IN THE COMPETITION TRIBUNAL OF SOUTH AFRICA
Case NO
92/IR/Sep07
REPLICATION TECHNOLOGY GROUP (PTY) LTD Applicant
Versus
GALLO AFRICA LIMITED Respondent
Heard on : 23 November 2007
Decided on : 10 December 2007
Panel : D Lewis (Presiding Member), M Moerane (Tribunal
Member) and M Madlanga (Tribunal Member)
DECISION
D LEWIS
INTRODUCTION
1]This is an application for interim relief brought under section 49C of the Competition
Act, 1998 by the Replication Technology Group (Pty) Ltd ( “RTG/the applicant” )
against Gallo Africa Limited ( “Gallo/the respondent” ). Central to this application is
a restraint of trade agreement entered into between RTG and Gallo, which RTG
contends constitutes market division in contravention of Section 4(1)(b)(ii) of the
Competition Act. In arriving at this conclusion, the applicant has placed much
reliance on the decision of the Tribunal in Nedschroef Johannesburg (Pty) Ltd v
Teamcor and Others .1
2]The restraint of trade agreement in question is contained in a Sale Agreement
whereby RTG disposed of its shareholding of approximately 40% in Compact Disc
Technologies (Pty) Ltd (‘ CDT’) to Gallo. Gallo already owned the remaining 60% of
CDT, although the company was effectively managed by RTG. Arising from the sale
of the shares, CDT thus became a wholly owned subsidiary of Gallo which assumed
responsibility for its management.
3]The relevant portions of Clause 13 of the Sale Agreement read as follows:
“13. RESTRAINT
13.1. Subject to the Purchaser acquiring not less than the total
number of sale shares in terms of this agreement, the Seller
undertakes to the Purchaser that for a period of 24 (twenty four)
months after the effective date, it will not, without the prior written
consent of the Purchaser, render any competing services to such
prescribed customer.
13.2. The area of restraint referred to in clause 13.1 shall be the
Republic of South Africa.
13.3. The restrained party acknowledges
13.3.1. that the seller would not have entered into the
purchase of the sales shares and the sale claims unless the
restrained party had agreed to the restraint contained in the
clause;
13.3.2. that the restraint is the minimum restraint required
by the seller to provide protection against unfair
competition and that in the circumstances it is fair and
reasonable, and necessary that for the protection of the
interest of the Seller that the restrained party should be
restrained in the manner set out in this clause....” 2
1 Case NO. 95/IR/Oct05.
restrained in the manner set out in this clause....” 2
1 Case NO. 95/IR/Oct05.
2 Although this is an accurate rendition of the restraint clause in the sale of shares agreement, it
2
4]In terms of the Sale Agreement competing services and/or prescribed services
mean services which are the same as, similar to or compete with those services
rendered by CDT, while prescribed customer means any person who is listed as a
customer of CDT in Annexure B to the Sale Agreement and who were effectively all
customers of CDT at the time the sale agreement was concluded. Clause 13 thus
restrains RTG, the seller of the shares in CDT, from competing with CDT, now a
wholly owned subsidiary of Gallo, in respect of the sale of designated services to a
list of specified customers. Gallo, the purchaser of the shares, thus concluded the
restraint in favour of its wholly owned subsidiary, CDT. The ‘effective date’ is the 31
July 2006 . Thus the two year period of the restraint ends on 31 July 2008.
5]In its Notice of Motion RTG seeks relief in the form of an order interdicting and
restraining Gallo from enforcing clause 13 of the Sale Agreement. It asks that the
interdict remain in force until the earlier of the final determination of a complaint which
RTG has lodged with the Commission or until a date six (6) months from the granting
of the relief. The complaint lodged with the Commission alleges that Clauses 2.9 and
13 of the Sale Agreement constitutes a restrictive and/or prohibited practice in terms
of section 4(1), alternatively sections 4(1)(b) and 5(1) of the Act. RTG also seek
costs.
