COMPETITION TRIBUNAL OF SOUTH AFRICA
Case no. 09/CR/Jan07
In the matter between
THE COMPETITION COMMISSION Applicant
and
ALLEN MESHCO (PROPRIETARY)
LIMITED First Respondent
WIREFORCE STEELBAR (PROPRIETARY)
LIMITED Second Respondent
HENDOK (PROPRIETARY) LIMITED Third Respondent
INDEPENDENT GALVANISING (PROPRIETARY)
LIMITED Fourth Respondent
ASSOCIATED WIRE INDUSTRIES (PROPRIETARY)
LIMITED Fifth Respondent
Panel : N Manoim (Presiding Member), Y Carrim (Tribunal Member),
and L Reyburn (Tribunal Member)
Heard on : 13 February 2008 and 17 July 2008
Order Issued : 23 July 2008
Reasons Issued: 23 July 2008
___________________________________________________________________
DECISION AND ORDER REGARDING RESPONDENTS’ POINTS IN LIMINE
___________________________________________________________________
1] This matter arises from a complaint lodged on 19 December 2003 with the
Competition Commission (‘the Commission’) by Barnes Fencing Industries
(Proprietary) Limited, F&G Quality Tubes (Proprietary) Limited, and Dunrose
(Proprietary) Limited (collectively, ‘the Complainants’), alleging that Allen
Meshco (Proprietary) Limited, Wireforce Steelbar (Proprietary) Limited,
Hendok (Proprietary) Limited, Independent Galvanising (Proprietary) Limited,
and Associated Wire Industries (Proprietary) Limited (collectively, ‘the
Respondents’) had engaged in collusive horizontal practices amounting to
illegal pricefixing in terms of section 4(1)(b)(i) of the Competition Act, 1998 (as
amended) (‘the Act’).
2] On 15 January 2007, more than three years after the lodging of the complaint,
the Commission referred the complaint to the Tribunal in terms of Section 50 of
the Act.
3] In the Commission’s founding affidavit in support of the referral, Mr Madiba,
the Commission’s representative, stated that the Complainants and the
Commission had agreed in terms of Section 50(4) of the Act to extend the
period of one year which is contemplated in Section 50(2) for the referral of a
complaint to the Tribunal after lodging of the complaint with the Commission. 1
4] In the Respondents’ answering affidavit, Mr Allen, the Respondents’
representative, raised a number of points in limine which in his submission
justified the dismissal of the complaint. 2
5] A hearing of the Tribunal on the points in limine began on 13 February 2008. At
that hearing the Respondents’ counsel, Mr Pretorius, stated that the
Respondents were persisting with only one of these points, namely an
assertion that the alleged extension of the oneyear period referred to above
had been irregular and that in fact no proper extension had taken place. 3 In
these circumstances, he asserted, the complaint had lapsed irretrievably.
6] The Tribunal considered that insufficient factual evidence was before it to rule
on this assertion, and ordered the Commission to furnish evidence in affidavit
form regarding the extensions in question. 4
1 See record 4.
2 Ibid pages 1417.
form regarding the extensions in question. 4
1 See record 4.
2 Ibid pages 1417.
3 See pages 12 of transcript dated 13 February 2008.
4 Ibid pages 3439.
7] In response to that order the Commission filed an affidavit on 28 February
2008 in which its representative, Mr Mateane, set out an account of events
which, in his submission, demonstrated that there had been an unbroken chain
of 15 extensions agreed to by the Complainants and the Commission over the
relevant period. He attached to this affidavit 15 documents which, he said,
constituted this series of consents to extensions. A supporting affidavit by Mr
Doron Barnes on behalf of the Complainants confirmed these assertions.
8] An affidavit was then filed on behalf of the Respondents in which their
representative, Mr Allen, harshly criticised the Commission’s conduct and its
evidence regarding the 15 extensions, and asserted that vital factual material
had not been revealed by the Commission. Accordingly, the Respondents
filed notices under High Court Rules 35(11), (12), and (14) requiring the
production of documents from the Commission’s files which led up to the
signing of the 15 extension documents referred to above.
9] An affidavit by Mr Ralekwa, of the State Attorney’s office, representing the
Commission, was filed in response, alleging that the discovery notices under
Rule 35 had been irregularly called for.
