1 COMPETITION TRIBUNAL OF SOUTH AFRICA
1.1.1
(ba) Case No: 103/CR/Dec06
In re points in limine:
Clover Industries Limited First Applicant
Clover SA (Pty) Ltd Second Applicant
Ladismith Cheese (Pty) Ltd Third Applicant
And
The Competition Commission Respondent
In the matter between:
Competition Commission Applicant
And
Clover Industries Limited First Respondent
Clover SA (Pty) Ltd Second Respondent
Parmalat (Pty) Ltd Third Respondent
Ladismith Cheese (Pty) Ltd Fourth Respondent
Woodlands Dairy (Pty) Ltd Fifth Respondent
Lancewood (Pty) Ltd Sixth Respondent
Nestle SA (Pty) Ltd Seventh Respondent
Milkwood Dairy (Pty) Ltd Eighth Respondent
1
Panel : D Lewis (Presiding Member), N Manoim (Tribunal Member),
and Y Carrim (Tribunal Member)
Heard on : 2 June 2008
Order Issued : 23 June 2008
1.2 Reasons Issued: 23 June 2008
1.3
1.4 REASONS FOR DECISION
1.5
Introduction
1] On 7 December 2006 the Competition Commission (“the Commission”), filed a
complaint referral with the Competition Tribunal against seven respondents, including
Clover Industries Limited, Clover SA (Pty) Ltd (herein collectively referred to as
“Clover”) and Ladismith Cheese (Pty) Ltd (herein referred to as “Ladismith”). However
in their answering affidavits in the complaint, three of the respondents, Clover and
Ladismith, raised points in limine to the Commission’s referral. Clover and Ladismith,
respectively the first, second and fourth respondents in the complaint, are the
applicants in the matter presently before us.
2] There are three points in limine raised by Clover, while Ladismith has raised only one
point in limine . These in limine points were heard by a panel of the Tribunal on 2 June
2008.
3] The first point in limine , raised by both Clover and Ladismith, is that the Commission
referred the complaint outside of the time frames provided for in the Competition Act,
1998, as amended (“the Act”) and, as a result, the matter has prescribed.
4] The second and third points in limine raised by Clover relate to the corporate leniency
agreement signed between Clover and the Commission. Clover contends that certain
of the charges proferred by the Commission in the complaint are the subject matter of
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leniency extended to it by the Commission and so should not have formed part of the
subject matter of the complaint. We will consider each of the three points in limine in
detail below.
5] On 28 May 2008, the Commission filed a supplementary affidavit to which was
attached an affidavit deposed to by the so called “small milk producer”, Mrs Malherbe.
This is pertinent to the first in limine point because the applicants allege that the
complaint was initiated by way of a letter from Mrs Malherbe. The Commission asked
the Tribunal to admit the supplementary affidavit into evidence in the hearing of the
points in limine . Clover filed an affidavit on 30 May 2008 objecting to the
Commission’s affidavit being admitted into evidence. Although we note that counsel
for Ladismith referred extensively to this affidavit in her oral submissions to the
Tribunal, we are able to decide the first in limine point without relying upon the
affidavit and so do not find it necessary to decide whether or not to admit the affidavit
in question.
First point in limine
6] On or about 10 June 2004, Mrs Louise Malherbe, a ‘small milk producer’ from the
southern Cape, wrote a letter addressed to the Commission in which she highlighted
certain anticompetitive practices allegedly perpetrated by certain milk processors in
the region of the country in which she conducted her business. This letter forms the
basis of the first point in limine raised by Clover and Ladismith, namely the claim that
the Commission’s referral has prescribed. On or about 11 June 2004, she forwarded
this letter to the Deputy Minister of Agriculture. The Commission avers that, even
though the letter in question is clearly addressed to the Commission and marked for
though the letter in question is clearly addressed to the Commission and marked for
the attention of one ‘William’, it did not in fact receive the letter directly from Mrs
Malherbe, but rather received it from the Deputy Minister of Agriculture. It appears
that, after receiving the letter from the Deputy Minister of Agriculture, the Commission
contacted a range of industry players in order to gather information concerning the
milk industry. 1
1 See Annexure HBS 2 to the founding affidavit.
3
7] On 10 February 2005, the Commissioner initiated “a full investigation into the milk
industry”, and more particularly against Clover, Parmalat (Pty) Ltd and Ladismith for
alleged breaches of sections 4 (1)(b) and 8(d)(i) of the Act. 2 The allegations related
to collusion and/or price fixing in the procurement of milk as well as certain alleged
abusive practices relating to inducements to suppliers not to deal with competitors.
The investigations undertaken by the Commission led it to investigate similar conduct
allegedly perpetrated by Woodlands Dairy (Pty) Ltd, Lancewood (Pty) Ltd and Nestle
SA (Pty) Ltd – these were consolidated with the initial complaint.
8] On 7 December 2008, the Commission referred the consolidated complaint to the
Tribunal against seven respondents namely Clover, Ladismith, Parmalat (Pty) Ltd,
Woodlands Dairy (Pty) Ltd, Lancewood (Pty) Ltd and Nestle SA (Pty) Ltd.
9] The first point in limine raised by Clover, which is also Ladismith’s point in limine , is
that the Commission’s referral has prescribed as the Commission did not refer it within
the one year period contemplated in section 50(2) of the Act, and/or in the alternative,
the Commission did not get the necessary extensions from the initial complainant after
the investigation period had ended in terms of section 50(4). However, in its founding
affidavit in the complaint, the Commission averred that it had initiated all the
investigations under section 49B(1) and referred the complaint in terms of section
50(1) of the Act, thus implying that the complaints were “timeously referred”. 3 Section
49B of the Act provides as follows:
1.6 “(1) The Commissioner may initiate a complaint against an alleged
prohibited practice.
