COMPETITION TRIBUNAL OF SOUTH AFRICA
Case No.: 13/CR/FEB04
In the matter between:
HARMONY GOLD MINING COMPANY LIMITED First Applicant
DURBAN ROODEPOORT DEEP LIMITED Second Applicant
Versus
MITTAL STEEL SOUTH AFRICA LIMITED First Respondent
MACSTEEL INTERNATIONAL HOLDINGS BV Second Respondent
_______________________________________________________________
In re: The Complaint Referral between:
HARMONY GOLD MINING COMPANY LIMITED First Complainant
DURBAN ROODEPOORT DEEP LIMITED Second Complainant
Versus
MITTAL STEEL SOUTH AFRICA LIMITED First Respondent
MACSTEEL INTERNATIONAL HOLDINGS BV Second Respondent
Coram : Lewis PM, Manoim TM, Holden TM
Heard on : 31 May 2006
Delivered on : 19 June 2006
_______________________________________________________________
REASONS AND ORDER
MANOIM TM:
[1] This is an application brought by Harmony Gold Mining Company Limited
and Durban Roodepoort Deep Limited (“the complainants”), to amend the relief
sought by them in this complaint hearing. The application is opposed by both
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respondents on various grounds. 1
[2] The complaint referral to which this application relates concerns an
allegation that the first respondent, Mittal Steel South Africa Limited (“Mittal”),
has contravened section 8(a) of the Competition Act (the “Act”), by charging
excessive prices in the South African flat steel market.
[3] Mittal also faces an allegation that it has contravened section 8(d)(i) of
the Act, in that it requires or induces customers to not deal with a competitor.
That allegation is, however, the subject of separate and specific relief, which the
complainants do not seek to amend. Hence the amendment sought relates only
to the section 8(a) or excessive pricing allegation. The amendment seeks to
add alternative prayers to one of those already sought. As a comparison
between the original prayer sought, prayer C, and the proposed alternative to it,
prayer C bis, is germane to understanding the dispute between the parties, we
set out below the original relief sought with the amendment included in bold
type.
“…the complainants intend to apply to the above honourable Tribunal to
1 The procedure for amending pleadings is found in Tribunal rule 18 which states:
“(1) The person who filed a Complaint Referral may apply to the Tribunal by Notice
of Motion in Form CT 6 at any time prior to the end of the hearing of that complaint for
an order authorising them to amend their Form CT 1(1), CT 1(2) or CT 1(3), as the case
may be, as filed.
(2) If the Tribunal allows the amendment, it must allow any other party affected by
the amendment to file additional documents consequential to those amendments within
a time period allowed by the Tribunal.”
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amend their referral of complaint, form CT1, by substituting the relief
sought in the referral in respect of the claim of excessive pricing with the
following:
“A For an order declaring that the first respondent’s practice of
employing import parity pricing (as set out in paragraph 11.1.5 of the
founding affidavit) in the South African flat steel market amounts to an
abuse of dominance in terms of section 8(a) of the Act;
B For an order directing the first respondent to refrain from charging
excessive prices in the South African flat steel market;
C For an order directing the first respondent to levy factory gate
prices in the South African flat steel market, irrespective of whether the
product is intended for export or not;
C bis In the alternative to prayer C above , for an order directing
that:
1 The first respondent may not itself, or with any natural or
juristic person, or through any entity, vehicle, trust or other
juristic person in which it has an interest, export flat steel
products from South Africa;
2 The first respondent divest its interest in the second
respondent to an independent third party or parties approved
by the Tribunal within such period and on such conditions as
the Tribunal considers appropriate;
3 The first respondent may not:
i. impose upon any customer of its flat steel products
any condition in respect of the customer’s use or
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resale of those products; or
ii. reach agreement on a condition with a customer of
its flat steel products, or enter into any arrangement
or understanding with such a customer, in respect
of the customer’s use or resale of those products;
4 The first respondent waive in writing any condition in any
agreement concerning the use or resale of flat steel products
by a customer;
5 The first respondent make known in the public domain, at all
times, its list prices, rebates, discounts and other standard
terms of sale for flat steel products;
D For an administrative penalty to be levied on the first respondent
of 10% of its annual turnover for the financial year ended 30 June 2003 in
the South African flat steel market;
E For those respondents that oppose the complaint to pay the costs
incurred by the complainants in prosecuting the complaint;
F For an order granting further and/or alternative relief.” 2
[4] Two of the proposed prayers, C bis (1) and (2), have attracted the brunt
of the respondents’ criticism. In order to appreciate what the proposed prayers
C bis (1) and (2) seek to remedy, it is necessary to refer to a joint venture that is
presently in place between the two respondents. Macsteel International
Holdings BV (“Macsteel”), the second respondent, is a joint venture company
2 See page 23 of the pleadings file in the complaint referral, as well as pages 14 of the
amendment application.
