COMPETITION TRIBUNAL
REPUBLIC OF SOUTH AFRICA
Case No. 64/AM/Nov01
In re: Request for Consideration of Intermediate Merger between
Mr Dumisani Victor Ngcaweni and Others Applicant
And
Kwazulu Transport (Pty) Limited (in provisional liquidation) Respondent
Basfour 2488 (Pty) Limited Respondent
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Decision of the Competition Tribunal
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1. The Competition Commission approved without conditions the merger between
Kwazulu Transport (Pty) Limited (in provisional liquidation) (“KZT”) and
Basfour 2488 (Pty) Limited (“Basfour”) on 09 November 2001. The merger has
since been implemented.
2. On 28 November 2001 we received an application to consider the Commission’s
approval of the merger from Mr Dumisani Victor Ngcaweni, an employee of
KZT, and a body calling itself the Natal United Cooperation 1. Mr Ngcaweni
professes to represent KZT employees who are opposed to the merger. Attached
to the application were 250 signatures from persons claiming to be employees of
KZT and a memorandum entitled “REASONS FOR PARTICIPATING IN THE
ISSUE OF THE MERGER”. The memorandum contained a number of grounds
relied upon by the applicants in support of the application.
3. The merging parties responded to this application by challenging the locus standi
of the applicants to bring these proceedings. At a prehearing conference held on
1 Mr Kuboni, who appeared for the applicants, conceded that Natal United Cooperation had no locus
standi to bring these proceedings. Natal United Cooperation is therefore not party to these proceedings and
will receive no further mention in this decision. ‘Applicants’ refers to Mr Ngcaweni and the 250 signatories
to the memorandum entitled “REASONS FOR PARTICIPATING IN THE ISSUE OF THE MERGER”.
19 December 2001 it was decided that since the locus standi point, if good, would
spell the end of the proceedings, it be resolved first. The hearing was set down for
20 January 2002.
4. The respondents argue that only section 16(1)(b) of the Act bestows upon persons
the right to request the Tribunal to consider a decision by the Commission to
approve an intermediate merger. This section, they argue, precludes the applicants
from bringing these proceedings before the Tribunal.
5. Section 16(1)(b) provides:
“(1) If the Competition Commission approves –
…
(b) an intermediate merger or approves such merger subject to
any conditions, a person who, in terms of section 13A(2), is
required to be given notice of the merger, by written notice in the
prescribed form, may request the Competition Tribunal to
consider the approval or conditional approval , provided the
person had been a participant in the proceedings of the
Competition Commission. ”
6. Section 13A(2) provides that the primary acquiring firm and the primary target
firm must each provide a copy of the Merger Notice to:
“(a) any registered trade union that represents a substantial number of its
employees; or
(b) the employees concerned or representatives of the employees
concerned, if there are no such registered trade unions.”
7. It is argued that the wording of section 13A(2) is clear; it requires that parties to a
merger serve the merger notice either on the registered trade union that represents
a substantial number of the employees or, where there is no such trade union, on
the employees concerned or their representatives; but not both. Service on the
employees of a merging party is necessary only where there is no registered trade
union that represents a ‘substantial’ number of the merging parties’ employees. In
union that represents a ‘substantial’ number of the merging parties’ employees. In
addition, the person upon whom the merger notice is required to be served, must
have participated in the proceedings before the Competition Commission in order
for them to acquire locus standi to bring an application in terms of section 16(1)
(b).
8. Uncontradicted evidence is that the Trade and Allied Workers Union (TAWU)
and the South African Trade and Allied Workers Union (SATAWU) are the
registered trade unions at KZT and, together represent just over 77% of the
employees of KZT. 2 The respondents argue that 77% of all employees of KZT is
a ‘substantial’ number. Accordingly, in terms of section 13A(2), the only persons
upon whom the merger notice had to be served are TAWU and SATAWU. 3 It is
argued that no service was required on Mr Ngcaweni and the KZT employees he
purports to represent (the applicants). The applicants are not persons on whom the
notice in terms of section 13A(2) is required to be served and accordingly are not
entitled to apply for a consideration of the Commission’s decision as
contemplated in section 16(1)(b).