(ii) Any person may –
1.7 (a) submit information concerning an alleged prohibited
practice to the Competition Commission, in any manner or
form; or
practice to the Competition Commission, in any manner or
form; or
2 See Annexure HBS 2 to the founding affidavit.
3 See page 10 of the founding affidavit.
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1.8 (b) submit a complaint against an alleged prohibited practice to the
Competition Commission in the prescribed form.
(iii) Upon initiating or receiving a complaint in terms
of this section, the Commission must direct an
inspector to investigate the complaint as quickly
as practicable.
(iv) At any time during an investigation, the
Commissioner may designate one or more
persons to assist the inspector. ”
10] However section 50 of the Act provides clearly that the time periods within which a
complaint must be referred by the Commission to the Tribunal are determined by
whether the complaint is initiated by the ‘Commissioner’ (Section 49B(1)) or by ‘any
person’, that is, by a private complainant (Section 49B(2)(b)). Section 50 provides
that:
1.9 “(1) At any time after initiating a complaint, the Competition
Commission may refer the complaint to the Competition Tribunal.
b. Within one year after a complaint was submitted to
it, the Commission must –
1.10 (a) subject to subsection (3), refer the complaint to the
Competition Tribunal, if it determines that a prohibited practice
has been established; or
1.11 (b) in any other case, issue a notice of nonreferral to the complainant in
the prescribed forms.
c. When the Competition Commission refers a
complaint to the Competition Tribunal in terms of
subsection (2)(a), it –
1.12 (a) may
1.13 (i) refer all the particulars of its complaint as
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submitted by the complainant;
1.14 (ii) refer only some of the particulars of the complaint as submitted by the
complainant; or
1.15 (iii) add particulars to the complaint as submitted by the complainant; and
1.16 (b) must issue a notice of nonreferral as contemplated in
subsection (2)(b) in respect of any particulars of the complaint
not referred to the Competition Tribunal.”
1.17 (4) In a particular case –
(a) (a) the Competition Commission and the complainant may
agree to extend the period allowed in subsection (2); or
(b) (b) on application by the Competition Commission made
before the end of the period contemplated in paragraph (a), the
Competition Tribunal may extend that period.
(5) If the Competition Commission has not referred a complaint to the
Competition Tribunal, or issued a notice of nonreferral, within the
time contemplated in subsection (2), or the extended period
contemplated in subsection (4), the Commission must be regarded as
having issued a notice of nonreferral on the expiry of the relevant
period”.
11] It is indeed common cause among the parties that there are two routes by which the
Commission can initiate an investigation in terms of section 49B of the Act and that
the route selected impacts upon the time period within which the complaint must be
referred. Firstly, the Commissioner can ‘self initiate’ an investigation in terms of
section 49B(1) and in that instance, the Commission can refer the matter at ‘any time’
as stated in section 50(1) of the Act. Secondly, ‘any person’ a ‘complainant’ may
lodge a complaint with the Commission as envisaged in section 49B(2)(b). We
observe – and will return to this point later – that when a ‘a person’ lodges a complaint
in terms of Section 49B(2)(b) it must be done ‘in the prescribed form’. In the latter
in terms of Section 49B(2)(b) it must be done ‘in the prescribed form’. In the latter
instance the Commission has one year within which to conclude its investigation and
refer the matter to the Tribunal. If the Commission intends to extend the investigation
6
period beyond a year, it has to obtain the consent of the complainant to extend the
investigation period, or to approach the Tribunal for an extension. Should the
Commission fail to refer the matter to the Tribunal within the requisite time period or to
obtain the necessary extension, then it is be deemed to have issued a certificate of
nonreferral. It is also noteworthy – and this point will also be examined later – that
Section 49B(2) distinguishes between the submission to the Commission of
‘information’ concerning an alleged prohibited practice which may be submitted ‘in any
manner or form’ and a ‘ complaint’ which must be submitted ‘in the prescribed form’.
12] Clover and Ladismith claim that the letter from Mrs Malherbe dated 10 June 2004 was
a complaint in terms of section 49B(2)(b) and as a result, the Commission had one
year within which to submit the complaint to the Tribunal. Alternatively, the
Commission should have obtained Malherbe’s consent to extend the period of
investigation. Since, as is common cause, the Commission failed to do either, it is,
allege the applicants, deemed to have issued a certificate of nonreferral in terms of
section 50(5). However, the Commission contends that Mrs Malherbe’s letter is not a
complaint in terms of the Act, but constitutes a mere submission of information to
various authorities and/or people, including the Commission itself.
13] It is worth citing Mrs. Malherbe’s letter in its entirety:
“Geagte William
i.s. Ondersoek na melkprys vir produsent en verbruiker
Onlangs was daar n ondersoek gelas van owerheids kant na die motorbedryf
waarom motorpryse nie gedaal het toe die Rand versterk het nie. Nou
wonder ons of daar nie n ondersoek kan kom na die melkprys van die
produsent vergeleke met die prys wat die verbruiker moet betaal nie.
produsent vergeleke met die prys wat die verbruiker moet betaal nie.
Ons het n melkplaas net buite Riversdal in die SuidKaap waar ons reeds
meer as 35 jaar in die melkbedryf is en ons melk aan Nestle lewer.
Ongeveer 10 to 15 jaar gelede was die aankoopprys van melk om en by 50%
7
van sy rakprys in n winkel. Huidiglik kry ons as boere, met n Frieslandkudde,
n skamele R1.62 per liter. n Sakkie melk kos tans R5.49 by die supermark.
Ons kry dus ongeveer 25% van sy rakwaarde, Sedert verlede jaar September
het ons prys van melk met 30c per liter afgekom. Dit is wat ons reeds drie
jaar gelede gekry het.
Die Suidkaap se melkprys is die heel laagste in die land. Waarom verskil die
prys van streek tot streek? Mielies en ander stowwe kos vir ons presies
dieselfde! Inteendeel. Ons het nog vervoerkoste van ongeveer R250.00 per
ton om mielies hier gelewer te kry.