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owned in equal parts by Mittal and Macsteel Holdings (Pty) Ltd. 3 A contract
was entered into in 1995, between Macsteel and Mittal, whose essential terms,
insofar as they impact on this application, are:
1. Mittal undertakes to market a specified range of steel products, which
include flat steel, only through Macsteel in the international market;
(clause 30.1)
2. Macsteel undertakes not to sell any of these steel products in the
domestic market without Mittal’s consent; (clause 29.1)
3. The Macsteel Group also makes a similar undertaking to Mittal that as
long as the agreement persists it will not market Mittal products in the
international market other than through the joint venture (clause 31.2);
and
4. Mittal undertakes to sell steel to Macsteel at “international related
market prices”. (clauses 29.2.1. and 30.2)
[5] The joint venture however is not confined to trading in Mittal’s steel;
apparently this constitutes roughly half of its business. Nor is the joint venture
trivial from Mittal’s point of view; approximately 40% of its flat steel is traded
through the joint venture.
[6] Both complainants and respondents are clear that C bis (1) and (2) strike
at the heart of this arrangement. They differ fundamentally over whether the
existing prayer C placed it in similar jeopardy. This is relevant in assessing how
3 We refer to the second respondent as Macsteel as this is the way the parties refer to it in
extracts we cite later. Note however that Macsteel Holdings (Pty) Ltd is the name of the joint
shareholder in the second respondent, which through its subsidiaries, operates as a steel
merchant in South Africa and abroad. The term ‘Macsteel’ has frequently in the hearings been
used loosely to describe any of these entities and hence the note of caution as to what is meant
here.
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far reaching the amendment is and hence its possible prejudice to the
respondents.
[7] What has made this application controversial is not only the debate over
its ambit, but the timing of the application and the circumstances that preceded
it.
[8] This complaint referral, with the relief in its present form, was instituted in
February 2004. Though cited as a respondent in the complaint referral
Macsteel chose not file any pleadings and adopted, as Harmony’s counsel has
put it, a “supine” response to the litigation. Given this posture, pleadings,
discovery and the array of prehearing arrangements were conducted in
Macsteel’s absence.
[9] Macsteel alleges that the reason it did not participate in the complaint
proceedings was because no relief was sought against it. 4 It relies for this on
paragraph 8 of the complaint referral which states:
“Macsteel International is cited as a respondent for the interest it may
have in this complaint. No relief is sought against Macsteel International,
save for a cost order in the event of opposition”
[10] It also relies, it says, on a statement made by Mr Unterhalter, the
complainants’ counsel, during his opening address on 15 March 2006.
4 Letter from Edward Nathan to Cliffe Dekker, dated 12 May 2006, amendment application
record page 38.
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[11] We will examine what was said by Mr. Unterhalter later, but prior to the
commencement of the hearing, a telephone conversation took place between
the respective attorneys of Macsteel and the complainants, on 10 March 2006.
The complainants place great reliance on what was allegedly conveyed by them
during the course of this conversation, to suggest that Macsteel ought to have
been disturbed from its passivity into defending its interests in this case.
[12] There is disagreement about what actually transpired. It is however
common cause that the initiative for the call came from Macsteel’s attorney Ms
Mendelsohn. She says her client was concerned about the adverse publicity
implications of the impending hearing. She says she discussed two proposals
with Ms Meijer, the complainants’ attorney; either that the complainants would
withdraw against Macsteel or Macsteel would consider participating in the
proceedings. Told from Ms Meijer’s point of view, the conversation takes
roughly the same course, but she adds that she explained to Mendelsohn why
papers had been served on Macsteel. According to Ms Meijer:
“I advised that the papers had initially been served on Macsteel, not
because the complainants sought relief against Macsteel, but because a
possible outcome of the proceedings was the termination of the
agreement between Mittal and Macsteel.” 5
[13] Thus says Ms Meijer, Macsteel’s attorneys understood that Macsteel’s
exclusive relationship with Mittal was imperilled by prayer C.
