IN THE COMPETITION APPEAL COURT OF SOUTH AFRICA
CASE NO 72/CAC/Aug 2007
In the matter between :
CAXTON AND CTP PUBLISHERS AND
PRINTERS LIMITED (“Caxton”) Applicant
and
Naspers Limited (“Naspers”) First Respondent
ELECTRONIC MEDIA NETWORK LIMITED
(“M-Net”) Second Respondent
SUPERSPORT INTERNATIONAL
HOLDINGS LIMITED
(“Supersport”) Third Respondent
THE COMPETITION COMMISSION Fourth Respondent
THE COMPETITION TRIBUNAL Fifth Respondent
Delivered
October 2007
LEVINSOHN AJA :
[1] For ease of reference I shall refer to the
parties to these review proceedings by their
abbreviated names.
[2] The salient background facts which have given
rise to the review are in brief outline the
following.
[3] Naspers proposes to take control of M-Net and
Supersport. This is deemed to be a large merger and
requires approval by the Tribunal. The latter is
scheduled to hold hearings on 8th to 12th October
2007.
[4] Caxton has applied to the Tribunal to intervene
in the said merger proceedings. In its founding
affidavit Caxton averred that Naspers is the
largest publisher of newspapers and magazines in
South Africa which fall under the direct control
of Media24.
[5] Caxton itself is a printer and publisher of books
and magazines. It controls one regional daily
newspaper and many regional and community newspapers.
[6] The applicant’s deponent made the point that
Naspers and Caxton are competitors in the print
market inasmuch as they would be competing for
subscribers to their respective publications and
for advertisers. The deponent goes on to
describe the powerful position exercised by the
television networks, namely M-Net, Supersport and
the various Multichoice satellite channels.
[7] According to the allegations made by Caxton’s
deponent Naspers’s dominance in the market place
would be considerably enhanced if the merger were
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to take place.
[8] Caxton makes the following averment : -
“The applicant apprehends that Naspers will use
its new-found freedom of control to obtain an
unfair advantage in the various print media
markets in which it competes with the applicant.
In particular, the applicant anticipates that
post-merger Naspers will engage in cross-
subsidisation, foreclosure and anti-competitive
bundling. I explain each of these concerns in
turn.”
[9] The deponent then goes on to describe the manner
in which the alleged anti-competitive behaviour
will manifest itself following a merger. It is
unnecessary to summarise these allegations in any
detail save perhaps to mention that the deponent
avers that the Commission has misdirected itself
in regard to the issue of “foreclosure”,
“bundling” and “cross-subsidisation”.
[10]The deponent makes the submission that Caxton has
a material interest, alternatively even if it
does not have such an interest, it possesses the
ability to assist the Tribunal in its
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consideration whether or not to permit the
merger.
[11]Importantly Caxton submitted it should be given
the “fullest possible rights” to participate in the
proceedings as an intervening party.
[12]Naspers delivered an answering affidavit. At
the outset it made the point that it did not oppose
Caxton’s application in terms of section 53(1)(c)(v)
of the Competition Act, No 89 of 1998 (“the Act”).
[13]However Naspers submitted that the Tribunal ought
not to permit Caxton to raise any issue it
chooses to do in the merger proceedings but
rather that the issues which Caxton may raise be
defined ; in short the ambit of the opposition to
the merger be circumscribed.
[14]Accordingly Naspers averred that Caxton ought to
be permitted to raise only the issues of
“bundling” and “foreclosure” in the merger
proceedings.
[15]After a hearing on 23rd July 2007 the Tribunal
issued the following order : -
“1. The applicant is granted leave to
intervene and participate in the
merger proceedings between the first,
second and third respondents (“the
merging parties”), in terms of s53(1)
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(c)(v) of the Competition Act 89 of
1998 (“the Act”), read with rule 46
of the rules of the Competition
Tribunal, subject to the scope of
intervention being limited to the
following matters :
1.1 Foreclosure, but limited to the
concerns articulated in
paragraph 29 of the Notice of
Motion.
1.2 Bundling as contemplated in
paragraph 27 of the Notice of
Motion; save that bundling is
not limited to issues of mixed
bundling and may, if
appropriate, include such
matters as full line forcing.
2. Subject to paragraph 1 above, the
applicant is entitled to participate
in the merger hearing and the pre-
hearing procedures, to the full
extent of a party to such
proceedings.