6]The Notice of Motion in this application for interim relief formulates the relief sought
in the following terms:
“1. That the respondents be and are interdicted and restrained from enforcing clause
13 of the Sale Agreement... and/or from requiring that the applicant abide by aforesaid
clause 13 and/or from implementing such clause on the basis that such clause
constitutes a restrictive and/or prohibited horizontal practice as contemplated in section
constitutes a restrictive and/or prohibited horizontal practice as contemplated in section
4(1)(b) of Act No. 89 of 1998.
2. The relief sought in paragraph 1 above operates and/or remains in force until the
earlier of
2.1. a final determination of the applicant’s complaint in terms of Act No. 89 of
is obvious that the references to ‘the seller’ in clauses 13.3.1 and 13.3.2 should be references to
‘the purchaser’.
3
1998 (and which complaint will be lodged with the Competition Commission
simultaneously herewith) that clauses 2.9 and 13 of the aforesaid Sale
Agreement constitutes a restrictive and/or prohibited practice as contemplated
in section 4(1)(a), alternatively section 4(1)(b) and 5(1) of Act No. 89 of 1998; or
2.2 a date that is 6 (six) months after the date of the granting of the relief sought in
paragraph 1 above.
3. That the costs of this application be paid by the respondent in the event of it opposing
this application.
4. Granting the applicant such further and/or alternative relief as the Honourable
Tribunal deems fit.”
BACKGROUND
7]The applicant is RTG. When RTG was founded in 2000 its management held
50.1% of its issued share capital while RMB Corvest, a subsidiary of the FirstRand
Group, held the remaining 49.9%.
8] From its inception RTG focused principally on the market for the
manufacture of analogue audiovisual formats (that is, VHS and audio
cassettes). Its entry into the market came through the acquisition of the
analogue manufacturing and replication business of Abacus Technology
Holdings. In an effort to enhance its presence in the analogue market, an
agreement was reached on 7 December 2001 between RTG and Gallo,
represented by Johncom, its holding company, whereby RTG acquired 100% of
Gallo’s analogue business. The imperative underlying Gallo’s disposition of its
analogue business is understood to have been the rapid obsolescence of
analogue technologies and Gallo’s desire to focus on the newer technological
formats, namely, Compact Discs (“CDs”) and Digital Versatile Discs
(“DVDs”), which were rapidly replacing the analogue formats.
(“DVDs”), which were rapidly replacing the analogue formats.
9]The respondent is Gallo, a music and entertainment company located within the
Johnnic Communications Limited Group (“Johncom”). The Gallo Group comprises
4
Gallo Music Group, Gallo Record Company, Gallo Music Publishers and CDT.
Gallo’s interest in the CD and DVD manufacturing, replication, editing, authoring,
printing and packaging market resides in CDT. CDT was formed in February 1999
when key players in the South African music content industry, namely Gallo, EMI,
and Warner Music, formed a joint venture – CDT to manufacture CDs in South
Africa. In due course all other parties withdrew from the joint venture and CDT
became wholly owned by Gallo.
10]On 13 March 2002, RTG acquired a 28.55% shareholding in CDT from Gallo. In
due course RTG acquired a further 12%, bringing its shareholding in CDT to
approximately 40%. Gallo continued to hold the remaining 60% of CDT. Prior to
RTG’s acquisition of its interest in CDT it did not participate in the DVD and CD
market. Indeed, as is confirmed by the affidavit of Hermanus Carel Trollip, RTG
expressly acquired a shareholding in CDT in order to gain exposure to the CD and
DVD market. Although Gallo continued to control a majority of the shares in CDT,
managerial responsibility was effectively assumed by its joint venture partner, RTG,
whose CEO, Shimon Henry Teperson, was appointed the CEO of CDT.
11]During 2004 RTG decided to sell its 40% stake in CDT in order to redeem its
shareholders’ investments. Various explanations are offered for RTG’s decision to
exit CDT. It is claimed that the decline of the analogue format market underpinned
financial problems in RTG. There is also evidence that the management of RTG
wished to pursue interests in the digital format market in Australia. What is clear is
that the management of (and majority shareholders in) RTG had decided to exit the
South African CD and DVD market. Accordingly, Teperson and his fellow
South African CD and DVD market. Accordingly, Teperson and his fellow
shareholders concluded an agreement to sell RTG’s 40% shareholding in CDT to
RMB Corvest. However, Gallo elected to exercise a preemptive right to purchase
RTG’s interest in CDT and so displaced RMB Corvest as the purchaser of RTG’s
shareholding. CDT thus became a wholly owned subsidiary of Gallo.