5 See founding affidavit, paragraph 28.
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[14] Mendelsohn denies that there was any debate as to “...whether the
Complainants’ complaint might result in the termination of the agreement
between Mittal and MIHBV.” 6 Nor she says did she seek any guidance from
Meijer as to why Macsteel had been cited as a respondent.
[15] Thus for the complainants the conversation serves to alert Macsteel that
prayer C portends doom for its arrangement with Mittal, and thus by implication,
it ought to be on its guard. To Macsteel, nothing has been said to alter what
has been stated in the pleadings cited earlier. Namely, no relief is sought
against Macsteel.
[16] Macsteel says its understanding of the situation was reinforced a few
days later, when Mr Unterhalter, in response to a question from the Tribunal
during his opening address, says the following:
“ ADV UNTERHALTER : Sorry, I perhaps should have made it clear. The
Macsteel arrangement is simply the export channel, which ensures that
effectively arbitrage doesn’t take place. So, what happens is that under the
Macsteel joint venture arrangement all exports are done through that singular
channel and consequently it is impacted only because it is an agreement, which
ensures that effectively arbitrage can’t take place.
So, it’s really one of the mechanisms that’s used to ensure market
segmentation and the continuance of excessive pricing.
6 See paragraph 147 the second respondent’s answering affidavit read with the confirmatory
affidavit of Ms Mendelsohn.
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CHAIRPERSON: But then this allegation finds no echo in the remedies that you
seek.
ADV UNTERHALTER : No, it doesn’t, and it’s for that reason that we have not
… I mean we cited Macsteel, but they have simply indicated that they will abide
the decision. So, we simply use it for evidence. We don’t seek specific
remedies to undo that arrangement.” 7
[17] This is the last word from the complainants on the subject of the
pleadings, until the application for amendment. The complainants, however,
place great reliance on Mr Unterhalter’s crossexamination of Mr Dednam, a
Mittal executive, and its chief witness on its pricing policies. During the course
of cross examination Mr Unterhalter discusses the proposed relief and asks if
there would be any problem in having a situation where Mittal can agree any
price it liked with any customer provided it could not tell them what to do with
the product. Mr Dednam indicates he would have no objection to that. Mr
Unterhalter goes on to ask:
“ADV UNTERHALTER: So that’s the one stipulation. The other is you
can’t have a channel for exporting to get the exports offshore in the way
that you do now. You’ve got to submit to yourself, which as you’ve
indicated is not a problem, to traders competing for your business to
place your product abroad. You say both of those are fine.
MR DEDNAM: That happened in the past.
7 See transcript dated 15 March 2006, page 34.
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ADV UNTERHALTER: And it could happen again.
MR DEDNAM: It could happen again.” 8
[18] Granted the seeds of the amendment contemplated may be read into this
line of crossexamination. But the language of the cross examiner is
ambiguous, cautious and insufficient to alert either the witness or Mittal’s legal
team that an amendment of the one now contained in C bis (1) and (2) is being
contemplated, namely an attack on the joint venture agreement itself. It is
precisely for these reasons we have pleadings and a procedure for amending
them so that both parties to litigation know what case they have to meet and
how to respond to it. The cross examination was not accompanied by any
statement that an amendment was forthcoming, and if that was the
complainants thinking at that time, they gave no outward expression of this until
the service of the amendment application.
[19] Thus whatever the truth of the conversation between the attorneys, and
despite the subliminal message allegedly conveyed by the crossexamination,
the complainants have both in their pleadings and in counsel’s opening address,
maintained a consistent position; and that is that no relief was being sought
specifically to undo the Macsteel arrangement i.e. the joint venture agreement
between Macsteel and Mittal.
[20] It does not of course follow that prayer C did not pose consequences for
Macsteel, simply because it did not strike at its legal apparatus. The
8 See transcript dated 6 April 2006, page 1864.
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complainants argue that if prayer C was granted, this would have profound
consequences for the business of the joint venture.
[21] The complainants’ theory of harm in this case is that Mittal is able to sustain
excessive prices because it can segment its customers, between those who get some
discount or rebate and those who do not. In order to maintain this regime of different
prices it has to be able to prevent arbitrage between those customers who qualify for
better prices and those who do not. One such mechanism is the arrangement between
Mittal and Macsteel. According to the complainants the arrangement serves both to
take excess flat steel out of the domestic market, so as to sustain the allegedly
excessive prices, and to ensure that it does not come back into the domestic market
and hence depress prices. Hence the remedy sought in C bis (1) and (2) seeks to
prohibit Mittal from exporting either itself or through any entity in which it has an interest
and secondly to break the umbilical cord between it and Macsteel by requiring
divestiture of its interest in the joint venture.