3. There is no order as to costs.”
[16] On 7th August 2007 following upon the issue of
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the aforesaid order Caxton launched urgent
review proceedings before this Court. It
claimed the following relief in its notice of
motion : -
“1. Authorizing this application be heard as
one of urgency and for the purpose
dispensing with the rules governing forms
and filing and disposing of the application
at such time and place and in accordance
with such procedure as to the Court seems
meet.
2. Reviewing and setting aside the order of
the Competition Tribunal dated 23 July 2007
to the extent that it qualifies the ambit
and scope of intervention of the applicant.
3. Substituting for such order the following
order :
a. ‘The applicant is granted leave
to intervene and participate in
the merger proceedings between
the first, second and third
respondents in terms of s 53(1)
(c)(v) of the Competition Act 89
of 1998 read with rule 46 of the
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Rules of the Competition
Tribunal.
b. There is no order as to costs.’
4. For costs of suit.”
[17]In its founding affidavit in support of the
review Caxton’s deponent submitted that the
Tribunal had committed a reviewable irregularity
by placing limits on the scope and ambit of the
intervention. The submission is that in doing
so it strayed beyond the scope of the powers
conferred upon it by the Act.
[18]Caxton in paragraph 16.2 of the said founding
affidavit makes the following submission : -
“In raising this objection, Caxton in no
sense contends that it would not be precluded
from raising or traversing issues in the
hearing that, by reason of their content,
would fall beyond the scope of legal
relevance. Before such a question can
arise, however, Caxton must, through the
conventional processes of discovery and
interrogatory, be given the opportunity to
consider, examine and explore whatever issues
might appear to be relevant to the grant or
refusal of the merger approval. At present
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Caxton is severely curtailed in this respect,
as is evidenced by the fact that the legal
representatives for the merging parties have
instructed the Commission to supply Caxton’s
legal representatives with a significantly
expurgated version of the record, and their
discovery has been similarly limited.”
[19]Counsel for Caxton in amplification of the
foregoing submission submitted principally
that ,once the Tribunal recognises the right of a
party to intervene, it is not entitled to
curtail in any way the scope of the intervention
by limiting the issues such intervening party is
entitled to raise.
[20]At the outset counsel for Caxton focused on the
provisions of section 53 of the Act. This section
regulates the rights of persons to participate in
various categories of matters which come before the
Tribunal. For example, complaints which are
regulated by part C of the Act which relate to
complaints in regard to prohibited practices. Then
there are hearings constituted in terms of section 10
of the Act where an applicant seeks an exemption
within the meaning of that section. Finally there
are Chapter 3 proceedings which concern us herein.
[21]The subsection reads as follows : -
“53(1) The following persons may participate
in a hearing, in person or through a
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representative, and may put questions
to witnesses and inspect any books,
documents or items presented at the
hearing : -
…….
c) if the hearing is in terms of
Chapter 3 –
(i) any party to the merger;
(ii) the Competition Commission;
(iii) any person who was entitled
to receive a notice in
terms of section 13A(2) and
who indicated to the
Commission an intention to
participate, in the
prescribed form;
(iv) the Minister, if the
Minister has indicated an
intention to participate;
and
(v) any other person whom the
Competition Tribunal
recognised as a
participant.”
[22]It is self-evident that subsection (c) gives the
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Tribunal a discretion to “recognise” a person as
a participant in merger proceedings. This
discretionary power has been affirmed by this
Court in Anglo South Africa Capital (Pty) Ltd and
Others v Industrial Development Corporation of
South Africa and Another 2004 (6) SA 196 (CAC)
where Jali JA at 208 E said the following : -
“I agree with Mr Gauntlett's submission that
the Tribunal misdirected itself on the nature
of the applicable discretion. The granting of
leave to a party to participate is
discretionary. However, such discretion
cannot be unfettered. The discretion must be
exercised judiciously or according to rules of
reason and justice. (See Ismail and Another
v Durban City Council 1973 (2) SA 362 (N) at
371H - D372.) If one considers the provisions
of s 53(1)(c)(v) which does not set any grounds
for participation, the Tribunal has a wide
discretion, albeit to be exercised in a
judicial manner.”
[23]That is in stark contrast to, for example, the
complaint procedure where the test for locus to
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participate is the complainant’s interest. In
the case of an intervenor, it is said to be a
“material interest”.
[24]This Court has also affirmed the principle that
the right to participate in merger proceedings is not
based solely on the criterion of interest or material
interest. See the Anglo South Capital (Pty) Ltd
case, supra.