12]Gallo, through CDT, is the largest domestic participant in the South African market
for CD and DVD manufacturing, replicating, DVD authoring, editing, printing,
packaging, marketing and sales with focus on music and film home entertainment
(“the South African CD and DVD Market”).
5
13]The Sale Agreement entered into between Gallo and RTG contained a restraint
clause forbidding RTG from furnishing CD and DVD manufacturing, replication,
marketing, packaging and sales services to approximately 592 CDT customers for a
period of two (2) years. Put differently, RTG was free to remain in the market and
furnish its services to any customer, except to those customers specifically identified
as CDT customers. It is interesting to note that the identical restraint clause is to be
found in the aborted sale agreement concluded between RTG and RMB Corvest.
14]Note that RTG has not exited the digital format market, nor is this required by the
terms of the restraint which is limited to specified customers. Indeed, it appears that
RTG utilised part of the proceeds of its sale of its share of CDT to purchase the
equipment necessary to remain in this market. Hence, it is active in the adult
entertainment niche of the market which Gallo/CDT eschews. It also appears to have
serviced customers not listed in the annexure to the sale agreement and therefore
not subject to the restraint. It has also undeniably continued to service certain
customers whose custom is indeed subject to the restraint. 3
15]Central to this application is the desire on the part of RTG – which appears to
have abandoned its Australian ambitions soon after concluding the sale of CDT to
3 The dishonesty of RTG and of Teperson, its CEO and the deponent to its affidavits, is
comprehensively dealt with in the Heads of Argument submitted by Gallo’s counsel and the
evidence referred to therein is uncontroverted. In summary, in December 2006 RTG
approached Gallo’s attorneys alleging that it, RTG, had been approached by several of the
Gallo customers who were subject to the restraint but who had requested that RTG perform
Gallo customers who were subject to the restraint but who had requested that RTG perform
certain of the prescribed services required by these customers. In at least one of these cases
investigations revealed that this account was false – that is, one of the customers in question
denied ever having approached RTG. Despite this falsehood, Gallo nevertheless agreed to
meet RTG in order to discuss the latter’s request. At this meeting, which took place in March
2007, Teperson admitted that RTG had already been supplying competing services to
prescribed customers. Teperson however undertook to comply with the terms of this restraint
and this undertaking was repeated in writing by RTG’s then attorneys. In the replying affidavits
filed in this matter Teperson denied an allegation in Gallo’s answering affidavit to the effect that
it, RTG, was continuing to violate the restraint. However, further investigations conducted by
Gallo reveal that RTG was continuing to violate the restraint – indeed it appears that since the
filing of the replying affidavit RTG has again violated the restraint, despite its contractual
commitment, its express undertakings and those of its attorneys, and its averments in affidavits
placed before this Tribunal. Again none of these allegations are denied. While counsel for
Gallo argues that Teperson’s dishonesty, including in his submissions to us, is sufficient to deny
the application for interim relief on the grounds that to do so would not be ‘just and reasonable’,
we have not based our finding on these grounds. However, this conduct is, at very least,
relevant in assessing the credibility of a witness whose affidavit is relied upon in these
proceedings.
6
extend its digital services to customers from whom it is precluded under clause 13 of
the Sale Agreement. RTG has accordingly now approached us seeking an interim
order interdicting and restraining Gallo from enforcing clause 13 on the ground that
the clause constitutes market division by allocating customers in contravention of
section 4(1)(b)(ii) of the Competition Act. Gallo opposes the application. These are
the contending positions upon which the Tribunal must adjudicate.
INTERIM RELIEF
16]Section 49C(2)(b) of the Competition Act provides:
“The Competition Tribunal
....