Sedert die begin van die jaar was daar by twee geleenthede grafieke van
verbruikerspryse, deur Prof Johan Kirsten verskaf, in die media. Melk is die
enigste een wat n konstante opwaartse kurwe toon. Die verbruiker betaal al
hoe meer en die produsent kry al hoe minder. Waarom kan ons nie deel in
die duidelik groter wins wat gemaak word nie OF waarom kan die armes nie
die voordeel trek van ons lae pryse nie.
Teen hierdie pryse (daar is gerugte van n verdere verlaging teen September!)
sal ons nie verder kan boer nie, maar saam met ons sal 12 gesinne ook
sonder inkomste wees Dit kom neer op absolute uitbuiting van produsente en
hul personeel.
In hierdie area bestaan die melkkopers hoofsaaklik uit Nestle, Parmalat en
Ladismith Kaas. Dit is nie meer soos vroeer toe hulle nog opposisie vir
mekaar was nie, hulle kom elke paar maande by mekaar en bespreek hulle
behoeftes. Waar daar tekorte of oorskotte mag bestaan, voorsien hulle
mekaar Kartel vorming. Daar is dus nie onderlinge kompetisie nie en hulle
kom ooreen oor n prys wat hulle almal pas. As jy enigsins te veel na n koper
se sin kla of antwoorde soek, se hulle eenvoudig vir jou dat hulle nie verder
jou melk gaan koop nie. EN die ander kopers stel nie belang om jou oor te
jou melk gaan koop nie. EN die ander kopers stel nie belang om jou oor te
neem nle. Wat moet jy dan met jou melk maak? Jy word dus eenvoudig
gedwing om na hulle pype te dans. Jy het geen bedingingsmag nie. EN jy is
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afhanklik van die inkomste om te oorleef.
Indien jy wel navraag doen, is een en almal se antwoord dat Pick en Pay en
Shoprite Checkers die melkprys beheer. Hulle dikteer die prys. Ek het
vanoggend weer na Prof Johan Kirsten se kantoor geskakel, maar aangesien
hy nie beskikbaar was nie, met Prof. Chris Blighnaut gepraat. Hy se dat die
melkkopers ook saamspeel met hierdie genoemde groepe.
As die heffings wat op melkprodukte is, verhoog kan word, kan hierdie
groepe staak om die enorme hoeveelhede suiwelprodukte in te voer.
Nieuseeland vireers, subsidieer hul suiwelprodukte met 50% en word dus
spotgoedkoop ingevoer deur groot kettinggroepe,
Die M.P.O. is veronderstel om na die melkboere se belange om te sien. Anngesien hulle van
die melkkopers afhanklik is om hul premies in te vorder, kan hulle ook nie teen hulle
optree nie!
Hiermee n klomp inligting kortiks saamgevat, maar ons is bereid om alle
verdere inligting tot ons beskikking te verskaf indien julle ons kan help.
Nogmaals dankie dat jy geluister het na ons probleme en bereid is om
daaraan aandag te gee. Hoekom moet ons, boere en verbruikers, geboelie
word deur die groot geldmagte?
Met dank
N.S. die saak is vir ons so belangrik dat ons bereid is na Pretoria te kom en
inligting tot ons beskikking beskikbaar te stel.”
Translation:4
“Dear William
4 See Annexure A2 to the Commission’s Heads of Argument.
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RE: Investigation into milk prices for producers and consumers
As discussed telephonically, herewith our problem with the milk buyers.
There was an investigation launched recently by government in the motor industry: why car
prices did not come down when the Rand has become stronger. We are now wondering if
a similar investigation could not be launched into the milk prices of producers in
comparison to what consumers have to pay.
We own a milk farm outside Riversdale in the Southern Cape whereby we have been in the
milk industry for 35 years. We deliver milk to Netsle.
Around 10 to 15 years ago the purchase price of milk was +50% of the shelf
price in a shop. Currently, we as farmers, with Friesland cattle receive a mere
R1.62 per litre. A sachet of milk’s price is R5.49 in the supermarket. We
receive +25% of the shelf value. And it is the same as what we used to get 3
years ago.
Milk prices in the Southern Cape are the lowest in the country. Why does the price differ
from region to region? We pay the same prices for mealies and other resources as other
regions! In fact, we also have transport costs of around R250.00 per ton to get mealies
delivered here.
The media published graphs of consumer prices on two different occasions since the
beginning of the year, done by Prof. Kirsten. Milk is the only graph that shows a constant
rise. Consumers pay more and more and producers get less and less. Why can we not
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share in the obviously bigger profit OR why can the poor not benefit from our low prices?
At these prices (and there are rumours of a further price cut in September!) we will not be
able to farm anymore and there will be 12 families altogether without an income. This
boils down to an absolute exploitation of the producers and their personnel.
Milk buyers in this area are basically Nestle, Paarmalat and Ladismith Cheese. And it is not
like in the past when they were competitors. They now meet once a month to discuss
their needs and interests. Where there are losses or excess they provide to each other –
forming a cartel. Thus there is no competition between each other and they agree on a
price that suits them all. If someone complains too much or look for answers they plain
and simple make you understand that they will not buy milk from you anymore. And what
are you supposed to do with the milk then? We are forced to dance to their tune and
have no bargaining power. AND we are dependent on the income.
If we do make enquiries the answer is that Pick ’n’ Pay and Shoprite
Checkers control the milk prices. They dictate the prices. I tried to contact
Prof. Johan Kirsten again this morning but, as he was not available. I spoke
to Prof. Chris Blighnaut. According to him the buyers are playing along
named groups.
If the levies on milk products can be raised these groups can stop importing the enormous
amount of dairy products. New Zealand subsidises their dairy products with 50%
therefore it is imported by big chain groups at a very cheap price.
