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Sappi Fine Papers and Competition Commission (62/CR/Nov01) [2002] ZACT 26 (17 April 2002)

78 Reportability
Competition Law
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Brief Summary

Competition Law — Complaint Referral — Jurisdiction — Sappi Fine Papers (Pty) Ltd took exception to a complaint referral by the Competition Commission, alleging that the referral was void due to lack of jurisdiction as it was not made within the prescribed time. The Commission referred the complaint after obtaining multiple extensions for investigation. The Tribunal held that the Commission validly extended the time period for investigation and that the omission of jurisdictional allegations in the referral was not fatal, as the Commission had sufficient information to establish jurisdiction. The Tribunal further concluded that multiple consent extensions were permissible under the Act.

Comprehensive Summary

Summary of Judgment


1. Introduction


The proceedings were an exception brought by Sappi Fine Papers (Pty) Limited against a complaint referral instituted by the Competition Commission before the Competition Tribunal (Case No: 62/CR/Nov01). Although Sappi was cited as the applicant in the exception proceedings, it was the respondent firm in the underlying complaint referral, in which the Commission sought a finding of prohibited conduct.


The procedural history arose from a complaint lodged by Papercor CC with the Commission, followed by related interim relief proceedings before the Tribunal that were postponed to allow negotiations. After the Commission later referred the complaint to the Tribunal, Sappi did not deliver an answer on the merits but instead raised two points of exception: one directed at the Tribunal’s jurisdiction (based on time limits for referral), and the other directed at the Commission’s failure to plead a cognisable cause of action under the Competition Act.


The general subject-matter of the dispute concerned alleged abuse of dominance in the paper supply market, specifically whether Sappi’s insistence that Papercor pay Sappi’s legal costs (incurred in earlier interim relief proceedings) as a precondition to concluding a supply arrangement constituted prohibited conduct under section 8(d)(iii) of the Competition Act 89 of 1998.


2. Material Facts


Papercor CC lodged a complaint with the Competition Commission on 18 May 2000, which the Commission accepted on 8 June 2000 under the then-operative procedural framework. The Commission ultimately referred the complaint to the Tribunal on 26 November 2001.


A set of facts was treated as common cause for purposes of the exception. These included that Papercor’s complaint alleged that Sappi had refused to sell paper supplies to Papercor, or had refused to sell on the same terms as those offered to “designated merchants” who competed with Papercor. Similar allegations were pursued by Papercor in an interim relief application before the Tribunal.


That interim relief application was postponed sine die at Papercor’s request to permit negotiations between the parties. Negotiations did not yield agreement because Sappi insisted that, as a precondition to any supply agreement, Papercor should pay Sappi’s legal costs incurred in defending the interim relief application on a party-and-party basis. In the complaint referral, the Commission characterised this insistence on payment of legal costs as conduct falling within section 8(d)(iii).


The jurisdictional facts relevant to timing were also common cause, including the submission date (18 May 2000), acceptance date (8 June 2000), and the referral date (26 November 2001). After the exception was filed, the Commission produced correspondence indicating that Papercor had granted a series of consents extending the period for investigation, beginning with a first consent granted on 30 May 2001 for a period running from May 2001 to the end of June 2001, followed by further consents extending the period up to 30 November 2001. It was common cause that these consents were given after the amendments introducing section 50 had come into force.


In relation to the merits of the pleading, the Tribunal treated as decisive not a factual dispute on evidence, but that the Commission’s referral did not plead facts explaining why the legal-costs condition was unrelated to the object of the proposed supply agreement, and did not plead facts showing that the condition would link two markets (a feature the Tribunal regarded as essential to a section 8(d)(iii) prosecution on a purposive reading).


3. Legal Issues


The Tribunal was required to determine two principal categories of questions.


The first category concerned jurisdiction and turned largely on questions of law and statutory interpretation. The issues included whether section 50 of the Competition Act (introduced by the Competition Second Amendment Act 39 of 2000 and operative from 1 February 2001) applied retrospectively to complaints submitted before that date, whether the Commission’s failure to plead the fact of extensions was fatal to jurisdiction, and whether section 50 permitted multiple extensions by consent of the complainant.


The second category concerned whether the complaint referral disclosed a cause of action under section 8(d)(iii). This required determining, as a matter of pleading sufficiency and legal characterisation, whether the Commission had alleged the material facts necessary to sustain a contravention, including what the elements of section 8(d)(iii) required and whether a complainant must plead anti-competitive effects for conduct listed under section 8(d). This category was primarily a question of application of law to pleaded facts and of the adequacy of the pleaded averments, assessed on the assumption that pleaded allegations would ultimately be proven.


4. Court’s Reasoning


Jurisdiction and time limits under section 50


The Tribunal first addressed Sappi’s contention that the complaint referral was void because it was made after the Commission’s time to refer had expired. The Tribunal set out the distinction between the pre-amendment (“old”) system—under which the one-year period ran from acceptance of the complaint—and the post-amendment (“new”) system in section 50—under which the one-year period runs from submission of the complaint.


Because the complaint had been submitted and accepted before the commencement of section 50, the Tribunal held that the key legal question was whether section 50 applied prospectively only or retrospectively to pending complaints. The Tribunal relied on its earlier decision in Novartis (22/CR/B/Jun01), where it held that section 50 did not operate retrospectively because the right to bring a complaint referral within a time period creates a substantive right, and amendments affecting substantive rights are not interpreted as retrospective absent clear language.


The Tribunal recorded that Sappi did not persist in challenging the correctness of Novartis, but argued instead that the Commission had failed to plead a basis for jurisdiction and that multiple extensions were impermissible. On pleading jurisdiction, the Tribunal held there was nothing in the rules requiring the Commission to plead jurisdictional grounds in the complaint referral. The referral contained the dates of submission and acceptance, and the referral date was apparent from the document, providing sufficient information for Sappi to challenge jurisdiction. While the Tribunal described it as good practice to plead the existence of extensions, it found their omission not fatal, because jurisdiction would be determined by whether the Commission could prove the facts if challenged, not by whether they were pleaded. The Tribunal therefore accepted that the Commission had validly obtained extensions and moved to the interpretive question of whether multiple extensions were permissible.


On multiple extensions, the Tribunal considered the text of section 50(2) and (4)–(5). It rejected Sappi’s argument that the use of the phrase “the period” implied only a single extension. The Tribunal accepted the Commission’s submission that section 50 was silent on limiting the number of extensions, and that where the legislature intended to limit extensions it did so expressly, as in section 14 (mergers) which refers to “a single period” not exceeding 40 business days.


The Tribunal reasoned that the contrast between sections 14 and 50 was a significant interpretive guide, because both were introduced as part of the same amendment package. It further noted that section 50 contains no cap on the length of an extension, and that restricting the Commission to one extension without a time cap would not necessarily address prejudice concerns in a coherent way: a single long extension could be more prejudicial than a series of short ones. The Tribunal also framed the purpose of section 50’s time limits as primarily protective of the complainant, not the respondent firm, because a complainant needs a non-referral notice to self-refer or pursue damages, and section 50 balances the Commission’s prosecutorial role with the complainant’s interest in finality.