(b) may grant an interim order if it is reasonable and just to do so, having regard to the
following factors:
(i) the evidence relating to the alleged prohibited practice
(ii) the need to prevent serious or irreparable damage to the applicant; and
(iii) the balance of convenience.”
17]We have previously decided that section 49C(2)(b) properly construed does not
require that each of the listed factors be independently and separately satisfied
before interim relief is granted. In National Wholesale Chemists (Pty) Ltd and Astral
Pharmaceuticals (Pty) Ltd et al, 4 also an application for interim relief, we held that in
terms of section 49C(2)(b) the Tribunal is not required to establish that each of the
requirements has been established in isolation, but must rather consider all the
factors listed in section 49C(2) as a whole to see whether a case for interim relief has
been established. That is, a weak case on, say, irreparable harm may be
counterweighted by a very strong case on the balance of convenience or particularly
persuasive evidence of prohibited practice. In Nedschroef we observed that the
section starts of by making the threshold requirement that the granting of the order is
‘reasonable and just ’ and then requires that the Tribunal has regard to the constituent
‘reasonable and just ’ and then requires that the Tribunal has regard to the constituent
factors which must again be balanced and weighed through the prism of what is
4 Case No. 98/IR/Dec00.
7
‘reasonable and just’. Section 49C therefore confers a discretion on the Tribunal to
grant interim relief having regard to what is reasonable and just in the circumstances.
Indeed the Competition Appeal Court took a similar view in National Association of
Pharmaceutical Wholesale et al v Glaxo Wellcome (Pty) Ltd 5 where it held: “ The
above requirements are however not determinative and even where all these
requirements are present a court has discretion to refuse an interim interdict.”
EVIDENCE OF A PROHIBITED PRACTICE
18]As noted above, the complaint lodged by RTG with the Commission alleges that
Clause 13 of the Sale Agreement is a market sharing arrangement between RTG and
CDT in contravention of Section 4(1)(a) of the Competition Act, alternatively Section
4(1)(b) and Section 5(1) thereof. This application has focused on an alleged violation
of Section 4(1)(b)(ii) which provides for a per se prohibition of agreements between
firms in a horizontal relationship which divide markets by ‘allocating customers’. It is
from this alleged contravention that RTG seeks interim relief.
19]However, as we shall demonstrate, we are, in fact, here dealing with a common
garden variety restraint of trade normally associated with the sale of a business.
Indeed to the extent that it differs from a typical restraint of trade, its distinguishing
features are to be found in the limited nature of the restraint imposed.
20] Firstly, it is limited as to duration – as noted above, it is a two year restraint
that has a little over six months to run. This stands in stark contract with the 10
year restraint encountered in Nedschroef upon which the applicant places much
reliance. As we observed at the time that the Nedschroef matter was decided the
restraint still had another 5 years to run.
21]Secondly, the restraint before us does not, as is normal in restraints of this sort,
21]Secondly, the restraint before us does not, as is normal in restraints of this sort,
require that the restrained party refrain from participation in the market altogether. As
stated above, RTG is free to participate in the adult entertainment market in which
CDT does not compete and it is free to compete for the business of customers who
5 Case No. 29/CAC/Jul03 at paragraph 8.
8
are not listed in the pertinent annexure to the sale agreement. While we
acknowledge that the restraint covers the most significant consumers of the relevant
services and products, the evidence is that it is an expanding market. Moreover, as
already mentioned above, the restraint is not absolute insofar as the restrained party
is entitled to compete in the restricted part of the market with the prior written consent
of its contracting partner. In fact RTG did approach Gallo with just such a request,
although, as observed above, it appears, that at the time that this approach was
made, it had, contrary to its contractual commitment, already provided certain of the
services in question to some of the prescribed customers. RTG and Gallo could not
agree on the terms of the compensation to be paid by RTG in exchange for Gallo’s
permission for it to operate outside of the terms of the restraint. RTG offered
compensation by way of a portion of the revenue generated from customers subject
to the restraint, whereas Gallo, consistent with its view that the sale price was, in
significant part, constructed on the basis of the restraint, proposed that the sale price
be adjusted in order for RTG to be freed from the restraint.