The M.P.O. (Milk Producers Organisation?) is supposed to look after the milk farmers’
interests but because they are also not in the position to act against them.
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This is a whole lot of information summarised but we are prepared to submit any further
information at our disposal if you are in the position to help us.
Thank you for listening to our problem and that you are prepared to give attention to it. why
must we as farmers and consumers be abused by the big money powers?
With thanks.
PS: This case is of such importance to us that we are prepared to go tp Pretoria and make
the information at our disposal available.
14] Central to this case then is whether Mrs Malherbe’s letter is a complaint for the
purposes of the Act. This being so, all the parties went to great lengths in their efforts
to define what constitutes a complaint in terms of the Act. The Commission
immediately pointed out that the ‘complaint’ in the Malherbe letter had not, contrary to
the requirements of the Act, been submitted in the prescribed form. In addition the
Commission argued that it had initiated the investigation against other respondents
who, like Clover itself, were not even mentioned in Mrs Malherbe’s letter. This, the
Commission submits, demonstrates that the investigation went beyond the scope of
the Malherbe letter. This, the Commission argued, demonstrated that Mrs Malherbe
was merely submitting information in terms of section 49(B)(2)(a) rather than a
complaint in terms of section 49B(2)(b).
15] Clover and Ladismith sought to answer the first of the Commission’s argument – the
failure to adhere to ‘the prescribed form’ – by citing the decision of the Tribunal in the
case of National Pharmaceutical Wholesalers 5:
5 45/CR/Jul01
12
Significantly, there is no requirement that a complaint specify,
the sections of the Act that have been contravened or to
classify the conduct in any way as a particular prohibited
practice. It is clear that the form of the complaint is intended to
be “user friendly” and to be “factdriven” . A complainant is not
expected to be able to classify the conduct complained of into
a particular prohibited practice in terms of the Act. What it
must do however, is to specify what conduct has been
complained of.” (Our emphasis)
16] This conclusion, the applicants aver, is supported by the Competition Appeal Court in
the Glaxo Wellcome (Pty) Ltd and Others v National Association of Pharmaceutical
Wholesalers and Others ,6 where the court stated that:
“Section 49B provides for the initiating of a complaint. This may be
done in any manner or form or in the prescribed form. The wording of
section 49B is worth noting in that it is not prescriptive as to how a
complaint may be initiated. This theme runs throughout the complaint
procedures, the object being to enable complaints to be lodged
without the need for procedures that are too technical or formalistic.”
In paragraph 15 the court stated that:
“Section 49B focuses on a ‘prohibited practice’ and does not require a complainant to
identify prohibited conduct with reference to various sections of the Act. A complainant is
not required to pigeonhole the conduct complained of with reference to particular sections
of the Act. What is required is a statement or description of prohibited conduct. In this
regard, Form CC1, prescribed in terms of sections 21(4) and 49B of the Act is instructive.
The former requires a complainant to ‘provide a concise statement of the conduct’ that is
6 Case 15/CAC/Feb02 para 14.
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the subject of the complaint. A complainant need only identify the conduct of which it
complained”
17] Based on the above case, Clover and Ladismith submit that Malherbe’s letter
complied with the requirements of section 49(B)(2)(b) as the conduct complained of –
‘kartel vorming’ and the parties are identified. As to the Commission’s contention that
the fact that the ultimate referral went beyond the ambit of Mrs Malherbe’s letter, the
applicants point out that a referral by the Commission that departs even in important
aspects from the complaint submitted is expressly contemplated in Section 50(3)(a).
In addition they argue that certain of the Commission’s language (for example
statements in its founding affidavit in the complaint referral to the effect that the milk
investigation was “prompted” by a letter from “a small milk producer”) and certain of its
actions (for example, the fact that soon after receipt of Malherbe’s letter the
Commission appointed two of its investigators to further examine the broad market) is
indicative of its treatment of the letter as the initiating act in a complaint proceeding.
18] However there are several factors that militate against the interpretation of Malherbe’s
intervention that is urged upon us by Clover and Ladismith. We should clarify at once
that, for the purposes of the Act, a ‘complaint’ is a juristic act necessary to bring
alleged anticompetitive conduct within the ambit of the statute’s formal procedures
with Sections 49 and 50 being the first steps in the process. In this specific context
we are little availed by confining our interpretation of ‘to complain’ or ‘complaint’ to the
ordinary English meaning because the Act gives meaning to the concept of a
‘complaint’ and serious consequences, not least the possibility of prescription, flow
from the precise manner of its initiation, or, expressed otherwise, the precise form in
which it is submitted. 7 Certainly then in the ordinary meaning of the verb ‘to
complain’, Mrs Malherbe ‘complained’ of what she construed as misconduct on the
part of certain of those who were ultimately cited as respondents in the main
complaint referral. However, this does not necessarily support a conclusion that she
had submitted a ‘complaint’ which meets the requirements of Section 49B(2)(b) as
7 A complainant is a person who enjoys certain rights under the Act not granted to the
public generally. For instance the right to bring a an application for interim relief,
( section 49 C), the right to bring proceedings in terms of section 49D(4) after a consent
order has been granted, and the right to locus standi in certain circumstances, ( section
53(1)(a)(ii).
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opposed to the mere submission of ‘information’ as contemplated by Section 49(2)(a).