10] The Respondents’ attorney, Ms Kraamwinkel, then filed an affidavit denying
the irregularity alleged by the Commission, but containing an alternative
application for discovery to be ordered on the basis of the abovementioned
notices under Rule 35; in other words, a request that those notices be
regularised.
11] This was in brief the state of affairs when the Tribunal was to have resumed
the hearing on 24 June 2008. On that date, however, the parties’
representatives informed the Tribunal in chambers that they had reached
representatives informed the Tribunal in chambers that they had reached
agreement that the Commission would produce documents from its files for the
Respondents’ scrutiny to enable the Respondents to ascertain whether or not
the 15 extensions had been properly made to constitute the unbroken chain for
which the Commission contended.
12] A hearing to finalise the point in limine was arranged for 17 July 2008 following
the production of the documents in question.
13] On 15 July 2008, thus two days before this scheduled hearing, the
Commission served an affidavit on the Tribunal and on the Respondents in
which Mr Mateane stated that it had recently been drawn to his attention by the
Commission’s counsel that an essential document constituting one of the links
in the abovementioned chain and covering a period of some 13 days in
December 2006 was missing. As this document could not be found in the
Commission’s files, Mr Mateane contacted Mr Barnes and requested his
assistance in tracing the missing document. Mr Barnes had been able to
provide this document, and it was attached as an annexure to Mr Mateane’s
affidavit. A supporting affidavit by Mr Barnes was supplied, confirming Mr
Mateane’s assertions in this regard.
14] These affidavits led the Respondents to address a letter through their
attorneys to the Commission and to the Tribunal, dated 17 July 2008, calling
for Mr Barnes to be in attendance at the hearing on that day and to bring with
him all documents in his possession relating to the extensions.
15] At the hearing on 17 July 2008, Mr Pretorius protested that the affidavit of 15
July 2008 of Mr Mateane and its annexures had placed the Respondents in an
untenable position since the Respondents had been unable to react to this
new evidence by making necessary investigations and in particular requiring
discovery of further documents they might have concluded were relevant.
Focusing on two of the extension documents which he considered to be
suspicious, namely one purportedly signed by Mr Barnes on 30 October 2006
(Exhibit B in the proceedings) and another dated 30 November 2006, also
purportedly signed by Mr Barnes (Exhibit A), Mr Pretorius contended that the
purportedly signed by Mr Barnes (Exhibit A), Mr Pretorius contended that the
exfaciecondition of these documents and differences which he claimed
existed between them and other of the extension documents in the evidence
justified a further postponement of the proceedings and the undertaking of far
reaching further discovery.
16] Mr Maenetje, representing the Commission at this hearing, pointed out that Mr
Barnes was present with his file of relevant documents and had indicated that
he was willing to give oral evidence in an attempt to dispel all misgivings and
misunderstandings. On this basis the Tribunal ruled that Mr Barnes should
take the stand and give evidence, but an opportunity of a halfhour
adjournment was given to the Respondents’ representatives to examine Mr
Barnes’ file of documents before he testified.
17] Following the adjournment, Mr Barnes testified 5 that he had been mandated at
all times to represent all of the Complainants in their dealings with the
Commission, and that he had been fully aware of the need under Section 50 of
the Act for the Complainants to reach agreement with the Commission
regarding extensions of the oneyear initial period contemplated in the Act for
the Commission to make its investigations and submit a referral of the
complaint to the Tribunal. He had personally negotiated all of the extensions,
firstly in telephone discussions in which he had made it plain that he was only
willing to consent to short periods of extension, and he had personally signed
all but one or two of the extension documents. On his understanding, his oral
arrangements with the Commission in these telephone conversations had
constituted consent to an extension for each relevant period, and an extension
document had been prepared and signed on each occasion after oral
consensus had been achieved. The signed documents were in his view
therefore simply a confirmation of the existence of the extension.
18] Mr Barnes stated that he had on some occasions been sent an extension
document by the Commission by fax or email for signature and dating, but on
other occasions he had prepared the document by adapting or editing a
previous version on his computer system, the process involving the
previous version on his computer system, the process involving the
substitution on the document of the dates mentioned in it by fresh dates. The
form itself bore the name and logo of the Commission. The form as completed
by his signature and the insertion by hand of the date of signature was then
faxed by his secretary to the Commission.
19] Mr Barnes emphasised that the complaint was of great importance to the
Complainants’ businesses and that they had been aware of the importance of
obtaining valid extensions on each occasion to enable a legitimate referral to
5 See pages 1533 of the transcript dated 17 July 2008 for Mr Doron Barnes’ oral testimony.
be made by the Commission on completion of its investigations.