On this basis, the Tribunal concluded that multiple consent extensions are competent under section 50, provided each is obtained before expiry of the preceding period so that the “chain” of extensions is not broken. As there was no suggestion of a break in the extension chain on the facts presented, the jurisdictional exception was dismissed.


No cause of action disclosed under section 8(d)(iii)


The Tribunal then addressed the exception that the complaint referral failed to disclose a cause of action. It adopted the Appellate Division definition of a cause of action from McKenzie v Farmers’ Cooperative Meat Industries Ltd 1922 AD 16 at 22, namely that it comprises every fact necessary to be proved (if traversed) to sustain the right to judgment, and not the evidence by which those facts are proved. The Tribunal reaffirmed its prior approach that, although its rules do not expressly provide for exceptions, it will exercise a discretion to entertain exceptions in appropriate circumstances, including where a complaint referral discloses no cause of action.


The Tribunal noted that Rule 15(2) requires the supporting affidavit to set out material facts or points of law relied upon. Against that standard, it held that a complainant may not proceed on bald conclusions and must at least allege facts covering the elements of the alleged contravention so that the respondent can know the case it must meet.


The Tribunal broke section 8(d)(iii) into elements. First, the impugned conduct must be that of a dominant firm. Second, the conduct must involve either (i) selling on condition that the buyer purchases separate goods or services unrelated to the object of the contract (a classic tying formulation), or (ii) forcing the buyer to accept a condition unrelated to the object of the contract.


On dominance, the Tribunal held the Commission had adequately pleaded the relevant market and alleged Sappi’s market share exceeded 45%, sufficient to sustain a presumption of dominance under section 7. The Tribunal emphasised that whether the market is correctly defined and whether dominance is ultimately proven are matters for the merits stage, not the exception.


The pleading failure arose in relation to the “unrelated condition” component. The Commission accepted that it was not alleging a tie involving purchases of separate goods or services in unrelated markets. It instead relied on the second leg: that Sappi allegedly forced Papercor to accept an unrelated condition, namely payment of Sappi’s legal costs from the interim relief litigation.


The Tribunal held that the Commission had not pleaded facts establishing that the legal-costs condition was unrelated to the object of the prospective supply contract. On the contrary, the Tribunal identified a strong prima facie basis for the opposite conclusion on the pleaded narrative: the legal costs arose from interim relief proceedings aimed at procuring supply from Sappi, those proceedings were postponed to allow negotiations for a supply arrangement, and the complaint referral arose directly from those negotiations. While the Tribunal accepted that evidence might later establish unrelatedness, it held that at the pleading stage the Commission must disclose the facts on which it would rely to sustain that claim. Because those “crucial facts” were not alleged, the exception was upheld on that ground alone.


Sappi further argued that the Commission also had to plead that the impugned conduct was anti-competitive in effect. The Tribunal rejected this, holding that the specific acts listed in section 8(d)(i)–(v) are characterised as “exclusionary acts” and are therefore presumptively anti-competitive, unlike the general category of exclusionary acts in section 8(c). It described section 8(d) acts as per se anti-competitive (in the sense that anti-competitive character is presumed), but not per se contraventions because the statute provides an efficiency or pro-competitive gains defence.


Notwithstanding that conclusion, the Tribunal examined an interpretive “anomaly” in the second leg of section 8(d)(iii). It observed that while classic tying involves leveraging power from one market into another and is well-established as anti-competitive, the imposition of an unrelated condition might, on a literal reading, have no competitive effect at all. The Tribunal resolved this by adopting a purposive reading: section 8(d) is intended to identify well-documented anti-competitive practices, and the “unrelated condition” language was understood as a mechanism to close a potential loophole by catching tying arrangements implemented via conditions (such as standards or specifications) that effectively channel purchasers into a tied market without explicitly requiring purchase of a separate good or service.


The Tribunal reasoned that the placement of both legs within the same subparagraph supported the conclusion that both were directed at the same anti-competitive ill, namely tying. It also considered the parallel language of Article 82(d) of the EU Treaty, noting that authoritative EU decisions applying that provision involved linking separate markets or products. Accordingly, the Tribunal concluded that for the “unrelated condition” component to succeed under section 8(d)(iii), the Commission needed to allege facts that, if proven, would show the condition links two markets, which it regarded as essential to a successful prosecution under that section. Because the Commission did not plead such facts, no cause of action was disclosed.


The Tribunal added that even if it were wrong on the “two markets” requirement, the exception would still succeed because of the independent pleading deficiency: the Commission had not pleaded facts showing that the legal-costs condition was in truth unrelated to the object of the supply contract.


Remedy following a successful exception


Having upheld the exception on no cause of action, the Tribunal considered whether to dismiss the complaint referral outright or to allow the Commission to amend. It expressed reluctance to dismiss a complaint before it had been fully ventilated, noting that injudicious dismissal could invite abuse of process. It adopted the approach described in Erasmus, Superior Court Practice, that the invariable practice where an exception is upheld for no cause of action is to set aside the pleading and grant leave to amend within a time period. The Tribunal therefore allowed the Commission an opportunity to file amended pleadings curing the defects, warning that failure to disclose the factual basis would mean it need proceed no further.


5. Outcome and Relief


The Tribunal dismissed the exception based on lack of jurisdiction and upheld the exception based on failure to disclose a cause of action under section 8(d)(iii). The Commission was granted leave to file amended pleadings, and if it elected to do so it was required to file them within 10 days of the handing down of the decision. The Tribunal made no order as to costs.


Cases Cited


McKenzie v Farmers’ Cooperative Meat Industries Ltd 1922 AD 16 (at 22).


The Competition Tribunal decision in Novartis (Case No: 22/CR/B/Jun01).


The Competition Tribunal decision in The Competition Commission of South Africa v Federal Mogul Aftermarket Southern Africa (Pty) Ltd and Others (Case No: 08/CR/B/May01).


The Competition Tribunal decision in National Association of Pharmaceutical Wholesalers and Others v Glaxo Wellcome (Pty) Limited and Others (Case No: 45/CR/Jul01).


The Competition Tribunal decision in The Competition Commission v Patensie Sitrus Beherend Beperk and Jakobus Johannes Petrus Bezuidenhout v Patensie Sitrus Beherend Beperk (Case No: 37/CR/Jun01).


The Competition Tribunal decision in American Natural Soda Ash Corporation and Others v Botswana Ash (Pty) Limited and Others (Case No: 49/CR/A/Jul00).


The Competition Tribunal decision in Schering (Pty) Limited and Others v New United Pharmaceutical Distributors (Pty) Ltd and Others (Case No: 05/IR/A/Jul01).


Jefferson Parish Hospital District No 2 v Hyde 466 U.S. 2 14 n.20 (1984).


Tetra Pak v Commission [1994] ECR II–755.


United States v Colgate and Co 250 U.S. 300 (1919).


Legislation Cited


Competition Act 89 of 1998, including sections 7, 8(c), 8(d)(iii), 50, 51(1), and 65.