[22] The complainants allege that this is not the only method of preventing
arbitrage and that there is evidence that customers who get preferential prices
are subject to a regime imposed by contract that prevents them from reselling
their steel obtained at more favourable prices in the domestic market. This
would explain the amendment contained in C bis (3) and (4).
[23] The complainants argue that prayer C, the prayer originally formulated,
would have the effect of eliminating any attempt to segment customers and
hence arbitrage. Prayer C bis they argue is all of a piece with its predecessor in
working to achieve the same objective. Under C while Mittal could retain its
working to achieve the same objective. Under C while Mittal could retain its
share in Macsteel and be permitted to export steel through it, it could not
engage in price differentiation as to whether the product is intended for export or
not by a customer. 9 Secondly, Mittal cannot enjoy any exclusive arrangement
with Macsteel as the only customer to export its flat steel products. This is
9 Complainants’ heads of argument, paragraph 20.
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because prayer C allows any customer to buy product and then choose to
export it or to sell it domestically. 10
[24] C bis (1) and (2), the complainants argue, achieves the same end as
does C. Prayer C, the complainants argue is aimed at resolving the
segmentation problem by:
“ ...requiring Mittal to offer product at the factory gate at the same prices
to all customers who wish to purchase, regardless of whether a customer
intends to use the product itself or resell it domestically or resell it into
the export market. The remedy in prayer C therefore undermines Mittal’s
current market segmentation and renders it ineffective.” 11
[25] In contrast the respondents argue that the amendment has implications
for them that prayer C did not have. Under prayer C, Mittal was not obliged to
sell its stake in MIHBV and was not barred from exporting itself or through an
entity in which it has an interest.
[26] The complainants however, carefully step aside from the legal
consequences of prayer C, focussing instead on the market implications of why
prayer C would threaten the joint venture agreement. In their founding affidavit
they allege:
“But Mittal would not be able to entrench the kind of price differentiation
that it currently practices in offering prices to Macsteel that are vastly
different to its offerings to many classes of domestic customers because
no commercial consideration relevant to quality, specification or volume
10 Complainants’ heads of argument, paragraph 21.
11 Complainants’ h eads of argument, paragraph 9.
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would justify such a differentiation.”
And then:
“The remedy in prayer C sought to ensure that customers could enter
into negotiations with Mittal to purchase product from Mittal’s entire
output and then determine for themselves where that product would be
resold and how it would be utilised.” 12
And further:
“However this does not mean that the order sought against Mittal in
prayer C has no implications for the manner in which Macsteel buys
products from Mittal. On the contrary, and as I have sought to sketch
above, the plain import of prayer C is that Macsteel’s position as the
exclusive purchaser of Mittal product for export comes to an end because
any customer, following the imposition of prayer C, is permitted to buy
product for export and the price at which it does so cannot be determined
by Mittal merely on the basis that the product is destined for export.” 13
[27] On this score Mittal begs to differ. In its answering affidavit it contends
that even under prayer C:
“ In short Prayer C…is not an order against Macsteel, does not “undo the
exclusivity that attaches to the relationship between Mittal and the Joint
Venture”, either directly or indirectly, and most importantly, does not
prevent Mittal from using the Joint Venture as an exclusive export
12 Harmony amendment application founding affidavit paragraphs 19 20.
13 Harmony amendment application founding affidavit paragraph 27. Note that Macsteel denies
that it has this interpretation but does not seriously contend for another. See Macsteel affidavit,
paragraph 142.
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channel through which to export Mittal’s output in excess of local
demand.” In terms of Prayer C, Mittal could and would continue to sell to
Macsteel, on an exclusive basis, at the same price. The agreement
would be unaffected.” 14
[28] Mittal goes on to allege that the proposed C bis is undeniably, an order of
a fundamentally different kind, predicated upon different allegations and with
wholly different consequences, for both Mittal and Macsteel.
[29] The question for the Tribunal is why prayer C lends itself to such widely
different interpretations. Despite the fact that it may, in its present formulation,
lack precision, the debate is not over its language, but its implications. In our
view the reason for the dispute revolves around the difference between the legal
and economic implications of prayer C. Neither side in this debate made this
distinction, since it did not suit them to do so, since an all or nothing approach to
the reading, would lead to C bis’s survival or demise.