19] Indeed ‘complaints’, in the colloquial sense, of anticompetitive conduct – whether
wellfounded or not – are the stuff of everyday commerce and thus of everyday life in
South Africa and, certainly, elsewhere. Moreover, these ‘complaints’ are routinely, in
one form or another, brought to the attention of the competition authorities. They are
the subject of regular ‘letters to the editor’ and of newspaper editorials, callers to radio
chat shows frequently wax lyrical regarding the parlous state of competition in South
Africa and just as frequently cite in their complaint their pet alleged perpetrator. An
employee of the competition authorities seldom attends a social gathering, public or
private, at which he/she is not assailed by a citizen who believes that he/she has been
poorly treated by some or other provider of goods or services and who believes
fervently that his complaint merits the attention of the competition authorities. And, as
with Mrs. Malherbe, there are conscientious or particularly aggrieved citizens who
regularly commit their grievances to writing for submission to those deemed able to
assist in their resolution. Indeed, it would not be possible for the Commission or any
competition enforcement agency anywhere, to do its work were it not the direct or
indirect recipient of this market intelligence. And it certainly would not be able to do its
work were it compelled to file a referral to the Tribunal within 12 months of the date on
which a particular issue had been ‘complained’ of. Certainly the Act envisages that all
of this airing of grievances or ‘complaining’ may lead to the Commissioner to utilise his
formal powers under Section 49B(1) to initiate a formal complaint – section 49B is
formal powers under Section 49B(1) to initiate a formal complaint – section 49B is
after all entitled ‘initiating a complaint’ – but this does not eliminate the distinction
which the Act explicitly draws between, on the one hand, the ‘submission of
‘information’, and, on the other, the submission of a ‘complaint’. 8
20] So where then does one draw the line between the submission of ‘information’ and
8 Although counsel for Clover had sought to argue that section 49B(2)(a) operates to
allow persons to give information during the course of investigation and hence should not
be seen in contradistinction to section 49B(2)(b) which provides for the lodging of a
complaint, the context of the provision suggests otherwise. The section is headed
“initiating a complainant” and is located chronologically in Part C, in the portion that
deals with the manner in which a complaint is triggered. It is quite clear contextually that
what the legislature had in mind here was the submission of information prior to the
commencement of an investigation. It is therefore legitimate to interpret the section as
providing two sources of pre-investigation submissions from the public, those that
constitute complaints and those that constitute the mere furnishing of information.
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the submission of a ‘complaint’? As we have just pointed out, the Act certainly
envisages a possible link between the provision of information and the ultimate
referral of a complaint by the Commissioner. However, we cannot ignore the
inescapable fact that the Act explicitly provides that ‘information’ may be submitted in
‘any manner or form’ while a complaint is to be submitted in ‘the prescribed form’. This
does not mean that we fetish the precise form that a complaint should take. Indeed
our flexibility with respect to the way in which a section 49B(2)(b) complaint may be
formulated in our decision in National Pharmaceutical Wholesalers has been cited by
the applicants. That decision makes it perfectly clear that we have adopted this
flexible stance precisely to permit a layperson – as opposed to a competition law
practitioner to submit a complaint, an approach entirely consistent with our statutory
requirement to conduct ourselves in as informal a manner as possible. However, our
tolerance of informality as to the manner in which a particular complaint is articulated
does not extend to interpreting every articulation of a grievance, every submission of
information, as tantamount to the initiation of a complaint as contemplated by Section
49B(2)(b). And there is good reason for this: there can be no tolerance of informality in
the submission of a Section 49B(2)(b) complaint if the form of the submission leaves
the Commission uncertain as to whether a complaint has been submitted or
information has been submitted and this because important consequences – notably
prescription flow from the Commission’s understanding of what precisely has been
submitted, a complaint or mere information.
21] This view is bolstered when one concedes – and this too is common cause and
specifically conceded by the applicants – that the purpose of the prescription provision
imposed on privately initiated complaints is precisely to protect the ‘complainant’ who
may have her rights impaired by a dilatory or otherwise uncooperative Commission
and who then may wish ultimately herself to stand in the place of the Commission and
bring a private prosecution before the Tribunal. To uphold the application would be to
achieve precisely the opposite of what the legislature manifestly intended in those
circumstances when the aggrieved individual clearly has neither the intention nor the
resources to proceed herself – it would deprive the Commission of the ability to
address her grievance without effectively enabling her to seek redress herself. 9
9 We have been urged by Counsel for Clover to eschew a ‘consequentialist’
interpretation of the statute. That is, to ignore the hard fact that by upholding the
application neither Mrs Malherbe’s nor the public’s rights to have an alleged cartel
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22] Our answer then to the question ‘where does one draw the line between the
submission of a ‘complaint’ and the submission ‘of information’’, is that the articulation
of a grievance becomes a ‘complaint’ for the purposes of the Act, when there is some
realistic basis for apprehending that the aggrieved person intends, absent a referral by
the Commission, to assume the role of the complainant herself. It is this intention that
has to be signalled and it is for this reason that the Act distinguished the submission
of information (in any manner or form) from the submission of a complaint (in the
prescribed form). The best evidence of such a signal would of course be the
submission of a completed form CC1. 10 Absent that, such intention can only be
inferred by the content and context of the person’s submission as well as the nature of
the ongoing interaction between that person and the Commission.
23] Mrs Malherbe’s letter is devoid of any form whatsoever much less a prescribed form –
it is addressed to the ‘Chairman of the Competition Board’ and directed at someone
named ‘William’ who has never been identified by either the applicants or the
Commission; it constantly refers to ‘we’ as the aggrieved persons and so it is not clear
whether this ‘complaint’ is submitted in Mrs Malherbe’s personal capacity or on behalf
investigated and possibly prosecuted will be vindicated. However there are strong
grounds for rejecting this argument. A maxim of Roman-Dutch law holds that where
there is doubt as to the meaning of a law it is presumed that the legislature did not
intend an inequitable or unjust or unreasonable result. See Donellas De Jure Civili
1.13.12.The South African Courts have long accepted this presumption and Kellaway,
quoting various cases, argues that “where two meanings may be given to a provision of a
quoting various cases, argues that “where two meanings may be given to a provision of a
statute and one meaning leads to harshness and injustice whilst the other does not, a
court should hold the legislature intended the milder rather than the harsher meaning”.