[25]I think it is important to emphasise that
subsection (c) uses the phrase “whom the Competition
Tribunal recognised”. In this context “recognises”
means to acknowledge; to treat as valid; as having
existence or is entitled to consideration; to take
notice (a thing or person) in some way. (See the
Shorter Oxford English Dictionary, Third Edition,
page 1764.)
[26]In the instant case Caxton and Naspers placed
information before the Tribunal by way of affidavit
and that is of course a necessary preparatory
ingredient to the proper exercise of the Tribunal’s
discretion. The Tribunal ,after assessing that
information, accorded recognition to Caxton. It
could now participate in the merger proceedings, and
it was permitted to canvass the issues which are set
forth in the Tribunal’s order. It is evident that
in doing so the Tribunal took the view that the
defined issues were of importance and would assist it
in making the determination whether the merger is
likely to substantially prevent or lessen competition
within the meaning of section 12A.
[27]Counsel for Caxton contends that in making the
aforesaid determination the Tribunal is enjoined to
consider all the factors which appear in section 12A.
This in effect means that there may well be a whole
array of factors which fall to be considered beyond
those that were raised in the affidavits.
Therefore to the extent that Rule 46 of the Tribunal
rules requires a proposed intervenor to set forth the
matters in respect of which such intervenor will make
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representations, it is contended by Caxton that
this requirement is ultra vires the Act.
[28]Now section 52 of the Act provides that the
Tribunal must conduct a hearing into every matter
which is referred to it and, importantly, in terms of
section 52(2)(b) it “may conduct its hearings
informally or in an inquisitorial manner”. It seems
to me therefore that the Tribunal is not simply a
passive decision-maker waiting upon the parties in an
adversarial-like manner to place evidence before it
and then arrive at a decision. The Act intends that
it play an active and if necessary an interventionist
rôle and I think, more importantly, it ought to
control and regulate its own proceedings. To my
mind that is a necessary incident of section 52(2)(a)
and (b).
[29]In my view rule 46 of the rules of the Tribunal
have been framed to achieve the objectives to which
I have alluded above.
[30]If Caxton’s contentions are correct and it would,
as it were, have “open season” at the hearing, that
in my view, would not be in the interests of an
orderly and expeditious hearing. The parties to the
merger it seems to me as a matter of common sense
must at least be apprised of what is said to be the
anti-competitive implications of the merger. In
that regard it would be able to marshal its
witnesses, particularly its experts, and produce
documents. If it were otherwise, in my view, far
from promoting an expeditious hearing there would be
delays resulting I believe in a cumbersome and
chaotic hearing.
[31]Thinking my way through Caxton’s argument there
is yet another very undesirable consequence that
flows therefrom. If the matters to be raised are
not circumscribed Caxton would presumably be entitled
to a wide-ranging discovery of documents from the
merging parties. There would be no limit on which
documents, confidential or otherwise, are to be
produced. In ordinary High Court litigation the
right to obtain documents from one’s opponent is in
right to obtain documents from one’s opponent is in
general limited by relevance arising from the defined
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issues. Notwithstanding that merger proceedings
take place without pleadings , it remains of the
utmost importance that the Tribunal exercise
control over the proceedings to ensure that the
evidence led is relevant to the issues raised as to
the approval of the merger. This is yet another
reason why the Tribunal ought to be entitled to
control and rein in what may turn out to be a very
unruly horse.
[32]Of course if it turns out during the course of
the hearing that an issue arises which falls outside
the ambit of the Tribunal’s order and the Tribunal
considers that such issue to be of substance and
importance and therefore should be weighed in its
assessment, there appears to me to be no reason why
the Tribunal cannot at that stage permit Caxton to
canvass such matters. As I have suggested above
that would be part and parcel of the Tribunal’s
inherent right to control its own proceedings.
[33]It follows that in my opinion Caxton has not
shown that the Tribunal in making the aforesaid order
acted ultra vires, exceeded its jurisdiction or
improperly exercised its discretion. The review
must accordingly be dismissed with costs such costs
to include the costs consequent upon the employment
of two counsel.
DAVIS JP :
MAILULA AJA :
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DATE OF JUDGMENT : OCTOBER 2007
DATE OF HEARING : 10 SEPTEMBER 2007
COUNSEL FOR THE APPLICANT: MR S. SYMONS SC with him
MR M WESLEY
INSTRUCTED BY : DENEYS REITZ INC, SANDTON
COUNSEL FOR FIRST, SECOND
AND THIRD RESPONDENTS : MR D. N. UNTERHALTER SC,
with him MR N. H. MAENETJE
INSTRUCTED BY : WERKSMAN INC, SANDTON
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