22]However, our essential point is that the specific terms of the restraint imposed
upon RTG do not seem unduly restrictive relative to restraints of this type.
23]Counsel for RTG has attempted to distinguish this restraint from those ‘normal’
restraints which are characteristically cast as mechanisms for protecting the ‘goodwill’
acquired by the purchaser. He argued that goodwill properly resides in CDT which is,
as a result of the sale, now in the sole ownership and control of Gallo. RTG, or so its
Counsel appears to argue, cannot appropriate the goodwill of CDT only its
managers and partowners and Teperson, in particular, are able to do this and they
are not the subject of the restraint. However, this argument is without merit.
24]Prior to the sale RTG managed CDT. Its CEO – Teperson – was also the CEO of
CDT. It is admitted that Teperson – and the RTG management generally – are
intimately familiar with the business secrets and strategies of CDT and, but for the
restraint, would have unhindered access to the customer base which they were
instrumental in creating. There can be no doubt that the commercial merit of Gallo’s
purchase of RTG’s interest in CDT would be severely compromised if RTG, part
owned and managed by Teperson and his colleagues, was permitted to act without
9
restraint in the immediate aftermath of the transaction. Gallo avers that this was the
basis for the agreed price and this is indeed confirmed by those subclauses of the
restraint clause in which both parties accept that the transaction would not have
taken place but for the restraint and, moreover, that the restraint is ‘fair and
reasonable’. While it may have arguably been more appropriate to impose the
restraint on Teperson and other RTG managers, subsequent evidence of their
flagrant disregard for contractual commitments and for basic honesty in the conduct
of their business affairs establishes that a restraint of this sort would have been even
more difficult to enforce than that imposed on the corporate entity, RTG, which they
control and which was the entity that managed CDT. Moreover, RTG argues that any
restraint imposed on Teperson would have ‘borne no connection to the sale’. The
mere fact that an unrestrained Teperson finds it necessary to participate in the
market through the medium of RTG indicates that the restraint is correctly located.
And so whether or not the restraint conforms in all its aspects to a ‘traditional’
restraint of trade is beside the point. What is clear is that the restraint was necessary
to protect the value of the investment made by Gallo and was a precondition for RTG
being able to realise its investment in CDT. 6 We note again that this concern to
protect its investment in this way was not unique to Gallo. RMB Corvest sought an
identical restraint in order to protect the investment that it considered making before
Gallo exercised its preemptive rights.
25]This discussion does serve to focus attention on the counterfactual. That is, what
would have happened in the absence of the restraint? The answer is, we repeat, that
would have happened in the absence of the restraint? The answer is, we repeat, that
RTG would have been stuck with its interest in CDT – as with RMB Corvest and
Gallo, no investor with any modicum of commercial sense would have purchased
RTG’s share in CDT without restraining RTG. The chilling effect that a farreaching
6 Note the following comments made by the Tribunal in other matters dealing with restraints of
trade. In Compagnie Gervais Danone and Clover Beverages and Clover SA(Pty)Ltd and
DanoneClover(Pty)(Ltd) (Case No. 04/LM/Jan03): ‘We accept the parties’ contention that such
a restraint is commercially reasonable for parties entering into joint venture in order to protect
their investment. There is no history of Clover and Danone competing with each other in the
South African market. When Danone entered the SA market in 1996 it did so in joint venture
with Clover and this has been the relationship ever since’ . And then in Ruenert Ltd and African
Cables Ltd (Case No. 59/LM/Aug04): ‘In the light of the fact that Pirelli has sensitive information
on the business of African Cables it has agreed to a restraint from being directly or indirectly
engaged or interested in the manufacturing of or trading in the products offered by African
Cables for a period of three years. After expiry of the period Pirelli can immediately enter the
South African market as a potential competitor to African Cables.’
10
decision of this sort would have had, not only on investment in CDT but also on the
market for corporate assets, would ill serve the objectives of competition.