(See Kellaway Principles of Interpretation of Statutes, Contracts and Wills page 158).Du
Plessis echoes the same sentiments that “where enactments centre around the status
and protection of citizens of a country, the presumption is that such enactments promote
rather frustrate justice”. (See Du Plessis The interpretation of Statutes page 46).
Devenish states that “where more than one interpretation is possible, or where doubt
arises from the consideration of another relevant part of the same statute, then the
courts should give expression to the presumption that the legislature must have
intended a meaning that will avoid harshness and injustice”. (See GE Devenish
Interpretation of Statutes page162). this instance it clear – and is indeed conceded by
the applicants - that a finding that Mrs. Malherbe is a complainant has serious
consequences for the case as a whole as the matter will have prescribed. Thus, no party
can ever bring the case before the Tribunal again, including Mrs Malherbe herself. While
we are aware of this danger, the document that Clover and Ladismith rely on is an
inchoate document that provides a murky picture of the status we should accord to Mrs
Malherbe. On the other hand, there is little or no prejudice that Clover and Ladismith will
suffer as they will have their day in court where they can defend themselves. As a result
it is better to interpret the provisions of section 49(B)(2) for the benefit of the public as a
whole, including Mrs Malherbe
10 The prescribed form.
17
of a collective of farmers; while she avers that the she owns a milk farm ‘outside
Riversdale in the Southern Cape’, no business is named; a physical address is not
even furnished. It is little wonder then that the Commission – when it received a copy
of the correspondence from the Deputy Minister of Agriculture construed this letter
as the submission of information rather than the submission of a complaint from
someone who, upon nonreferral or prescription, would stand in the place of the
Commission.
24] There is much else that suggests that Mrs Malherbe intended her letter to be the
submission of information rather than a complaint in the meaning of the Act and that it
was reasonable for the Commission to interpret it as such.
25] First, we note that Mrs Malherbe wrote and spoke to anyone in a position of some
authority who may have been of some assistance in addressing her grievance. She
spoke and forwarded her letter to the Deputy Minister of Agriculture, she spoke to
Professor Chris Blignaut, she attempted to contact Professor Johan Kirsten who at
that time was conducting research into the high food prices, and she wrote to
“William” at the Commission. These are the actions of someone wishing to publicise
her plight rather than those of a potential litigant in a major law suit.
26] Second, this conclusion is powerfully bolstered by Mrs Malherbe’s express wish to
remain anonymous vis a vis the alleged perpetrators of the conduct that aggrieved
her. In an email dated 4 December 2004, to Mr. Liebenberg, Mrs. Malherbe stated
that she wanted her identity not to be revealed. 11 In that email she stated that:
“Ek en Wilhelm het die saak bespreek en ons voel dat dit beter sal wees as
ons identiteit nie openbaar gemaak sal word nie. Indien ons enigsins kan help
met verdere ondersoek is ons altyd beskikbaar”. 12
Translation:
met verdere ondersoek is ons altyd beskikbaar”. 12
Translation:
“... we feel it would be better if our identity was not made public. However if we can assist in
11 See Annex A3 to Commission’s Heads of Arguments.
12 Ibid para 1
18
the further investigation we will always be available.”
27] This requirement of anonymity is clearly not consistent with someone intent upon
prosecuting a complaint. Indeed the practice of the Commission has been that when
a complainant lodges a complaint with the Commission, then her identity is revealed.
However, when information is supplied in terms of section 49B(2)(a), Commission
Rule 14(1) specifically makes provision for a request for anonymity. Commission Rule
14(1) (b) states that:
“Identity of a complainant, in the following circumstances:
i) A person who provides information in terms of section 49(B)(2)
(a) may request that the Commission treat their identity as
restricted information; but that the person may be a
complainant in the relevant matter only if they subsequently
waive the request in writing.
ii) If a person requests in terms of subparagraph (i) that the
Commission treat their identity as restricted information –
aa) The Commission must accept that request;
bb) That information is restricted unless the person
subsequently waives the request in writing”.
28] Counsel for Clover, citing the reasoning of the Competition Appeal Court in Anglo
South African Capital ,13 correctly cautioned against using rules for interpreting a
statute. However, it is difficult to deny that this provides further content to the
essential difference between an informant and a complainant.
13See Anglo South Africa Capital (Pty) Ltd and Others v Industrial Development
Corporation of South Africa and Another [2003] 1 CPLR 10 (CAC) par 17F where it was
stated that “Rules which have not been drafted by the legislature cannot be treated
together with the Act as a single piece of legislation nor can these regulations be
employed as an aid to the interpretation of the Act”.
19
29] Thirdly, it should be appreciated that we are dealing here with an allegation of cartel
conduct. While it is not uncommon for private parties to prosecute abuse of
dominance allegations which often turn on complex legal and economic argument, it is
exceedingly rare for a private party to prosecute cartel conduct. The reasons are
obvious: the successful prosecution of a cartel turns on an ability to prove clandestine
conduct which requires the utilisation of considerable investigative resources and,
above all, the utilisation of major investigatory powers which even a wellresourced
private litigant does not possess. There can be no serious suggestion that Mrs
Malherbe’s letter to the Commission was intended as a prelude to a possible private
prosecution. It was the provision of information intended for the Commission’s
edification and provided in order to persuade it to investigate further and prosecute if
possible.
30] Fourthly, account must be taken of the broader context within which the Commission
gathered its information. While the Commission’s initiating statement clearly indicates
that Mrs Malherbe’s letter did assist in focusing its enquiries, it also clearly establishes
that the path along which it encountered the alleged milk cartel was illuminated by a
variety of sources, some of which predated the letter from Mrs Malherbe. The
Commission’s initiating statement explains that:
“1. Over the past two months, the Commissioner’s office has been in
contact with various players in the milk producing industry. The
purpose of this contact has been to establish whether there has been
anticompetitive behaviour at any level in the industry. This contact
was prompted by a letter from a “small” milk producer in the Southern
was prompted by a letter from a “small” milk producer in the Southern
Cape complaining about factors in the industry affecting milk
producers. This letter was sent to the Deputy Minister of Agriculture
who then forwarded it to the Commissioner for his attention.
