16(a) and (b);
Education and Culture, House of Delegates, and Another 1989 (3) SA 221 (A)
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b) the submission is not frivolous; and
c) the Commissioner has not initiated or accepted a complaint
in respect of that practice.”
If the complaint is accepted, the Commission must proceed with its
investigation and decide whether to refer the matter to the Tribunal or to
issue a notice of nonreferral. The juristic difference between a nonreferral,
a decision the Commission is entitled to make in terms of section 50(b) of
the Act 3, and a nonacceptance in terms of Rule 17(2) is crucial. After a
“nonreferral” decision the complaint is kept alive, but the Commission opts
out of its role as the referring party in favour of the complainant; after a
“nonacceptance” decision the complaint is dead and can only be resurrected
if the party successfully reviews the Commission’s decision in terms of Rule
17(3).4
As the respondents have argued, the Rules require a complaint to be
accepted to clothe it with validity; this means acceptance must have taken
place before interim relief is applied for. To hold otherwise would lead to
the danger that the complaint is an inchoate juristic fact until acceptance. An
applicant whose submission still awaited acceptance by the Commission
could proceed and possibly obtain interim relief from the Tribunal only to
discover subsequently that the Commission had refused to accept the
complaint thus nullifying it. 5 This makes the acceptance rule farcical and
would introduce chaos and uncertainty into the proceedings. Logic dictates
that as long as acceptance of a complaint is a requirement for valid
complaint, acceptance must take place before a valid complaint can be said
to exist.
3 Section 50 states “After completing an investigation, the Competition Commission must –
a) refer the matter to the Competition Tribunal if it determines that a
prohibited practice has been established ;or
prohibited practice has been established ;or
b) in any other case, issue a notice of nonreferral to the complainant in the
prescribed form
4 Rule 17(3) states “If the Commission has rejected a submission in
terms of subrule (1) (a), (b) or (c), the person who made that
submission may request, within 10 days after receiving a notice from the
Commission in terms of subrule (2)(b), a review of the Commission’s
decision by the Competition Tribunal, subject to its Rules”.
5 Subject of course to a review to the Tribunal in terms of Rule 17(3).
8
For this reason we find that the applicants did not have locus standi to bring
this interim relief application and the application is dismissed.
COSTS
There are two cost issues to be decided in this matter. Firstly the costs of this
application to dismiss (the “dismissal application”) and secondly the costs of
the application as whole (the “main application”). The applicants have
argued that if they are unsuccessful we should only award costs against them
for the dismissal application but that the costs of the main application should
be reserved until they have had an opportunity to renew these proceedings
and if they do these costs become costs in the cause.
The respondents argued that the normal rule of cost following result should
apply and if the applicants lose they should pay their costs for both the main
application and the dismissal application. They argue that the onus is on the
applicants to meet the jurisdictional requirements of the statute and Rules
and having fallen short they must bear the costs.
As an administrative Tribunal we are less constrained by the obligation to
always award costs than a High Court. In addition we have a discretion as to
whether to award costs. This application is an unusual one for a number of
reasons –
• The regulations may well be ultra vires but we do not have the
jurisdiction to decide this and since the expense of approaching
the High Court might well exceed the costs of filing a new
application the applicants understandably may not wish to
proceed to the High Court.
• The act is being amended to change the nature of the complaint
regime.6 The transitional provisions of the Bill make it
retrospective in relation to pending proceedings 7.
• The applicants in their affidavit contended that in practice the
Commission did not follow the acceptance procedure set out in
6 The Bill revises section 44 with a new section 49(B)(2)(b). Although the language of submission of a
complaint is retained the ambit for regulation is considerably narrowed – the word prescribed now qualifies
the word “form” currently it qualifies “manner”. The new language suggests the legislature does not
contemplate acceptance as requirement for a valid complaint.
7 Section 23(5) of the amendment Bill.
9
its rules. As evidence for this they relied on a letter from the
Commission dated 18 October 1999. This letter, dated some
time after the complaint was lodged, does not expressly
stipulate that formal acceptance is a prerequisite to an
application for interim relief. Nevertheless its silence on the
issue of acceptance could have lead the applicants to reasonably
construe that the Commission did not regard this as a
prerequisite, more particularly as the letter draws the
applicants’ attention to interim relief as a remedy to be
considered by them.
• The Commission has since accepted the complaint.
• The objection is a “technical” one in the manner understood in
the case law. 8 Nor has the initial failure to have the complaint
accepted prejudiced the respondents. The respondents
complained that they are prejudiced by the failure of the
applicants to have filed their reply despite considerable delay,
but that is another matter and even if the complaint had been
accepted before the main application was launched this would
have had no bearing on the applicants alleged dilatoriness in
reply.
• The requirement for acceptance seems to have escaped all
parties not just the applicants who had they been alerted earlier
might have corrected the defect before further costs were
incurred. 9
For all these reasons we believe that the interests of justice would not be
served by making a costs award in respect of the main application at this
stage and costs in this respect should be reserved 10. Since this might
8 In Sirkhot v Parker 1929 1 PH F26 (C) the Court, after upholding an exception, did not grant costs in
favour of the successful defendant, but ordered that costs be costs in the cause as the exception was a
technical one and the defendant had not been embarrassed in any way.
technical one and the defendant had not been embarrassed in any way.
9 Indeed the Respondents seemed less concerned about acceptance than about examining the complaint, as
evidenced from the Affidavit of Johan Niehaus, on behalf of the 14 th Respondent, paragraph 59 where he
states “We would respectfully request the above Honourable Tribunal to permit the Respondents an
examination of the complaint in order to ensure that there are no allegations contained in the complaint
which will be taken into consideration by the Tribunal which are not already contained in this application
for interim relief under section 59”.
10 We have decided to reserve the costs as opposed to making them costs in the cause as there is always a
possibility that the renewed application takes a significantly different form to the present and in that case
we should allow a future Tribunal to have a discretion over whether the costs incurred should follow the
cause.
10
prejudice the respondents if a renewed application is not brought we have
decided to make the order in the following terms
1. The respondents who were parties to the dismissal application (the
first, second, third, fourth, sixth, ninth, twelfth, thirteenth and
fourteenth) are awarded costs of that application as follows
(i) In the case of the sixth respondent the costs of one
attorney
(ii) In the case of the other respondents the costs of two representatives is
authorised provided that the fees of the additional representative may not
exceed one half of the first representative.
2. The costs of the main application are reserved to be determined at the
same time as the costs of the renewed interim relief application are
determined provided that –
(i) The applicants file and serve the renewed
application by no later than 31 January 2001; and
(ii) If they do not the respondents will be entitled to approach the registrar
to have this matter set down to determine costs
iii) If any respondent to the present main application is
not cited as a respondent in the renewed application
such respondent may also approach the registrar to
have the matter set down to determine its costs.
_________________ 29 November 2000
Norman Manoim Date
Concurring: S. Zilwa; P. Maponya
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