[30] We, however, would not query the respondents’ reading of the clause
which was, we suggest, a purely legal construction of its import. The ordinary
language of C does not require what C bis (1) and (2) require, and on that there
is no ambiguity. However to suggest that prayer C had no implications for the
business of the joint venture would be to adopt a completely blinkered approach
to its impact on the market which the joint venture seeks to segment, albeit not
on the contractual and ownership rights created by the joint venture. That
would be to make the error of solely reading it qua lawyer, and not qua
businessperson or economist.
[31] It is a reasonable economic reading of the original relief that once all
customers received product at a factory gate price, the preferred status of
Macsteel was under serious threat. The agreement left Macsteel as a
14 Mittal amendment application answering affidavit, paragraph 10.9.
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segmented customer, an exporter only, but prayer C would have made all other
customers ‘unsegmented’ i.e. free to dispose of their steel as they saw fit and
not subject to the price disadvantage, previously the result of the present pricing
policy regime of Mittal. What Macsteel and Mittal ignore is that the exclusivity
on the complainants theory is buttressed, not by a contract alone, but also by
the effective segmentation of the export and domestic pricing regimes, resulting
in Macsteel receiving the lower factory gate price others do not receive. Once
this segmentation is removed it is reasonable to assume that Macsteel’s
commercial advantage is seriously threatened. Thus on this reading, no legal
provision required Mittal to prevent its domestic customers from exporting its
steel and thus threatening the joint venture’s exclusive rights. Rather the
silence in contract was compensated for by the workings of the Mittal pricing
policy. If Mittal’s customers wanted to export the steel they purchased from it at
the higher domestic price, they were free to do so, provided they could find
anyone prepared to pay the higher price. 15 No one was going to, and
presumably Mittal and Macsteel understanding this, did not need to provide for
this in their agreement.
[32] We need not at this stage decide, whether this economic theory is
correct, indeed it would be undesirable for us to do so, only if it is a reasonable
reading of the possible market outcome of the relief. We find that it is. Having
made this finding the next issue is whether this has consistently been
Harmony’s theory of the economic consequences of Prayer C or whether it has
cobbled together a novel one to justify an argument that prayer C bis is not as
extensive as the respondents suggest it is. The less novel prayer C bis is the
extensive as the respondents suggest it is. The less novel prayer C bis is the
less the respondents can claim prejudice by the amendment and hence the
complainants have been at such pains to reduce its import.
[33] The complainants we find are correct to contend that prayer C and prayer
15 Note that the evidence is that domestic customers who received a discount or rebate from
the domestic price are subject to restrictions on their ability to trade their steel.
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C bis are similar, insofar as their economic implications for the joint venture.
The same cannot be said of the legal implications of the two prayers, and we
examine below why we say this.
[34] The complainants’ case, as expressed through the pleadings, is that no
relief is sought against Macsteel. This posture is given further support in the
statement from Mr. Unterhalter in his opening address. In response to a
question pertinently on this point by the Tribunal Mr. Unterhalter stated that
Harmony did not seek specific remedies against the arrangement. This has
remained the complainant’s position throughout the hearing and they gave no
indication, until this application was served that they had changed their mind on
this point. That some crossexamination or other evidence might have
contemplated this amendment, does not, absent an express avowal of the
adoption of new remedies, avail them. Pleadings are there for a reason and an
amendment procedure is there so that a process is followed to change them.
As a result it was reasonable for the respondents to rely, and in their approach
to the case to assume, that the legal edifice of the joint venture was not at the
complainants behest, going to be subject to a proposed remedy.
[35] The respondents both argue that they are seriously prejudiced by the late
amendment. From Macsteel’s perspective it argues that had it known that the
joint venture was the subject of possible relief it would have entered the fray.
Instead, so disabused by the pleadings and the opening address of counsel, it
elected to watch the case from the stands. Mittal for its part argues that if it had
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been alerted to this relief it would have informed its approach to the case not
just on remedies, but also the merits. Whilst Mittal has not been more specific
on this point, arguing it rather at the level of abstraction, it is nevertheless a
reasonable argument to make. We are satisfied that both respondents will be
prejudiced by the amendments insofar as they implicate the legal edifice of the
joint venture.