Competition Second Amendment Act 39 of 2000, including the transitional provision in section 23(5).


Treaty Establishing the European Community, Article 82(d) (as referenced in the judgment).


Rules of Court Cited


Competition Tribunal Rules, Rule 15(2).


Previous Competition Commission Rules, Rule 17(2) and Rule 19(2) (as referenced in the judgment’s discussion of the “old system”).


Held


The Tribunal held that section 50 did not operate retrospectively in a manner that deprived the Commission of jurisdiction over pending complaints, and that the Commission’s omission to plead the existence of extensions was not fatal where the jurisdictional facts could be established when challenged. It further held that section 50 permits multiple consent extensions, provided each extension is obtained before the expiry of the preceding period so that the chain of extensions is not broken.


On the substantive pleading point, the Tribunal held that the Commission’s complaint referral did not disclose a cause of action under section 8(d)(iii) because it failed to plead material facts showing that the legal-costs condition was unrelated to the object of the supply contract, and failed to plead facts showing that the condition would link two markets, which the Tribunal regarded as an essential element of section 8(d)(iii) on a purposive interpretation. The Tribunal therefore upheld the exception but granted leave to amend within 10 days, with no costs order.


LEGAL PRINCIPLES


The Tribunal applied the principle that statutory amendments affecting substantive rights are not presumed to operate retrospectively absent express language, and it treated the ability to pursue a complaint referral within a defined time framework as implicating substantive rights. This principle informed its approach to the temporal application of section 50 to pending matters.


In interpreting section 50’s extension mechanism, the Tribunal applied a textual and contextual method, drawing significance from the legislature’s express use of “a single period” in section 14 (merger control) and the absence of similar limiting language or a time cap in section 50. It held that, in the absence of an express prohibition, the Act does not preclude multiple extensions by consent, subject to the requirement that extensions be granted before the prior period expires.


On exceptions, the Tribunal applied the pleading principle that a cause of action comprises the material facts necessary to sustain a right to relief, not the evidence, and that a complainant must plead sufficient facts to enable the respondent to understand the case to be met. It reiterated that even where the Tribunal’s rules do not expressly provide for exceptions, the Tribunal may entertain them in appropriate cases, including where no cause of action is disclosed.


In relation to section 8(d), the Tribunal treated the practices enumerated in section 8(d)(i)–(v) as presumptively anti-competitive such that a complainant is not required to plead or prove anti-competitive effects as an element of establishing the prohibited act, while recognising that section 8(d) contraventions are not per se contraventions because they admit of a pro-competitive gains defence.


Finally, the Tribunal adopted a purposive interpretation of section 8(d)(iii), treating both its “tying” and “unrelated condition” formulations as directed at the anti-competitive phenomenon of tying/leveraging, such that successful reliance on the “unrelated condition” formulation required facts indicating the condition would operate to link or leverage across markets, and in any event required pleaded facts supporting the alleged unrelatedness to the object of the contract.

COMPETITION TRIBUNAL 
REPUBLIC OF SOUTH AFRICA
Case No: 62/CR/Nov01
In the matter between: 
Sappi Fine Papers (Pty) Limited Applicant
and
The Competition Commission  Respondent
_____________________________________________________________
Reasons
_____________________________________________________________
BACKGROUND
1. This   matter   concerns   an   exception   taken   by   Sappi   to   a   complaint  
referral by the Commission. The relevant factual background to the  
case, which is common cause, is that Papercor CC (Papercor) lodged a  
complaint   with   the   Commission   on   18   May   2000   alleging   various  
prohibited   practices   on   the   part   of   Sappi   Fine   Papers   (Pty)   Ltd  
(Sappi). According to the complaint referral, the complaint included  
allegations  that  Sappi refused  to sell  paper   supplies  to  Papercor   or  
refused to do so on the same terms as it sells to so­called designated  
merchants, who are competitors of Papercor. Similar allegations were  
made by Papercor against Sappi in an interim relief application filed  
with   the   Tribunal.   At   the   request   of   Papercor,   the   hearing   of   the  
interim relief application was postponed   sine die  to allow the parties

an opportunity to negotiate. Agreement has not been reached between  
the parties because Sappi insists that, as a pre­condition to any supply  
agreement, Papercor pays on a party and party basis, the legal costs  
incurred by Sappi in defence of the interim relief application referred  
to above. 
2. In   the   complaint   referral,   the   Commission   alleges   that   Sappi’s  
insistence   that   Papercor   pays   its   legal   costs   prior   to   concluding   a  
supply agreement is conduct prohibited by section 8(d)(iii) of the Act.  
Instead   of   filing   an   answer   Sappi   took   exception   to   the   complaint  
referral. There are two grounds to the exception: firstly, it is argued  
that   the   complaint   referral   is   void   and   of   no   effect   because   the  
Commission failed to refer it within the time period prescribed by the  
Act and consequently the Tribunal lacks the jurisdiction to pronounce  
upon   it.   Secondly,   it   is   argued   that   the   complaint   referral   lacks  
averments necessary to sustain a contravention of section 8(d)(iii) ­  
the   factual   allegations   in   the   complaint   referral,   even   if   they   were  
proved, do not disclose a cause of action.
3. We deal with these two points of exception below.
JURISDICTION 
4. As   its   first   point   of   exception,   the   respondent   argues   that   the  
complaint referral is void and of no effect as it was made at a time  
when   the   Commission   no   longer   had   jurisdiction   to   refer   the  
complaint.
 
5. The common cause facts are that the complaint was submitted on the  
18 May 2000 and was then accepted by the Commission on the 8 June  
2000. The Commission referred the complaint to the Tribunal on the  
26 November 2001.
6. In   the   complaint   referral   the   Commission   alleges   that   it   has  
jurisdiction to hear the complaint in terms of section 50 of the Act. 
7. That  section   of  the  Act,  which   came  into  operation  on  1  February  
  2

2001 pursuant to the passing of the Competition Second Amendment  
Act  39  of  2000,  provides  that  a  complaint  must   be  referred  to  the  
Tribunal   within   one­year   of   submission   to   the   Commission.   This  
period may be extended with the consent of the complainant. If the  
period is not extended then the Commission is deemed to have issued  
the complainant with a notice of non­referral. 1
8. Extensions of the Commission’s time period to investigate operated  
differently prior to this amendment.  We will for convenience refer to  
the ‘old’ and ‘new’ systems. Under the old system the Commission  
was first required to screen a complaint after it had been submitted. 2 If  
the complaint met the prerequisites of the screening process, it was  
then   accepted   as   a   complaint.   After   it   had   been   accepted,   the  
Commission then had a period of one year from date of acceptance –  
(note, not the date of submission, which would always be a prior date)  
– to investigate the complaint and refer it to the Tribunal. 3
9. Under   the   new   system   there   is   no   longer   provision   for   the   prior  
acceptance of a complaint. A complaint simply has to be lodged in  
order to be investigated. Apart from this important distinction the two  
systems are similar. Accordingly section 50(2) of the Act provides, as  
did its analogue in the old system, that the Commission has one year  
to investigate a complaint, except under the new system the year runs  
from date of submission not the date of acceptance. 4 As with the old  
system the year may be extended with the consent of the complainant.
10.Subsequent to the exception being taken the Commission introduced  
correspondence to show that the complainant had agreed to extend the  
period   for   the   complaint   to   be   investigated   in   a   series   of   separate  
consents.5  The first consent was granted for the period commencing  
May 2001 until the end of June 2001 and was granted on the 30 May  
2001.