26]Moreover there is every reason to believe that the sale of RTG’s interest in CDT
coupled with the former’s ability and desire to remain active in the DVD and CD
market, albeit under a partial and temporary restraint, ultimately promotes rather than
retards competition. In our view, and despite claims of imminent irreversible harm,
there can be little doubt that by the middle of next year, the market will have an
additional robust and unrestrained competitive presence in the shape of RTG. If
RTG’s claim that established customers of CDT are clamouring to be served by it are
true today, then there is every reason to believe that they will still be true in seven
months' time and, even if their claims of current hardship are true, they should have
no problem financing their continued presence in the market for the limited period for
which the restraint is still effective.
27]This discussion has reference to the contention by Mr. Unterhalter, Counsel for
Gallo, that the agreement in question has not been concluded between two parties in
a horizontal relationship and thus could not fall foul of the provisions of Section 4 of
the Act, the section which the restraint is alleged to contravene. RTG has been quick
to point out that while Gallo may not be in direct competition with RTG, it is
contracting on behalf of its wholly owned subsidiary, CDT, in order to constrain RTG,
a competitor, or, at least, a potential competitor of CDT. While this is undoubtedly
true and we would be loathe to accept Gallo’s argument in the form presented, it
does assist in elucidating the true nature of the restraint. It is an agreement entered
does assist in elucidating the true nature of the restraint. It is an agreement entered
into between the seller and purchaser of shares in a company. At worst, the
temporary and partial restraint is ancillary to the sale agreement which, we repeat,
would not have been concluded but for the restraint. For RTG to press for this
restraint to be construed as a hardcore cartel is not only to elevate form over
substance, it is to opportunistically abuse the provisions of the Competition Act simply
so that one party to a standard commercial agreement may escape its obligations
whilst simultaneously enjoying it fruits.
28] We have, through the duration of this matter, been referred to the
Tribunal’s decision in Nedschroef in which a restraint of trade contained in a sale
11
agreement was successfully interdicted. Counsel for RTG insists that this matter is
on all fours with the Nedschroef matter. It is decidedly not, neither factually nor
conceptually. As already pointed out, the restraint in Nedschroef was to be operative
for 10 years whereas the restraint in the present matter is operative for 2 years. As
outlined above, the restraint is subject to other limitations as regards its scope and it
can be avoided with the prior written consent of the purchaser, Gallo. More important
for present purposes, the restraint in Nedschroef is precisely a prime example of an
attempt to present a hard core market allocating cartel as an ‘ordinary’ restraint of
trade which derives from a sale agreement. We note that in the Nedschroef case the
sale was of machinery to which no semblance of goodwill or any other such
commercial value attached and which required no protection in order for the sale to
be concluded. Furthermore, and most pertinently, in Nedschroef the agreement to
restrain trade was concluded between two purchasers of machinery who agreed to
divide the market between themselves as purchasers by each undertaking to the
other to utilise the machinery for distinct specified purposes. The interim relief
application in Nedschroef was then brought by the one purchaser against the other
purchaser and, in stark contrast with the present matter, not by the seller against the
purchaser. It is, for this reason, that it is the Nedschroef restraint that is unusual in its
terms and that appeared to the tribunal panel to constitute a market division
agreement dressed up as a standard restraint of trade.
29]While as stated above, we are required to balance the three factors listed in
Section 49C(2)(b) and, so, it is possible that strong evidence of likely irreparable
harm may, in undertaking this balancing, counterweigh a weak finding on, say, the
balance of convenience or on evidence relating to a prohibited practice, we have
previously held that we would be loathe to grant interim relief in the event that we find
no evidence of a prohibited practice. In this instance it appears to us that there is no
evidence of a prohibited practice and this would be sufficient reason for refusing the
application for interim relief. We have held on a number of occasions that we will be
extremely reluctant to grant interim relief in the face of unconvincing evidence of a
prohibited practice. 7 We will however examine the applicant’s contention concerning
7 In York Timbers Ltd v SA Forestry Company Ltd (1) [2001–2002] CPLR 408 (CT) at
paragraph 64 the Tribunal held: “...we must first establish if there is evidence of a prohibited
practice, which is the Act’s analogue of a prima facie right...” The Tribunal, at paragraph 101,
12
the irreparable damage that, it alleges, will eventuate should we refuse to grant the
interdict asked for.