2. On receipt of the letter referred to above, I instructed Mr Johan Liebenberg
and Mr. Jacobus Theron to make contact with the writer of the letter to establish the
factual position in the industry. Further, that they also speak to any other player in
the industry whom the information obtained indicates has knowledge about any
possible or alleged anticompetitive behaviour in the industry.
20
3. Pursuant to this instruction contact has been made with various
industry players and as a result of which, a memorandum has been
prepared detailing the progress made to date. The memorandum also
mentions factual information suggesting the existence of
anticompetitive behaviour in the market for the supply of milk. The
memorandum is attached.
4. As a result of the factual findings recorded in the memorandum, the letter
received from the Deputy Minister of Agriculture and numerous public comments
about the alleged high prices of various food products, including milk, made by the
Minister of Agriculture in 2003, I believe that there exists anticompetitive behaviour in
the milk industry. This anticompetitive behaviour may exist at both the supply and
demand side of the market.
5. In addition, further information has been obtained about the possible collusion
and/or price fixing involving Parmalat (Pty) Limited Ladismith Kaas (Pty) Limited. In
particular, it is alleged that these firms are colluding on prices. This would amount to
price fixing in terms of section 4(1)(b)(i) of the Act. The information also indicates that
Clover engages in abusive behaviour by requiring all farmers that are milk producers
not to sell milk to third parties (inducing a customer to not deal with a competitor).
This conduct would amount to abuse of a dominant position.
6. In light of the above and in terms of section 49B(1) of the Competition
Act, as amended, I initiate a full investigation into the milk industry”.
31] In summary, all of the above suggests that Mrs Malherbe had no intention to be a
complainant in terms of section 49B(2)(b) and we accept the Commission’s contention
that this complaint was initiated by the Commission in terms of Section 49B(1). The
Malherbe letter constituted nothing more than the submission of information.
Accordingly the time frames referred to in section 50(2) do not apply. Clover’s first
Accordingly the time frames referred to in section 50(2) do not apply. Clover’s first
point in limine which is also Ladismith’s point in limine are dismissed.
21
Second and third points in limine
32] The second and third points in limine relate to the conditional leniency granted to
Clover on 20 December 2006. 14 The Commission granted immunity to Clover for its
involvement in the milk balancing scheme, which is the basis of complaint six, and did
not grant it immunity for the surplus removal scheme, which is the basis of complaint
three.
33] In dealing with Clover’s arguments on the second and third points in limine , the
Commission treats them together. In these reasons we will deal with them together,
not because we assume that they are the same, but because Clover’s arguments in
both points in limine boil down to the question of the unfairness or prejudice that
Clover would suffer should the Tribunal hear the case against Clover, together with
complaint three.
34] Counsel for Clover submitted that when the conditional immunity was granted only
two charges had been brought against Clover by the Commission, being complaints
three and six. Since then, the Commission has levelled additional charges against it
as contained in the referral.
35] The essence of Clover’s arguments relate to the surplus milk removal scheme. Clover
submits that the Commission has alleged that both Parmalat and Clover have
committed an abuse of dominance in contravention of section 8 of the Act,
alternatively that they are parties to restrictive vertical practices in contravention of
section 5 of the Act by concluding exclusive supply agreements with producers.
Clover had introduced the Cmilk in 2003, which constituted that portion of the
producer’s production which exceeds its “A” (premium priced) and “B” quota (priced
between premium and the lesser Cquota). In terms of the producer agreements,
producers were obliged to supply all their production, including the Cmilk, to Clover,
notwithstanding the fact that such Cmilk was remunerated at a substantially lower
price level than the “A” and “B” quota.
14 See founding affidavit para 16.1.1
22
36] Clover claims that the Cmilk system is an integral and indivisible part of the surplus
removal scheme. The surplus milk removal scheme, which forms the basis of
complaint three, in turn forms an integral part of the milk balancing scheme, designed
by Clover and other processors to remove surplus milk from the South African market,
and which forms the basis of the sixth complaint. The Commission granted Clover
Conditional Immunity on 20 December 2006 in respect of the milk balancing scheme
but not the surplus removal scheme. 15 Consequently, the formulation of the third
complaint in addition to the sixth complaint constitutes a duplication of the sixth
complaint and is fundamentally unfair to Clover. To support its argument, Clover
states that the basis of the third and sixth complaints is the “Clover presentation
documents” and the continual reference in that presentation and subsequent
presentations that linked the surplus removal scheme to the Cmilk scheme. 16
37] In relation to the third point in limine, Clover contends that complaint six relates to
claims of fixing selling prices and trading conditions of milk and other processed
products, or agreeing on a coordinated control of volumes in the market, in
contravention of section 4(1)(b)(i), alternatively section 4(1)(a) of the Act. A condition
of the Corporate Immunity is that Clover must provide its full and candid cooperation
with the Commission in respect of the prosecution of complaint six against other
relevant Respondents. This entails, inter alia, providing evidence through testimony of
Clover officials. At the same time, however, Clover stands accused by the
Commission of prohibited conduct in terms of complaints one, two, three and five of
Commission of prohibited conduct in terms of complaints one, two, three and five of
the complaint referral. Complaint one and two do not create a “conflict of interests”,
as the facts underlying the complaints and the witnesses relevant thereto are quite
distinct from those relating to complaints three, five, and six. However, there is a
distinct overlap between complaints three and five on the one hand, and complaint six
on the other hand, with regard to the underlying facts and the witnesses relevant to
each and that this might lead to a situation in which Clover and its main witnesses will
simultaneously be required to defend themselves against complaint three and five,
and to support the Commission’s allegations and submissions in respect of complaint
six. This situation will cause prejudice to Clover.