May 2001 until the end of June 2001 and was granted on the 30 May  
2001.
1  A notice of non­referral entitles a complainant to refer its complaint to the Tribunal. Absent such  
a notice it is not entitled to do so. (See section 51(1))
2  See Rule 17(2)   of the previous Commission rules.
3  See Rule 19(2) of the previous Commission rules.
4  We set out the section below.
5  There   were   in   fact   eight   separate   extensions   that   ran   from   1   May   2001   to   30   November  
2001.See   Annexure   to   the   Commission’s   answering   affidavit   to   the   respondents   notice   of  
exception, Record pages 39 – 46.
  3

11.It is common cause that the consents for the extension were all made  
at   a   time   when   the   new   system   had   come   into   force.   The   legal  
question   that   arises   is   whether   the   new   system,   which   came   into  
operation on 1 February 2001, is prospective or retrospective in its  
operation.
12.If it is only prospective, then the old system applies, and at the very  
least the first extension was valid and effective, as the extension was  
granted   within   the   one­year   period   from   the   date   of   acceptance,  
namely the 8th June 2000.
13.If the new system applies, retrospectively, then the consent for the  
extension should have been granted within a year after the date of the  
submission of the complaint (18 May), and hence it would have been  
made out of time.
14.When   the   Competition   Second   Amendment   Act   came   into   force   it  
contained   a   transitional   measure   in   terms   of   section   23(5)   which  
provided that – 
“Any   proceedings   that   were   pending   before   the   Competition  
Commission,   Competition   Tribunal   or   Competition   Appeal   Court  
before the date of commencement of this Act must be proceeded with  
in terms of the principal Act as amended, except to the extent that a  
regulation   under   section   21(4)   or   27(2)   of   the   principal   Act   as  
amended,   or   a   rule   of   the   Competition   Appeal   Court,   provides  
otherwise.”
15.In   a   previous   decision   of   the   Tribunal   in   the   Novartis  case 6  we  
decided   that  notwithstanding  section   23(5)   of  the   Amendment  Act,  
section 50 does not operate retrospectively. This is because the right  
to bring a complaint referral within a time period creates a substantive  
right. An amending statute that affects substantive rights should not be  
interpreted to apply retrospectively unless the amendment expressly  
provides for retrospective application.
6  22/CR/B/Jun01
  4

16.In its oral submissions to us, the respondent indicated that they would  
not challenge the correctness of this decision, but confined themselves  
to   arguing   that   the   Commission   had   not   made   out   a   case   for  
jurisdiction in its complaint referral and secondly that even if it could  
validly extend the period for investigating the complaint it could do so  
only once, as the legislation did not contemplate multiple extensions.
17.Thus we must decide two questions: Firstly, whether it is fatal for the  
Commission not to have alleged that it had jurisdiction by virtue of  
the   extended   periods   it   had   obtained   from   the   complainant   and,  
secondly, whether multiple consent extensions  are competent under  
the Act.
18.There is nothing in the rules to suggest that the Commission is bound  
to plead its grounds for jurisdiction in its complaint referral. In the  
complaint referral the Commission sets out both the date on which the  
complaint was submitted (Paragraph 5.1) and the date on which the  
complaint was accepted (paragraph 8.3). 7 Since the date of the referral  
appears   ex   facie   that   document   the   respondent   had   sufficient  
information to question its jurisdiction. What the referral was missing  
were the allegations that the period for investigating the complaint had  
been extended. Whilst it would be good practice to plead these facts,  
so  that a respondent knows  whether  it can bring a  challenge, their  
omission is not fatal. 8  To hold otherwise would mean non­suiting a  
complainant’s referral that de facto was competent. It is quite clear  
that the Commission may not bring a complaint referral which it does  
not have the jurisdiction to bring, but it does not follow that it loses  
the jurisdiction it has, by want of allegations in the complaint referral.  
If its jurisdiction is challenged and it cannot prove it, it will lose. In

If its jurisdiction is challenged and it cannot prove it, it will lose. In  
7  The   respondent   made   much   of   a   rather   pedantic   point   that   because   the   Commission   had  
referred to section 50 as the basis on which it referred the complaint it had therefore not referred  
it in terms of the old system. The inference is not an obvious one as the reference to section 50  
does not suggest an obvious election to adopt the new system as opposed to the old as section  
50 contains a variety of provsions. The fact that the Commission mentions the date of acceptance  
of the complaint specifically seems to contradict this inference as otherwise this would be an  
irrelevant allegation. Secondly the question of retrospective effect is in any event an issue of law.
8  In this case until the respondent brought the exception it would not have known of the existence  
of the multiple extensions. It is for this reason that we did not restrict the respondent from arguing  
this issue at the hearing even though the point was not taken in its notice of exception or its  
heads of argument.
  5

this   case   we   find   that   the   Commission   validly   extended   the   time  
period, which it had to investigate the complaint and the only issue  
remains   whether   it   was   permissible   for   it   to   do   so   by   means   of  
multiple consents to extend.
19.This was the issue on which the respondent placed most of its reliance  
in its argument before us. The language of sub­sections 50(2), 50(4) –  
(5) is important here ­
“50. Outcome of complaint
1. …
2. Within   one   year   after   a   complaint   was   submitted   to   it,   the  
Commissioner must  ­ 
(a) subject   to   subsection   (3),   refer   the   complaint   to   the  
Competition   Tribunal,   if   it   determines   that   a   prohibited  
practice has been established; or
(b) in   any   other   case,   issue   a   notice   of   non­referral   to   the  
complainant in the prescribed form.
3. …
4. In a particular case –
(a) the   Competition   Commission   and   the   complainant   may  
agree to extend the period allowed in subsection (2); or
(b) on application by the Competition Commission made before  
the  end  of  the  period  contemplated in  paragraph  (a), the  
Competition Tribunal may extend that period.
5. If the Competition Commission has not referred a complaint to the  
Competition Tribunal, or issued a notice of non­referral, within  
the time contemplated in subsection (2), or the extended period  
contemplated in subsection (4), the Commission must be regarded  
  6