9. The applicants, on the other hand, argue that the respondents’ construction of
section 13A(2) is unduly restrictive. They argue that the section 13A(2) requires
that notice be served on three categories of people, namely; trade unions;
employees concerned and representatives of the employees concerned. For the
purposes of section 16(1)(b), they argue, it is not relevant whether the persons
referred to were served the notice or not, what is relevant is whether they were
required to be served and whether they participated in the Commission
proceedings.4 Where a person was required to be served in terms of section
13A(2) and they participated in the Commission proceedings, they are entitled to
bring an application for a consideration of the merger. The applicants, being
employees of one of the merging firms and having participated in the Commission
proceedings, are therefore entitled to bring these proceedings in terms of section
16(1)(b).
10. What the applicants appear to be arguing is that if one adopts a formalistic view to
10. What the applicants appear to be arguing is that if one adopts a formalistic view to
section 16(1)(b), the employees’ right to make representation on a merger may be
unduly curtailed where the trade union decides not to participate in these
proceedings. The purpose of the section, which is to give a voice to the employees
of merging firms, would be defeated by such a formalistic approach. As appears
below, the respondents argue that the employees are not denied a voice, but the
section gives priority to the bargaining unit.
11. It is also argued that the respondents’ interpretation of section 16(1)(b) would
result in glaring absurdities. It is argued by the applicant that the legislature could
not have intended to give a person such as the applicant locus standi to participate
in Commission proceedings but take this away where the Commissions’ decision
is referred to the Tribunal.
12. The applicants further argued that since section 1(2) of the Act enjoins the
2 TAWU alone represents 69,53% of all KZT employees, including management.
3 It is common cause that valid service was effected on both TAWU and SATAWU.
4 It is common cause that the applicants made written submissions on the merger to the Commission, but
see our comments on paragraph 19 below.
Tribunal to interpret the provisions of the Act in a manner consistent with the
Constitution, we must reject the respondents’ interpretation of section 16(1)(b)
because it disregards section 34 of the Constitution. Section 34 of the Constitution
states that everyone is entitled to have any dispute “that can be resolved by the
application of law decided in a fair public hearing before a court or, where
appropriate, another independent and impartial tribunal.”
13. The applicants also argued that the interpretation advanced by the respondents
may lead to a violation of the applicants’ constitutional right to freedom of
association. It was argued that if the applicants do not agree with the decision or
conduct of the trade union in this case, they have a right to come together and take
a different course. The interpretation advanced by the respondents negates this
right by insisting that the employees are bound by the decision or conduct of the
unions and is contrary to section 1(2) of the Act.
14. In response to the applicants’ argument under section 34 of the Constitution, the
respondents argued that the procedure for an application to consider the decision
of the Commission in intermediate merger proceedings is an administrative, and
not a judicial process, and is therefore not subject to section 34 of the
Constitution.
FINDING
15. We find that the applicants lack locus standi to bring these proceedings. The
reasons for this finding appear below.
REASONS FOR FINDING
16. In terms of section 16(1)(b) a person has locus standi to apply for a consideration
of the Commission’s decision in an intermediate merger where they meet two
requirements; first they must be required to be served notice of the merger in
terms of section 13A(2) and, second, they had been a participant in the
proceedings before the Commission. What we have to decide therefore is whether
the applicants meet both these requirements.
17. We agree with the applicants that it is not a requirement of section 16(1)(b) that
the person listed in section 13A(2) is actually served the merger notice. The
requirement is that the person is required to be served the merger notice in terms
of section 13A(2). However, we disagree with their conclusion that this means
therefore that all the persons listed in section 13A(2) are entitled to apply for the
consideration of the merger.
18. This interpretation disregards the clear and unambiguous wording of subsection
13A(2). The ‘golden rule’ of statutory interpretation is that the words of a statute
must be given their plain meaning unless the words used are ambiguous, vague,
misleading or would result in an absurdity, in which case the court may deviate
from that meaning to avoid such absurdity. 5 In our view, the wording of section
16(1)(b) is very clear and the plain meaning of the words used therein results in
no absurdity. The use of the word “or” at the end of subsection 13A(2)(a) and the
proviso to subsection 13A(2)(b) 6 clearly indicates that the persons listed in
13A(2)(b) (i.e. employees or their representatives) are only required to be served a
notice where there are no trade unions referred to in 13A(2)(a). A party to a
merger is therefore not required to serve the merger notice on all the persons
listed in subsection 13A(2) but to one of them only. As noted above, it is common
cause that TAWU and SATAWU are the registered trade unions representing the
employees of KZT. It was not disputed by the complainants that these unions
represent a ‘substantial’ number of KZT employees as contemplated in section
13A(2)(a). In the circumstances, only TAWU and SATAWU were required to be
served the merger notice in this case and they alone are entitled to bring these
proceedings. The fact that they elected not to do so does not make the applicants’
case any stronger.