15 Clover’s Heads of Argument page 11.
16 See Founding Affidavit, annexure “HBS86”, presentation document dated 14
November 2005, para 14.3.
23
38] The Commission has denied that the Cmilk system forms an integral and indivisible
part of the milk balancing scheme and has submitted that these two are distinct and
differentiated on the level of activity, the parties involved and the local/regional
operation. The Commission contends that Clover devised the Cmilk category with the
purpose of preventing surplus milk from falling into the hands of a competitor. Thus
the Cmilk system was vertical as between producers and processors whereas
balancing took place on a horizontal level as between competitors. In addition, the C
milk scheme was operational at a local level, whereas balancing took place on a
national level. Moreover, different parties were involved in the two forms of conduct.
39] In addition to the above, the Commission argues that Clover quoted selective parts of
the Conditional Immunity and omitted the very heart of the document. Clover entered
into the negotiations and subsequently concluded that corporate leniency agreement,
while being advised by its current attorneys of record and had “full knowledge of these
facts and negotiations”. 17 One of those conditions stated that:
1. It is acceptable that upon formal acceptance of the terms and
conditions set out in this document, Clover will be granted
conditional immunity from prosecution before the Competition
Tribunal for its involvement in cartel activities concerning collusion
with other role players in the milk industry regarding “surplus
removal” of milk, that resulted in price fixing in contravention of
section 4(1)(b) of the Competition Act (Act 89 of 1998, as
amended
2. It is further recorded that the application by Clover for
immunity regarding its internal prohibition on producers not
to sell off “Cquota” milk was unsuccessful and will still form
to sell off “Cquota” milk was unsuccessful and will still form
part of the original investigation as a possible abuse of
dominance by Clover” (Our emphasis)
17 Commission’s Heads of Arguments page 27.
24
40] On the basis of the above, the Commission argues that Clover accepted the
conditional immunity on these terms and that it should not be allowed to “wriggle out”
of the hearing concerning its Cmilk scheme. Clover has submitted that it is not that it
was unaware of the Commission granting partial leniency on complaint six, with the
express condition that complaint three would still be investigated and possibly be
prosecuted, but it is challenging the correctness thereof. 18 Clover argues that it would
be improper and inherently unfair for the Tribunal to hear complaint three when Clover
was granted immunity on complaint six, which has substantially the same evidence
and witnesses. Clover argues that the tenets of justice and fairness apply to all
agreements that the Commission concludes as a public body and those demands are
what Clover is claiming. Moreover, the proceedings before the Tribunal must be
conducted in a manner that is both procedurally and substantively fair and that if the
Tribunal hears the case against Clover as it currently stands (with the third complaint),
that would infringe on Clover’s right to just administrative action as envisaged in
sections 33(1) and 34 of the Constitution, the provisions of PAJA and also section
52(2)(a) of the Act. The Tribunal must therefore dismiss the third and/or fifth complaint
as against Clover, or alternatively, the sixth complaint should be separated out for
determination prior to the determination of the third and fifth complaints. 19
41] It is not clear to us in which way Clover’s right to fair administrative action and its
rights under PAJA were or would be infringed by the Commission’s refusal to grant it
immunity in relation to the Cmilk scheme. However, it is clear to us that at the time of
entering into the corporate leniency agreement Clover fully appreciated that it would
entering into the corporate leniency agreement Clover fully appreciated that it would
still face prosecution on complaint three and that its earlier request for immunity in
relation thereto had been turned down by the Commission and the terms of the
agreement at the time without challenging the correctness or fairness of the
Commission’s determination. Thus, Clover was fully aware of all the conditions to the
corporate leniency agreement.
42] It is important to bear in mind that this immunity is nothing but an agreement between
18 Clover’s Heads of Arguments pages 52-53.
19 See Clover’s Heads of Arguments page 83.
25
Clover and the Commission that the Commission would not prosecute it on certain
counts. Moreover it is conditional upon whether or not Clover lends its full co
operation to the Commission in the prosecution of the other respondents, something
that can only be determined by Clover’s conduct at trial. In any event, the issue that
Clover relies upon for this application, namely, that the milk balancing scheme
(complaint six) and the Cmilk scheme are an integral part of the same conduct is
something that can only be decided upon after evidence has been led on the two
schemes and is more appropriately decided at trial. Questions of unfairness arising
from this, if any, to Clover would also be better decided at trial.
43] As far as unfairness to Clover, as argued in the third point in limine , is concerned, this
can only be determined once preparations for trial are advanced to the stage where it
is possible to assess this and to assess whether or not a separation of the
proceedings, as suggested by the Commission, would be necessary. At this point in
time preparations are still at an early stage with witness statements yet to be filed. In
our view it would be premature for us to determine questions of fairness at this stage
of the proceedings. It is only at a later stage that the prejudice that Clover would suffer
can be fully ascertained and be effectively dealt with.
Order
1. Clover’s first, second and third points in limine are dismissed.
2. Ladismith’s point in limine is dismissed.
3. No order is made as to costs.
________________ 23 June 2008
D Lewis DATE
Tribunal Member
26
N Manoim and Y Carrim concur in the judgment of D Lewis
Tribunal Researcher : R Kariga
For the first and second applicants : D Unterhalter (SC) assisted by W Pretorius and
J Wilson, instructed by Roestoff Venter and
Kruse Attorneys
For the third applicant : G Engelbrecht, instructed by Jan S Devilliers
Attorneys
For the Commission : R Bhana (SC) assisted by A Coetzee and V
Ngalwana, instructed by Knowles Hussein and
Lindsay Inc.
For the third respondent in the
complaint referral : A Cockrell, instructed by Cliffe Dekker Attorneys
27