as   having   issued   a   notice   of   non­referral   on   the   expiry   of   the  
relevant period.”
20.The respondent argues firstly on a textual approach that the use of the  
words  “the period”  presupposes a single period of extension. This it  
argues is reinforced by the fact that the power to extend in section  
50(4) is to   ‘extend the period allowed in subsection (2)”.   Since this  
period is a period of one year the legislature only contemplated an  
extension to the period of one year and not an extension to the one  
year plus any previous periods of extension.
21.The respondent argues that the reason that the statute does not permit  
multiple   extensions   is   that   otherwise   a   respondent   would   be  
prejudiced by a never­ending series of extensions which would mean  
that the case against it would never reach finality.
22.The Commission argues that the statute is silent on this point and that  
indeed if there is nothing in the statute to prevent them from making  
use of more than one extension, we should not read such a stricture in.  
The   Commission   argues   that   where   the   legislature   had   intended   a  
single   extension   period   it   has   expressly   done   so   in   section   14,  the  
section dealing with merger control. In section 14(1)(a) it states that  
the Competition Commission – 
“may   extend   the   period   in   which   it   has   to   consider   the   proposed  
merger by a  single period  not exceeding  40 business days  and, in that  
case, it must issue an extension certificate to any party who notified it  
of the merger;...”
23.We are persuaded by the Commission’s argument. There is nothing in  
the   express   wording   of   the   text   of   section   50   to   preclude   multiple  
extensions.   In   order   to   be   valid,   however,   the   extensions   must   be  
granted before the expiry of the previous period otherwise the chain  
will be broken. There is no suggestion that the chain of extensions in

will be broken. There is no suggestion that the chain of extensions in  
this case has been interrupted by a period for which a prior consent  
had not been granted. 
24.The difference in the text in sections 14 and 50 is significant to serve  
  7

as   interpretative   guide.   Both   were   introduced   as   part   of   the   same  
amendment   and   therefore  we   can   assume   that  when   the   legislature  
applied   its   mind   to   the   issues   of   extensions   of   both   merger  
considerations and complaint referrals it was mindful of requiring a  
single extension period with the former, but not with the latter. What  
is also significantly different about section 14 is that the requirement  
of a single period is coupled with a stipulation that the extension may  
not exceed 40 days. Section 50(2) is silent on how long the period of  
extension may run.
25.The   absence   of   these   features   in   section   50   suggests   that   the  
legislature   had   not   intended   to   provide   for   only   a   single   period   of  
extension   for   the   reasons   suggested   by   the   respondent.     If   it   had  
considered it necessary, the logic would not be merely to restrict the  
Commission to a single extension but also to impose a time cap on  
that extension. If the legislature was concerned about the danger of the  
abuse of multiple extensions it would surely have provided for this  
expressly, coupled with a cap on the period for extension. Without a  
cap the period of extension is academic. A single period of several  
years   is   surely   more   prejudicial   to   the   respondent   than   a   multiple  
series of extensions that does not extend beyond three months. The  
only   distinction   between   the   two   is   that   under   the   former   the  
respondent knows when the end of the period is whilst under the latter  
the   endpoint   remains   uncertain.   The   distinction   would   make   little  
practical distinction as if the Commission had only a single period of  
extension   it   would   always   bargain   for   the   longest   period,   ex  
abundante cautela,   even if it only needed a much shorter period. A  
respondent’s uncertainty is hardly alleviated by this.

respondent’s uncertainty is hardly alleviated by this. 
26.The real explanation for the time cap on the Commission imposed by  
section   50   is   not   to   protect   a   respondent   but   a   complainant.   The  
complainant has no right to proceed with its own complaint referral  
unless it has a certificate of non­ referral from the Commission. If the  
Commission   is   dilatory   in   its   investigative   function   a   complainant  
might   wish   to   bring   the   case   itself,   but   it   cannot   do   so   without   a  
certificate of non­referral. Furthermore without a decision from the  
Tribunal   declaring   the   conduct   in   question   a   restrictive   practice   it  
  8

cannot bring a case for damages in a civil court. 9 What the legislature  
intended   was   to   impose   some   restriction   on   the   Commission’s  
prerogative to bring a complaint referral in its own good time – it was  
thus   meant   to   balance   the   Commission’s   public   right   to   be   the  
preferred prosecutor, with the private right of a complainant to get its  
dispute heard. For this reason the complainant can refuse to agree to  
the extension and then the Commission has to apply to the Tribunal  
for an extension. 
27.If   the   legislature   had   intended   to   protect   the   respondent   by   this  
mechanism it would surely have done so expressly. 
28.We   conclude   that   there   is   nothing   in   the   Act   to   preclude   the  
Commission obtaining multiple extensions for referring a complaint in  
terms of section 50. The exception based on jurisdiction is dismissed.
NO CAUSE OF ACTION DISCLOSED
29.The excipient – the respondent in the main matter – excepts to the  
complainant’s referral on the grounds that it fails to disclose a cause  
of action, which has been defined by Appellate Division as 
‘…every fact which it would be necessary for the plaintiff to prove, if  
traversed, in order to support his right to judgment of the court.   It  
does   not   comprise   every   piece   of   evidence   which   is   necessary   to  
prove each fact, but every fact which is necessary to be proved.’ 10 
30.In other words, the respondent argues that even if all the allegations  
made   in   the   Commission’s   pleading   are   true,   it   still   falls   short   of  
disclosing a cause of action. 
31.The   complainant   alleges   that   the   respondent   is   in   contravention   of  
Section 8(d)(iii) of the Competition Act, which provides:
“It is prohibited for a dominant firm to –
9  Section 65.
10  McKenzie v Farmers’ Cooperative Meat Industries Ltd   1922 AD 16  at 22
  9

…
(d) engage in any of the following exclusionary acts, unless the firm  
concerned   can   show   technological,   efficiency   or   other   pro­  
competitive   gains   which   outweigh   the   competitive   effects   of   its  
act–
…
(iii) selling goods or services on condition that the buyer purchases separate  
goods or services unrelated to the object of a contract, or forcing a buyer to  
accept a condition unrelated to the object of a contract.”
32.We   have   previously   held   that   although   our   rules   make   no   express  
provision   for   the   taking   of   exceptions   we   would   exercise   our  
discretion to hear exceptions in the appropriate circumstances. 11  An  
exception that a complaint referral discloses no cause of action is one  
of those.
33.The   Commission   argues,   based   on   its   interpretation   of   High   Court  
practice, that a pleading is only excipiable if no possible evidence led  
on the pleadings can disclose a cause of action. They argue that they  
will be able to lead evidence that will disclose a cause of action. The  
respondent disagrees and is of the view that no amount of evidence  
will remedy the faulty premise on which the Commission has sought  
to   erect   its   case   because   the   Commission   has   misconceived   the  
requirements   of   the   section   under   which   it   has   proceeded.   The  
Commission   or   any   other   complainant   may   not   simply   refer   a  
complaint on the basis of a bald allegation – it must at least allege that  
the elements of the transgression that it seeks to prove are,   in fact,  
present.12  The complainant does not, at this stage, have to  prove the  
11See our decisions in   The Competition Commission of SA v Federal Mogul Aftermarket  
Southern   Africa   (Pty)   Ltd   and   Others   (case   number   08/CR/B/May01)   and   National  
Association of Pharmaceutical Wholesalers and Others v Glaxo Wellcome (Pty) Limited  
and Others  (case number 45/CR/Jul01).