19. The applicants’ contention that they enjoyed locus standi in the Commission’s
proceedings is not correct. Only persons contemplated in section 13A(2) of the
Act, which as we have pointed out the applicants are not, enjoy such a right. The
applicants’ participation in the Commission’s proceedings amounted to no more
than the making of representations about the merger, which any concerned
than the making of representations about the merger, which any concerned
member of the public is entitled to make. 7 Making a submission did not confer
locus standi upon them nor does it make any difference that in making their
submissions they completed form CC 5(1). When section 16(1)(b) refers to
participation in the Commission’s proceedings it means participation by persons
required to be notified in terms of 13A(2). In this sense the applicants, despite
making submissions, were not participants in the Commission’s proceedings in
the manner contemplated in section 16. The applicants’ involvement in the
Commission’s proceedings can not confer upon them a locus standi which the Act
does not give them anymore than it would to any other person who makes
representations to the Commission, as is frequently the case, such as a customer
or competitor of the merging parties.
20. We turn now to the applicants’ argument that their constitutional rights may be
violated by the interpretation adopted above. The applicants are correct that we
5 See Venter v R 1907 TS 910 at 914; Standard Bank Investment Corporation Ltd v Competition
Commission and Others; Liberty Life Association of Africa v Competition Commission 2000 (2) SA 797
(SCA) at paragraphs 1620.
6 The proviso is that the persons listed in subsection 13A(2)(b) are required to be served where there is no
registered trade union representing a substantial number of the employees of the merging firms.
7 See section 13B(3) of the Act.
are bound by section 1(2) of the Act to interpret the Act in a manner consistent
with the Constitution. We do not consider that the interpretation of section 16(1)
(b) adopted herein is inconsistent with any provision of the Constitution. Section
16(1)(b) gives priority to represent employees’ views to the registered trade
union, which is the recognised collective bargaining unit 8. The right is given to
individual employees or their representatives in default, where there is no
registered trade union. The fact that a trade union may not participate in a merger
proceeding does not mean that it was passive in enforcing its members' rights. It is
equally possible that the trade union considered that the merger was nevertheless
in its members’ best interests or that opposition would be futile. The legislative
policy of preferring the collective bargaining unit to the individual seems to us a
sound one as if every employee was given these rights, merger adjudication
would be rendered impractical.
21. The applicants seek to use section 34 of the Constitution to invoke a right which
the clear language of the Competition Act does not afford them. Whilst the
application of section 34 is still in its infancy, what case law there is, relates to the
constitutionality of impediments to enforcing ones rights, for example,
prescription periods and onerous costs provisions, etc. 9 It has not to our
knowledge been used to create a substantive right, which a statute or the common
law did not already afford.
22. Accordingly the applicants’ argument on constitutional grounds fails. For this
reason, it is unnecessary for us to go further and determine whether the nature of
our proceedings is one of the nature contemplated in section 34.
ORDER
23. We make the following order:
ORDER
23. We make the following order:
1. the application to consider the decision of the Competition
8 The following dictum by Centlivres JA in Amalgamated Engineering Union v Minister of Labour and
Another 1949 (4) SA 908 (A), although made in the context of the Industrial Conciliation Act, is pertinent:
“The whole idea underlying the trade union system … is that the trade union concerned should act as the
spokesperson for its members whenever a dispute arises between employers and employees. The act
encourages collective bargaining… To insist that whenever a dispute arises between employers and
employees, an individual employer or employee should set the statutory machinery in motion for the
purpose of settling the dispute, would tend to defeat the object which the legislature had in mind, viz. to
facilitate the settlement of disputes, for it is obvious that what the legislature had in mind was that
employees should use the services of the trade union of which they are members and that employers should
use the services of the employers' organisations to which they belong.” See also Steel And Engineering
Industries Federation And Others v National Union of Metalworkers Of South Africa (1) 1993 (4) SA 190
(T)
9 See Chaskalson et al, Constitutional Law of South Africa , (Juta) 1999, pages 2523 to 2524.
Commission to approve the intermediate merger between
Kwazulu Transport (Pty) Limited (in provisional liquidation) and
Basfour 2488 (Pty) Limited is dismissed; and
2. there is no order as to costs.
_____________ 13 February 2002
NM Manoim Date
Concurring: U Bhoola; DH Lewis