[36] This is of course not the end of the matter. As the complainants argue
the practice in civil courts is to lean in favour of granting amendments unless
there is prejudice to the other party which cannot be cured by an order for costs
or a postponement. The complainants suggest that any prejudice in this case
may be cured by allowing the reopening of evidence on remedies and for this
reason they suggest that we separate a finding on the merits from a finding on
remedies.
[37] The respondents contend that the case itself would need to be reopened
amounting to both considerable expense and delay with the nightmarish
scenario advanced, of further exchange of pleadings, the recall of witnesses
and added discovery. 16
[38] We are not in a position to assess where the truth lies between the
complainants’ optimism that prejudice occasioned by the amendment effecting
the joint venture may be cured by a minor procedure and the respondents more
alarmist caution that it would require major surgery. 17 This is no run of the mill
16 See for instance Macsteel’s answering affidavit, paragraph 174.
17 The complainants had suggested that if the hearings were opened in respect of the remedies
only they would not lead any new evidence save for possible rebuttal witnesses. See transcript
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procedure which the Tribunal has daily experience of, such as a court may have
in a collision case or a contractual dispute. The parameters of this type of
dispute cannot be predicted on the basis of past experience, and so the
respondents concerns cannot be lightly dismissed, more especially given what
is at stake for them commercially.
[39] It is thus by no means certain that fairness would not dictate that the
merits of the case would have to be reopened and not just the case on
remedies. In civil cases the law is that the onus to establish that the other party
will not be prejudiced rests with the party seeking the amendment. 18 The
complainants have not, in our view, discharged the onus of persuading us why,
if C bis (1) and (2) are allowed as amendments, the case should not wholly or
partially be reopened on the merits as well. The implication of this is that the
prejudice to the respondents is by no means trivial.
[40] However, our proceedings are not wholly civil, and have as both the CAC
and the SCA point out – consequences that are not wholly private, but public as
well.19 Although this case has not been brought by the Commission, but by
private parties, were the Tribunal to find that excessive pricing had occurred this
has implications for all domestic consumers of Mittal and not just the
complainants.
[41] Mr Unterhalter therefore correctly cautions us not to put ourselves in a
position where we make a finding without an ability to impose an effective
remedy that follows that finding. Thus in the appropriate circumstances even
great inconvenience to respondents may be justified, for the Act to be given its
purpose.
dated 31 May 2006, page 2257.
18 See for example Euroshipping Corp of Monrovia v Minister of Agriculture 1979 (2) SA 1072
(C) at para 1090 B.
(C) at para 1090 B.
19 See American Natural Soda Ash Corp v Competition Commission [2005] 1 CPLR 1 (SCA) at
paras. 21 and 33, and Glaxo Wellcome (Pty) Ltd v Terblanche NO and others [20012002]
CPLR 48 (CAC) at para. 53FG.
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[42] That notwithstanding, we are bound to ensure that our procedures are
fair. This is so not only because we are subject to a constitutional obligation to
ensure that our procedures are fair, but also as Mittal correctly argue because
our statute is peremptory on this point as well. 20 In terms of section 52(2)(a) of
the Act, the Tribunal must conduct its hearings in accordance with natural
justice. Natural justice requires a party be given an opportunity to be heard.
The courts have held that implicit in this right is a right to be given notice of an
action and the opportunity to be heard. 21 If the amendment is granted Mittal
argues the respondents would not have been given proper notice of the new
consequences for them and they would not have been given a proper
opportunity to be heard. Of course fairness and audi alteram partem may still
be restored by allowing respondents an adequate opportunity procedurally to
redress their prejudice. In this case however, proper concern for the orderly
expedition of our procedures cannot allow us to tolerate at this late hour, an
amendment whose prejudice would occasion such extensive remedial redress.
[43] Where an amendment is brought as late in proceedings as this one it
must, as a matter of fairness to the opposing parties, be accompanied by a
reasonable explanation. We have found that Harmony’s amendment does
20 Section 33(1) of the Constitution of the Republic of South Africa requires administrative
action to be procedurally fair. The text of section 33 reads:
“(1) Everyone has the right to administrative action that is lawful, reasonable and
procedurally fair.
2) Everyone whose rights have been adversely affected by administrative action has
the right to be given written reasons.
3) National legislation must be enacted to give effect to these rights, and must
3) National legislation must be enacted to give effect to these rights, and must
a. provide for the review of administrative action by a court or, where
appropriate, an independent and impartial tribunal;
b. impose a duty on the state to give effect to the rights in subsections (1) and
(2); and
c. promote an efficient administration.”