and Others  (case number 45/CR/Jul01).
12  This is, in any event, clearly required by Rule 15(2) of the Tribunal rules which explicitly states  
that the affidavit that must support a complaint referral must set out ‘the   material facts   or the  
  10

facts alleged.  However, in order for the respondent to know the case  
that it is required to meet, the complainant must at least reveal the  
factual allegations upon which its claim is based. 
34.Section   8(d)(iii)   can   be   broken   down   into   a   number   of   distinct  
elements.     Firstly,   all   section   8   claims   require   that   the   alleged  
transgressor is dominant as defined in Section 7 of the Act.  Secondly,  
for   a   claim   to   succeed   under   Section   8(d)(iii)   the   Commission   is  
required to establish either that the respondent has made the sale of its  
goods and services conditional upon the buyer purchasing goods and  
services   unrelated   to   the   purposes   of   the   contract   or   that   the  
respondent has forced the buyer to accept a condition unrelated to the  
object of the contract.   In order then to ‘disclose’ a cause of action  
under Section 8(d)(iii) the Commission must ‘disclose’ the facts upon  
which it will rely in seeking to prove the existence of these elements.  
Note that the respondent argues that the Commission is also required  
to   establish   that   the   act   complained   of   generates   anti­competitive  
effects and that, accordingly, it must also disclose the factual basis for  
this   claim.     However,   as   we   shall   elaborate   on   below,   we   are   not  
persuaded by this latter argument.
35.The Commission has clearly alleged that the respondent is a dominant  
firm in the market for the manufacturing and provision of coated and  
uncoated   paper.   The   respondent’s   share   of   this   market,   avers   the  
Commission,  exceeds  45%, sufficient, in terms of  Section 7 of  the  
Act, to sustain a presumption of dominance. When, in the hearing on  
the merits, the Commission is put to proof of this allegation and the  
respondent is given the opportunity to contest it, we may conclude  
that the Commission’s allegation of dominance cannot be sustained ­

that the Commission’s allegation of dominance cannot be sustained ­  
the   market   share   may   be   exaggerated;   the   relevant   market   may   be  
incorrectly identified.  However, at this stage, this is not our concern  
and it does not have to be the concern of the Commission.   For the  
purposes   of   contesting   this   exception,   it   is   sufficient   that   the  
Commission discloses the relevant market that it has identified and the  
factual basis for the allegation that the respondent is dominant in this  
market.  This the Commission has done.
points of law relevant to the complaint and relied upon by the Commission...’
  11

36.However,   unfortunately   for   the   Commission,   this   is   not   the   only  
factual averment that it is obliged to make – that is dominance is not  
the only element of the alleged transgression.  It must also allege the  
factual   basis   of   its   claim   that   the   respondent   is   ‘selling   goods   or  
services   on   condition   that   the   buyer   purchases   separate   goods   or  
services unrelated to the object of a contract’  or is  ‘forcing a buyer to  
accept a condition unrelated to the object of a contract’ .  
37.The Commission  concedes  that it is not in possession  of facts that  
would support an allegation that the respondent is tying the sale of its  
products to purchases by the respondent of other goods or services in  
unrelated markets.  Accordingly, the facts that must be alleged relate  
to a claim that the respondent is, as a condition of sale, forcing the  
complainant   to   accept   a   condition   unrelated   to   the   object   of   the  
contract of sale. This condition is the respondent’s insistence that the  
complainant, Papercor, pay the legal costs sustained by the respondent  
as a result of the claim for interim relief initiated by Papercor.
38.The Commission does not disclose the factual basis of its claim that  
the sale of the respondent’s product is unrelated to the legal costs that  
it claims.     On the contrary, there is a strong   prima facie   basis for  
arguing   that   these   are   intimately   related.     The   disputed   legal   costs  
arose out of an action mounted by Papercor that had, as its express  
purpose,   the   procurement   of   product   from   the   respondent.     The  
interim   relief   proceedings   were   postponed   sine   die   to   enable   the  
respondent   and   Papercor   to  negotiate   a   mutually   acceptable   supply  
arrangement. The Commission’s complaint referral arises directly out  
of   these   negotiations.  The  Commission   may,  in  the  hearing  on  the

of   these   negotiations.  The  Commission   may,  in  the  hearing  on  the  
merits, prove that these are indeed unrelated, however, at present it  
must simply disclose the facts that it will allege in order to sustain its  
claim.  
39.Nowhere are these crucial facts alleged and on this basis alone the  
exception is upheld.
40.The respondent argues that the Commission would also have to allege  
that   the   imposition   of   this   allegedly   unrelated   condition   is   anti­
competitive in its effect.  However, we reject this argument.  The acts  
  12

described   in   8(d)(i)­(v)   are   characterised   in   Section   8(d)   as   ‘the  
following exclusionary acts’ which in turn are defined as ‘act(s) that  
impede(s) or prevent(s) a firm entering into, or expanding within, a  
market’.    Thus   these  acts,  in  contrast  with  the  general  category  of  
‘exclusionary acts’ referred to in Section 8(c), are presumptively anti­
competitive – a complainant is not required to allege or prove facts to  
this effect.
41.In other words the acts described in Section 8(d)(1)­(v) are  per se  anti­
competitive.13    However,   in   contrast   with   the   acts   described   in  
Section 4(1)(b)(i)­(iii) and those described in Sections 8(a) and (b)  
they   are   not   per   se  contraventions   of   the   Act. 14    This   is   because  
Section 8(d) offences permit of a pro­competitive defence, a showing  
that   the   presumed   anti­competitive   consequences   of   a   Section   8(d)  
Act   are   outweighed   by   the   ‘technological,   efficiency   or   other   pro­
competitive gains’.  Section 4(1)(b) offences (as well as Section 8(a)  
and (b) offences), on the other hand, admit of no such defence.  
42.The respondent makes much of the potential balancing of anti­ and  
pro­competitive consequences –   ‘if my opponent is not required to  
establish the precise anti­competitive consequences of a section 8(d)  
act, how’ the respondent effectively asks, ‘will I establish that its pro­
competitive gains outweigh those effects’? This difficulty, even if it  
were to be admitted, cannot change the clear statement in Section 8(d)  
that provides that all of  these  acts  are defined as  exclusionary and  
hence   anti­competitive.     It   may   well   be   that,   for   the   purposes   of  
balancing the pro­ and anti­competitive consequences, one may have  
to   delve   more   deeply   into   the   extent  of   the   anti­competitive  
consequences.  However one does not have to do any further delving

consequences.  However one does not have to do any further delving  
in   order   to   establish   the   existence   of   anti­competitive   effects,   to  
establish whether or not a practice described in Section 8(d) is indeed  
anti­competitive – this the Act establishes for us.  
13  For   a   further   elaboration   of   the   nature   of   section   8(d)   practices   see   The   Competition  
Commission   v   Patensie   Sitrus   Beherend   Beperk   and   Jakobus   Johannes   Petrus  
Bezuidenhout v Patensie Sitrus Beherend Beperk  (case number 37/CR/Jun01)
14  For   a   further   elaboration   of   section   4(1)(b)   complaints   see   American   Natural   Soda   Ash  
Corporation   and   Others   v   Botswana   Ash   (Pty)   Limited   and   Others   (case   number  
49/CR/A/Jul00).
  13

