COMPETITION TRIBUNAL
REPUBLIC OF SOUTH AFRICA
Case No: 80/IR/Aug05
In the application for interim relief:
Nqobion Arts Business Enterprise CC Applicant
and
The Business Place Joburg First Respondent
BeEntrepreneuring Second Respondent
Decision
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Introduction
1. The applicant, Nqobion Arts Business Enterprise (“Nqobion”), has brought
an application for interim relief against the first and second respondents in
respect of an intellectual property claim, the Arts Tuesday trademark,
which it alleges is being used by respondents to abuse their dominant
market position thereby contravening sections 8(b), 8(c), 8(d). It also
alleges that respondents are contravening sections 4(a) and 5(1) of the
Competition Act based on certain agreements entered into between
respondents.
2. The application is denied for the reasons set out below.
Background
3. The applicant, Nqobion, was represented by a layperson, Nqobile Mgiba,
who is its owner and CEO. Nqobion is a black owned business that
renders services such as artist management, mentorship and marketing of
art products for the tourism market to upcoming artists.
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4. The respondents are The Business Place Joburg (TBP) (“first
respondent”) and BeEntrepreneuring (“second respondent”). First
respondent is an association not for gain incorporated in terms of section
21 of the Companies Act 61 of 1973. It was established in 2002, in
partnership by the Technikon SA, the City of Johannesburg and Investec
Bank Ltd, with a view to assist artists and entrepreneurs in the creative
industries in starting their own businesses. Consultations, which are
offered free of charge, focus mostly on industry related workshops,
marketing and support services while at the same time offering a network
to interact within. It initially operated under the name Open for Business at
The Business Place, but was subsequently changed to The Business
Place Joburg.
5. The second respondent, BeEntrepreneuring, was contracted by first
Respondent during April 2005 to run the “Arts Tuesday” programme on
behalf of The Business Place Joburg after Mr Ngiba, had left the
employment of The Business Place Joburg.
6. According to Ngiba, first respondent appointed the applicant in June 2004
as a service provider to provide the Arts Tuesday Programme. The
programme was also promoted in the press as one of a list of free
services offered at The Business Place, and specifically by “Nqobion”. 1
7. First respondent disagrees saying that Mr Ngiba, and not the applicant,
was employed by it as a volunteer to offer business advice and services to
upcoming artists and assisted The Business Place Joburg with marketing
and general advice. In August 2004 first respondent entered into a full
time employment contract of one year with the Ngiba to provide these
same services on behalf of first respondent his official job title was
same services on behalf of first respondent his official job title was
Entrepreneurship Apprentice. It was only subsequent to entering into the
employment contract that these services, developed in conjunction with
The Business Place Joburg, became known as “Arts Tuesday”. Five
months later, on 24 January 2004, applicant resigned from first
respondent’s employment to pursue other opportunities.
8. At some time either after the applicant terminated its contract with first
respondent, or Ngiba had terminated his employment with it, the first
respondent secured the services of second respondent, a development
consultancy firm known as Bentrepreneuring, to continue with the Arts
Tuesday programme on behalf of first respondent.
9. It is this dispute over whether Ngiba’s employment related to the Arts
1 See Annexure QQ7 to the replying affidavit.
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Tuesday project or whether the applicant was providing this as a service
outside of Ngiba’s employment responsibilities that has led to a dispute
over the Arts Tuesday trademark.
10. The applicant claims that it owns the Arts Tuesday trademark, which the
respondents are apparently now using illegally and in contravention of the
Competition Act. The first respondent contends that it owns the rights as
Ngiba was working on this project for them as an employee not an outside
contractor. This is not a dispute we need to resolve for reasons that
appear later.
Relief sought
11. This matter was brought to the Tribunal as an application for interim relief
in terms of section 49C of the Competition Act.
12. Section 49C(1) state that:
At any time, whether or not a hearing has commenced into an
alleged prohibited practice, the complainant may apply to the
Competition Tribunal for an interim order in respect of the alleged
practice.
13. Section 49C thus limits the circumstances in which the Tribunal may
grant interim relief to cases where a formal complaint has been filed,
either with the Competition Commission or the Tribunal in case of a non
referral, and is being investigated by the Commission or pending a
Tribunal hearing.
14. At the commencement of the proceedings the chairperson of the Tribunal
panel brought to the Applicant’s attention certain procedural problems with
the application. The first related to the issue of whether the Tribunal had
jurisdiction to grant an order for interim relief given the fact that
subsequent to the application being filed, the Competition Commission
had made a decision not to refer the matter to the Tribunal for
determination. The Applicant indicated that he had received the
determination. The Applicant indicated that he had received the
Commission’s notice in this regard, dated 7 September 2005. The
Commission’s reasons for nonreferral were that the matter “mainly relates
to possible infringement(s) of intellectual property rights and delictual
claims, falling outside the jurisdiction of the Commission”.