IRREPARABLE DAMAGE
30]RTG alleges that it will be irreparably damaged if the restraint is not lifted. As
already noted, although the belated introduction of a limited auditor’s report has been
filed in support of this allegation, it is ultimately the averments in Teperson’s affidavit
regarding the state of the company and the market that constitute the essential
evidence upon which we must rely. However Teperson’s evidence is, in our view,
fatally tainted by clear evidence of his dishonesty, and, in particular, evidence that he
has perjured himself in the very affidavit deposed to for the purposes of these
hearings.
31]But, more important, RTG’s claim of irreparable damage flies in the face of other
facts and averments. RTG received a considerable sum of money for the shares sold
to Gallo. It appears to have immediately used part of the money received from the
sale in order to purchase assets that would allow it to compete in the CD and DVD
market. If these assets were purchased in order to compete in violation of the
restraint, then it only has itself to blame. It avers that the Nedschroef judgment had
alerted it to the illegal nature of the restraint so certainly at the time that it purchased
the machinery in question it had no reason to believe that it would be entitled to
compete in the restricted portion of the market. In any event, it has never been totally
excluded from the market. Indeed it seems to have had unhindered access to the
adult entertainment market. There is also evidence that the general DVD/CD market
is growing and new customers are not subject to the restraint. Moreover, the restraint
has fewer than eight months to run. As already noted, RTG would have us believe
has fewer than eight months to run. As already noted, RTG would have us believe
further held: ... we would, regardless of the prospect of damage or of the balance of
convenience, be hard pressed to grant interim relief in the absence of evidence of a restrictive
practice. See also Nationwide Airlines (Pty) Ltd and Others v SAA (Pty) Ltd and Others
[1999200] CPLR 230 (CT) at page 13, Nkosinauth Ronald Msomi t/a Minnie Cigarette
Wholesalers v British American Tobacco South Africa(Pty) Ltd [2001–2002] CPLR 383 (CT) at
paragraph 13, National Association of Pharmaceutical wholesalers and others v Glaxo
Wellcome (Pty) Ltd and others [2003] 2 CPLR 402 (CT) at paragraph 28, Dumpit Waste
Removal (Pty) Ltd v City of Johannesburg and Another 2004 (1) CPL'R 189 (CT) at paragraph
29, and Nuco Chrome (Pty) Ltd v Xstrata SA (Pty) Ltd and another [2004] 2 CPLR 34 (CT) at
page 5.
13
that large and important customers of CDT are clamouring to be served by it in
preference to CDT. If this is indeed true, then there is no reason to believe that this
business will not be available to RTG when, in eight months' time, it is permitted to
enter the restricted portion of the market.
32]We emphasise that RTG is not in the same position as many other restrained
entities: it has remained active in the market and it has, in the relatively recent past
procured assets to support this activity; it has maintained contact with key customers,
and, indeed, has served certain of these customers despite the restraint. RTG is, in
short, ready to hit the ground running and so its claims of irreparable damage and
imminent demise ring hollow. Hence, even if we have erred in concluding that it
appears to us that there is, in this restraint of trade, no evidence of a prohibited
practice, features of the actual restraint, in particular its limited nature, will ensure that
any damage caused will itself be limited.
CONCLUSION
33]Having regard to the above, we have come to the conclusion that it is not
reasonable and just to grant interim relief in the circumstances. Accordingly, we
dismiss the application with costs.
THE ORDER
34]We make the following order:
1. The application for interim relief is dismissed
2. Costs of the application shall be borne by the applicant,
including the costs of two counsel.
____________ 10 December 2007
D Lewis Date
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Concurring: M Madlanga and M Moerane.
Tribunal Researcher: P S Munyai
For the applicant: Adv. A Subel S.C and Adv. J Blou
(instructed by Deneys Reitz Attorneys)
For the respondent: Adv. D Unterhalter S.C and Adv. J Wilson
(instructed by Webber Wentzel Bowens)
15