43.It is, in any event, our view that the balancing is a less precise enquiry  
than that suggested by the respondent – it is, inevitably, a qualitative  
rather   than   quantitative   balance   that   is   sought.     Hence,   by   way   of  
example, if the firm imposing an alleged tie was, in addition to being  
dominant in terms of the Act, actually a monopoly supplier then we  
would inevitably conclude that it would have to show massive pro­
competitive   gains   in   order   to   outweigh   the   effect   of   its   monopoly  
status – a would be purchaser of product produced by the dominant  
firm   would   have   literally   no   choice   but   to   use   the   monopolist’s  
product and thus accept any condition imposed in a contract of sale.  
If, on the other hand, the firm, despite its formally dominant status,  
nevertheless  faced  significant   competition,  we   might  well   conclude  
when doing the balancing that the anti­competitive consequences were  
relatively   minor   and   the   pro­competitive   showing   required,  
concomitantly less onerous.     But, we repeat, it is not necessary to  
establish that the act is indeed exclusionary or anti­competitive – it is  
sufficient   to   establish   that   the   respondent   is   dominant   and   that   it  
perpetrated the act alleged.
44.We do however acknowledge that the second leg of Section 8(d)(iii) –  
the imposition of an unrelated condition on the sale of a product – is,  
on the face of it, peculiarly at odds with the other practices listed in  
Section   8(d)(i)­(v).       Each   of   the   other   acts   listed   here   are   well­
established   anti­competitive   acts.   This   is   the   reason   why   the   Act  
distinguishes these acts from the general category of exclusive acts  
referred to in Section 8(c) and why, in particular, it does not require a  
showing of anti­competitive effect in relation to the acts described in  
Section 8(d).   However while ‘tying’ – the practice of conditionally

Section 8(d).   However while ‘tying’ – the practice of conditionally  
linking   the   purchase   of   a   desired   product   to   the   purchase   of   an  
unrelated product, which is the act clearly described in the first leg of  
Section 8(d)(iii) – easily falls into this category of what the US courts  
have referred to as ‘black letter’ anti­competitive acts, the same could  
not  be  said   of   the   imposition   of  an  unrelated   condition.  It  is  quite  
conceivable   that   a   condition,   possibly   even   one   that   is   onerous   or  
‘unfair’,   may   nevertheless   have   no   impact   upon   competition  
whatsoever.   On this literal reading of the Act, the respondent may  
well be justified in insisting that when dealing with the practice of  
imposing an unrelated condition there should be a showing of an anti­
  14

competitive effect.   On the face of it, the imposition of an unrelated  
condition   indeed   bears   little   similarity   to   a   tying   arrangement,   the  
essential feature of which is the linking of two unrelated   markets. It  
would appear then that this single practice is at odds with the other  
acts listed in Section 8(d) including the act of tying described in the  
first part of Section 8(d)(iii). 
45.However,   in   our   view   this   anomaly   is   eliminated   by   a   purposive  
reading of the Act.  The clear purpose of this section is to describe a  
number of well­documented anti­competitive acts and to declare them  
per   se  anti­competitive.     The   drafters   would   have   not   intended   to  
extend this category to cover a practice which, on its face, may have  
little to do with competition and which the case law has certainly not  
identified as a significant anti­competitive practice.  
46.There   is,   however,   a   relatively   straightforward   explanation   of   this  
apparent   anomaly.     The   first   act   described   in   section   8(d)(iii)   is   a  
classic  tying arrangement – it is described  as  such in a number  of  
authoritative   US   and   EU   judgments   and   in   scholarly   commentary.  
The essential features of a tying arrangement are the existence of two  
distinct products, that is, two distinct markets. In one of these markets,  
the   ‘tying   market’   or   ‘tying   product’,   the   alleged   transgressor   is  
dominant.  It seeks to leverage advantage for itself or for an ally in the  
second   market  by requiring a  would­be  purchaser   in the  market  in  
which it is dominant to favour itself or its ally in the second or tied  
market.15   The element of leveraging is an essential feature of tying.  
15  According to Areeda ( Antitrust Law  at 1700d) in the US  “The original, continuing, and most  
fundamental concern about tying is ‘leverage’” . He quotes the US Supreme Court’s definition of

leverage where it held that  “’Leverage’ is loosely defined … as a supplier’s power to induce his  
customer   for   one   product   to   buy   a   second   product   from   him   that   would   not   otherwise   be  
purchased solely on the merit of that second product.”   [Jefferson Parish Hosp. Dist. No 2 v  
Hyde, 466 U.S. 2 14 n.20 (1984)] . In  “The Economics of EC Competition Law” at paragraph  
5.13, Walker and Bishop state:  “What may be referred to as the ‘intuitive’ antitrust concern with  
tying is that a firm that is a monopolist in one market might be able to ‘leverage’ this monopoly  
into another market and thus raise prices above the competitive level in this second market. The  
concern   is   that   the   monopolist   uses   his   market   power   in   the   tying   good   market   in   order   to  
improve anti­competitively his position in the tied good market.”     In Tetra Pak v Commission  
[1994] ECR II –755  the European Court of First Instance found that contractual clauses whereby  
Tetra Pak tied the sale of its carton packaging materials to the sale of its filling machines by  
requiring that purchasers of the filling machines use only their only their cartons infringed the  
provisions of article 82(d) (article 86(d) at the time). This was because these clauses eliminated  
  15

These   elements   are   clearly   described   in   the   first   leg   of   8(d)(iii)   –  
‘selling   goods   or   services   on   condition   that   the   buyer   purchases  
separate goods or services unrelated to the object of a contract’.
47.What then, are we expected to make of the second leg of section 8(d)
(iii) ­ the imposition of an unrelated condition? This, on the face it,  
does not appear to require the existence of two markets or products.  
In   the   present   case   the   condition   is   that   Papercor,   the   would­be  
purchaser of the allegedly dominant firm’s product, pay legal costs  
sustained   by   the   respondent   –   in   this   instance   it   is   clear   that   two  
products or markets are not linked by the tie, there is no leveraging of  
market   power.   In   our   view   the   inclusion   of   a   prohibition   on   the  
imposition   of   ‘unrelated   conditions’   simply   reflects   the   cautious  
approach of the legislature, a caution appropriate in a field of law that  
potential transgressors have both the incentive and resources to evade.  
It is conceivable that a dominant firm may seek to impose a tie, may,  
in   other   works,   seek   to   leverage   its   power   into   a   second   market,  
without   explicitly   specifying   that   the   intended   victim   of   the   abuse  
purchase   product   in   the   second   market.     It   may   achieve   this   by  
imposing a condition in the sale agreement – for example, a technical  
standard   or   specification   required   when   purchasing   spare   parts   or  
some  or  other   complementary input ­  that  would lead  its  customer  
directly to the door of the intended beneficiary in the second market.  
Because the condition specified a standard rather than ‘separate goods  
or   services’   the   perpetrator   of   the   tie   may   escape   scrutiny   under  
Section 8(d)(iii).   It is this potential loophole that the second leg of  
Section 8(d)(iii) is intended to close.