15. The applicant did not refer the complaint directly to the Competition
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Tribunal after the Commission issued a nonreferral but persisted with the
papers filed in its interim relief application
16. The Respondents were not aware of the notice of nonreferral, but
indicated that the relief would only be competent in circumstances where
the complainant had sought to refer the matter itself so that the complaint
was still alive. The existence of a valid complaint is a prior jurisdictional
fact in an application for interim relief. Where the Commission has decided
not to refer a complaint this prior jurisdictional fact ceases and can only be
revived by a direct referral of a complaint by the complainant.
17. In light of this it was put to Mr Ngiba that the applicant was entitled to refer
the complaint directly to the Tribunal in terms of section 51(1) of the
Competition Act, 2 which states that:
If the Competition Commission issues a notice of nonreferral in
response to a complaint, the complainant may refer the complaint
directly to the Competition Tribunal, subject to its rules of
procedure.
18. Mr Ngiba submitted that he was aware of the applicant’s right to bring a
complaint in terms of section 51(1), but that the Tribunal could exercise its
discretion (in the interests of convenience and in order to avoid further
costs), to convert the current proceedings into a section 51(1) application
on the existing papers. He referred to the ruling in Room Hire Co (Pty) Ltd
v Jeppe Street Mansions (Pty) Ltd 1949 (3) SA 1155 (T), in support of the
submission, and argued that he would tender oral evidence in support of
his application for condonation.
19. The respondents indicated that they would oppose the application for
condonation since the application would be out of time and the applicant
would have to show good cause as to why it should be condoned. It was
pointed out that condonation is frequently not granted where an
pointed out that condonation is frequently not granted where an
applicant’s prospects of ultimate success are poor and insofar as the
Tribunal did choose to exercise discretion to grant final relief, the
prospects of success did not, in the respondents opinion, favour the
applicant.
20. While the Tribunal could dismiss this application on the grounds of lack of
jurisdiction alone, the Tribunal has sought to understand the basis of the
2 In terms of Tribunal Rule 14(1)(b) the Applicant would have had to make the complaint in the prescribed
form referred to in section 51(1) and the Rules. The referral would have to have been brought within 20
days after the issue of the Commission’s notice of nonreferral.
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applicant’s complaint because Mr Ngiba is a layperson and has
represented the applicant in these proceedings. Hence we do not make
any finding in respect of the applicant’s argument that the Tribunal has the
discretion to convert the current proceedings into a section 51(1)
proceeding. Nor do we consider it necessary to express a view on whether
there is a proper application for condonation before us. Rather we have
chosen to consider the prospects of success of applicant’s case.
21. It is apparent from the papers that the applicant’s case, to a large extent,
has been made out in reply. On a reading of the papers before us and
applicant’s submissions at the hearing, it appears that the applicant’s
competition complaint is along the following lines: the applicant alleges
that the respondents are engaged in the illegal use of its intellectual
property in the rendering of services at the Business Place. The illegal
use of applicant’s intellectual property by the first respondent, which has
now concluded an agreement with the second respondent to provide a
similar service to that formerly provided by the applicant, confers market
power onto first respondent, or the first and second respondents together,
and amounts to an abuse of dominance or some other species of
prohibited practice. It is on this basis that the applicant, at the hearing,
sought default judgement against second respondent, which did not file
any papers in the proceedings.
22. However in this matter there is no evidence of price competition ever
being present. This is because the service was and is being offered at no
cost to the consumer by both the applicant and the second respondent.
Competition law inter alia is concerned about protecting the interests of
consumers and ultimately delivering, directly or indirectly, certain benefits
consumers and ultimately delivering, directly or indirectly, certain benefits
to them such as lower prices by, for example, proscribing minimum resale
price maintenance or preventing dominant firms of abusing their position
visàvis smaller competitors. In this case consumers are not worse off as
a result of the respondents’ actions since the service is offered for free.
Although a commercial dispute may be present we are of the opinion that
it is an intellectual property concern and not a competition issue.
23. In light of this we accordingly find that there are no reasonable prospects
of success as the applicant has failed to prove the existence of a
prohibited practice under any provision of the Act. Since there are no
reasonable grounds for success for the applicant to have the filing of its
interim relief application converted into an application for final relief in
terms of section 51 of the Act, the application is not granted. We find
further that we no longer have jurisdiction to grant the applicant interim
relief.
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Order
24. The application is dismissed.
Costs
25. No order is made as to costs.
22 March 2006
U Bhoola Date
Concurring: N. Manoim and Y. Carrim
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