21 See Administrator, Transvaal, and Others, v Theletsane and Others , 1991(2) SA 192 (A) at
para 206 CD.
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occasion serious legal consequences for the respondents that are not
consistent with the case as originally pleaded. For this reason we are not
dealing with a trivial tightening up of relief that should have always been
contemplated. Rather the complainants in this case have, through every
outward expression on this matter, signalled that the joint venture was not
imperilled. It does not avail the complainants to rely on the disputed telephone
call between the attorneys to suggest that Macsteel was alerted to the
consequences. Even assuming that Ms Meijer’s version was correct, whatever
impression of unease Ms Mendelsohn should have been left with after this
cautionary call, it would have been dissipated by the opening remarks of Mr
Unterhalter.
[44] The complainants did not merely remain, to borrow their own language,
‘supine’ on whether relief sought against the joint venture would be sought at a
later stage they actively sought to disabuse both respondents from this notion.
Granted, the complainants are correct that relief in competition cases is
complex, and that sometimes a remedy that may seem obvious in the dying
moments of a case, may not have been obvious at its birth; but in this case the
complainants have not convinced us that it took subsequent reflection at the
end of the litigious jousting, for an epiphany to come to them for the first time
that the joint venture needed to face remedial action. Rather it is more probable
that the complainants had considered this throughout indeed the express
disavowal in the pleadings coupled with the later reassurance by counsel seems
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to reinforce this; that tactically it would be better not to attack the joint venture
as this would leave them with one opponent rather than two. This calculation is
precisely how matters turned out. Having made this calculation by way of
assurances given, it would be manifestly unfair to the respondents to allow them
to change their stance now.
[45] For this reason out of considerations of fairness, based on the
complainants’ representations during the course of these proceedings, prior to
the amendment, we refuse to grant the amendment insofar as clause C bis (1)
and (2) are concerned.
[46] In relation to prayers C bis 3, 4 and 5 we have no difficulty granting the
amendments. Macsteel have raised no objection to them and nor in their heads
of argument do Mittal. These amendments are in their nature aligned to the
economic theory foreshadowed in prayer C, and unlike C bis (1) and (2), were
not the subject of any prior representation. Again, unlike C bis (1) and (2), they
do not threaten the legal edifice of the Macsteel joint venture arrangement.
[47] We need not consider various other arguments raised by the
respondents as those were raised in respect of C bis (1) and (2), and not (3), (4)
and (5).
Costs
[48] As Macsteel has confined its objections to prayer C bis (1) and (2) it has
been wholly successful and is entitled to its costs from the complainants. Mittal
objected to the amendment as a whole and thus has only been partially
successful.22 For this reason we make no order as to costs as between the
22 Mittal has been rather confusing on the ambit of its objections. In its answering affidavit it
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complainants and Mittal.
The Order
[49] In the result we make the following order:
1. The complainants are given leave to amend their complaint referral,
but only insofar as it entails the inclusion into the complaint referral,
as an alternative prayer to the existing prayer C, of paragraphs C bis
(3), (4), and (5) of the application for amendment, and the complaint
referral is accordingly amended by this substitution.
2. The complainants are refused leave to amend their complaint referral
by the inclusion of paragraphs C bis (1) and (2) of the application for
amendment.
3. The complainants, jointly and severally, must pay the costs of the
second respondent occasioned by this amendment application,
insofar as the complainants sought leave to introduce prayers C bis
(1) and (2), and such costs are to include the costs of two counsel.
4. No order of costs is made in respect of the matter between the
complainants and the first respondent.
______________
N M Manoim
Tribunal Member
concludes that the amendment as whole should not be granted (paragraph 13). In its heads of
argument it states that the amendments in respect of C bis 14 should be refused (paragraph
7.4). At 5.21 of its heads it states that relief should not be granted in respect of C bis 1 and 2.
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Lewis PM; and Holden TM concur in the judgment of Manoim TM.
Tribunal Researcher: T Masithulela
For the first and second applicant : DN Unterhalter SC and MA Wesley
instructed by Cliffe Dekker Inc.
For the first respondent : CDA Loxton SC, G Pretorius SC, AG Gotz,
and M Sikhakhane instructed by Bell Dewar
& Hall Inc.
For the second respondent : JJ Gauntlett SC, and A Cockrell instructed
by Edward Nathan Corporate Law Advisors.
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MANOIM TM