Section 8(d)(iii) is intended to close.
48.The   fact   that   the   two   legs   are   located   in   the   same   sub­paragraph  
suggests   that   they   are   both   intended   to   address   the   same   anti­
competitive ill, namely tying. If they were not conceptually linked and  
the second link refers to some conduct that is distinct from tying, it  
would   presumably   have   been   set   out   in   its   own   self­standing   sub­
paragraph.   The   architecture   of   paragraph   (d),   which   sets   out   a  
different   species   of   exclusionary   act   in   each   of   its   sub­paragraphs,  
tends to support this conclusion.
competition   at   the   level   of   carton   sales   by   tying   making   this   market   to   the   market   for   filling  
machines where Tetra Pak was dominant.
  16

49.Our view is supported by the observation that Article 82(d) of the EU  
Treaty specifies as an abuse of dominance  “making the conclusions of  
contracts   subject   to   acceptance   by   other   parties   of   supplementary  
obligations which, by their nature or according to commercial usage,  
have   no   connection   with   the   subject   of   such   contracts.”   It   is  
instructive   that   there   is   no   single   EU   case   in   which   the   offending  
unconnected   ‘supplementary   obligations’   has   not   linked   separate  
markets   or   products.     And   there   are   authoritative   EU   decisions   in  
which this Article has been used to impeach conditions that have tied  
two markets, in which, in other words, a dominant firm has sought to  
leverage its market power into an unrelated market. 16
50.Accordingly because the Commission has failed to disclose facts that  
will, if later proven, establish that the unrelated condition in question  
will   link   two   markets   –   in   our   view,   an   essential   element   for   a  
successful prosecution under Section 8(d)(iii) – we conclude that no  
cause of action has been disclosed and the exception is upheld.
51.We   note   that   even   if   we   have   erred   in   our   interpretation   of   the  
‘unrelated condition’ component of Section 8(d)(iii) we would have  
still upheld the exception.   This is because, as clarified earlier, the  
Commission has failed to disclose the facts upon which it shall rely in  
order to prove that the condition in question – the payment of the legal  
costs – is indeed unrelated to the object of the contract of sale.  As we  
have   noted,   on   the   face   of   it,   the   condition   and   the   object   of   the  
contract that the parties seek to conclude are intimately related and  
there   are   no   facts   disclosed   that   allege   the   contrary.     Accordingly,  
even   on   this   interpretation   no   cause   of   action   is   disclosed   and   the  
exception is upheld.

exception is upheld.
52.Note that we are not arguing that the imposition of a truly unrelated  
condition can never be anti­competitive.   For example, a refusal to  
deal,   a   possible   anti­competitive   act   although   one   clearly  
distinguished from tying, may conceivably be affected by imposition  
of a manifestly unacceptable unrelated condition on a sale – in other  
words an unrelated and unacceptable condition may be imposed as a  
16  See footnote 15  supra.
  17

device to force a would­be purchaser to walk away from a contract of  
sale. However, a refusal to deal would in all likelihood be prosecuted  
under Section 8(c) unless it met the onerous and unusual requirements  
contained in Section 8(d)(ii).  The distinction between a Section 8(c)  
and a Section 8(d) prosecution is by no means academic.  As already  
noted,   because   Section   8(d)   describes   acts   whose   anti­competitive  
consequences   have   been   established   by   a   century   of   anti­trust  
jurisprudence, a successful prosecution does not have to establish the  
anti­competitive or exclusionary consequences of the act in question –  
they are presumed to be present.  However, for a prosecution in terms  
of   Section   8(c)   to   succeed   it   is   necessary   to   establish   that   the   act  
complained of is indeed exclusionary, that it ‘impedes or prevents a  
firm entering into, or expanding within a market’. 17
REMEDY
53.The exception having been upheld, there are two potential remedies  
that we may impose.  We could dismiss the complaint referral.  In that  
eventuality, the Commission would be time barred from referring this  
matter to the Tribunal.  Alternatively, we may grant the Commission  
leave to amend and cure the defect on its papers – we may, in other  
words, grant the Commission an opportunity to submit papers that do  
indeed disclose a cause of action.
54.We are, in principle, extremely reluctant to dismiss a complaint before  
it   has   been   fully   ventilated. 18    An   injudicious   compromise   of   this  
principle may sow the seeds of considerable abuse of our processes.  
However, as noted, having upheld the exception we are entitled to  
impose   a   remedy   less   powerful   than   outright   dismissal   of   the  
17  The   imperative   to   establish   the   anti­competitive   consequences   of   a   ‘refusal   to   deal’   are,  
arguably, particularly clear insofar as forced dealing disturbs a broad principle of anti­trust, viz,

that ‘absent a purpose of creating or maintaining a monopoly merchants should be free to trade  
with whomever they choose and on such conditions as they choose’   (Glen O. Robinson ‘ On 
Refusing   to   Deal   with   Rivals’   University   of   Virginia   School   of   Law,   Law   and   Economics  
Research Paper Series, Working Paper No 01­3, May 2001).  This principle is confirmed time and  
again by the courts with possibly its best­known formulation in  United States v. Colgate and Co  
250 U.S. 300 (1919)
18  See   our   decision   in   Schering   (Pty)   Limited   and   Others   v   New   United   Pharmaceutical  
Distributors (Pty) Ltd and Others  (Case number 05/IR/A/Jul01).
  18

complaint referral.   We may grant the Commission leave to cure the  
defect on its papers so as to disclose more clearly its cause of action.  
Should it fail to do so we may, at that stage, dismiss the complaint  
referral ­ indeed if the Commission cannot disclose the factual basis of  
its complaint then it need proceed no further with this matter.
55.Erasmus describes the approach of the High Court in cases where it  
has upheld an exception:
“It is, in fact, the invariable practice of the courts, in cases where an  
exception   has   successfully   been   taken   to   an   initial   pleading   that   it  
discloses no cause of action, to order that the pleading be set aside and  
that  the  plaintiff  be   given   leave,  if   so  advised,   to  file  an  amended  
pleading within   a certain period of time.   It has been held that it is  
doubtful  whether   this   practice   brooks   of   any  departure;  in   the  rare  
case in which a departure may be permissible, the court should give  
reasons for the departure.” 19
56.There is no reason for us not to   ‘observe the invariable practice’   in 
the present case, so we will allow the Commission the opportunity to  
amend its referral.
ORDER
Accordingly we make the following order:
1. the exception based on lack of jurisdiction is dismissed;
2. the exception based on the Commission’s failure to disclose a cause of  
action in the complaint referral is upheld;
3. the Commission is granted leave to file amended pleadings;  
4. if the Commission elects to file amended pleadings contemplated in 3  
above,   it   must   do   so   within   10   days   of   the   handing   down   of   this  
decision; and 
5. there is no order as to costs.
19  Superior Court Practice  B1­158
  19

_____________ 17 April 2002
D.H. Lewis Date
Concurring: S. Zilwa; N.M. Manoim
  20

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