20] Mr Barnes could not remember who had been the responsible official
representing the Commission on some of the occasions when extensions had
been negotiated and agreed upon, and pointed out that there had been
considerable turnover during the relevant period in the personnel of the
Commission dealing with the complaint. It was also uncertain where he had
been on some occasions when telephonic contact had been made between
him and the responsible official of the Commission as he travelled frequently in
the course of visiting the Complainants’ offices in various parts of the country.
He could also not be sure that complete records existed in his office of all
faxes and covering sheets for completed extension documents transmitted to
the Commission as the Complainants’ fax system was a rudimentary one and
the process of filing documents in his office had not been wholly systematic.
To the extent that these documents were in his possession, they were in the
file which had by now been inspected by the Respondents’ representatives.
21] Under crossexamination by Mr Pretorius, Mr Barnes rejected the allegation
that he had been forging a Commission document when altering the extension
form in the manner he had described, pointing out that the Commission had
been content to receive the documents he had adapted and signed, and that
no third party had been involved in the exchange of the documents between
himself and the Commission. The document was in any case simply a form
and in his view it was irrelevant who adapted it on each occasion. As to the
existence of fax and telephone records which might verify his statements
concerning his communications with the Commission, he emphasised that
such records might not be in existence or might be widely scattered in view of
such records might not be in existence or might be widely scattered in view of
his business travels and his basic fax system.
22] Mr Pretorius made it plain that he was left unsatisfied by Mr Barnes’ evidence,
but the Tribunal has no hesitation in accepting it in all respects. It was
convincingly delivered and is entirely consistent with the economic interests of
the Complainants and with the documents placed in evidence by the
Commission.
23] Mr Pretorius’ calls in closing argument for further time and for further rights to
require discovery regarding records referring to the extensions would, if
granted, extend beyond all reasonable bounds the already strained limits of
the investigation demanded and received by the Respondents, and would
amount to nothing more than a wild goose chase.
24] It must be remembered that the Respondents have a steep hill to climb in
attacking the convergent evidence of the Commission and the Complainants
that they had reached consensus on all the relevant extensions. The
Commission and the Complainants alone were the parties to the extensions,
they confirm that all the extension consents were mutually given, and Mr
Barnes has cogently confirmed the negotiation and conclusion of all of the
extensions. Despite some lapses or gaps in the Commission’s documentary
records as revealed in the evidence before the Tribunal, Mr Barnes’ evidence
has clinched the matter and it is clear that there was no break in the chain of
extensions throughout the relevant period. Mr Pretorius’ fulminations to the
contrary are unavailing.
25] However, the case has not revealed the procedures and recordkeeping of the
Commission in a reassuring light. Section 50 of the Act has an important role
in the scheme of the Act regarding the lodging and prosecution of complaints
of contraventions of its provisions.
26] The relevant parts of Sections 50 and 51 of the Act read as follows:
50 (1) ………………………………………………..
2) Within one year after a complaint was submitted to it, the
Commissioner must –
(a) subject to subsection (3), refer the complaint to the Competition Tribunal, if it
determines that a prohibited practice has been established……….
(3) ……………………………………………………………
(4) In a particular case –
(a) the Competition Commission and the complainant may
(4) In a particular case –
(a) the Competition Commission and the complainant may
agree to extend the period allowed in subsection 2……..
(b) ……………………………………………………
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.
51. (1) If the Competition Commission issues a notice of nonreferral in
response to a complaint, the complainant may refer the complaint
directly to the Competition Tribunal, subject to its rules of procedure.
27] If a complaint is lodged and after due investigation the Commission proceeds
with a referral and vigorously wields the cudgels in the ensuing case before the
Tribunal, the complainant should have the benefit of knowing that the case is
being taken seriously and that the skills and resources of the Commission,
which are ultimately public resources, are being used to act against the alleged
wrongdoers. The complainant is thus spared the cost and inconvenience of
conducting its own prosecution. If the Commission by neglect were to fail to
secure just one necessary extension, for example if a complainant were not to
have as diligent a representative as Mr Barnes, who clearly took the initiative
in securing at least some of the extensions affecting the Complainants in this
case, the Commission’s rights to proceed with the complaint will lapse. The
complainant will then be faced with the dilemma of having to proceed with a
prosecution using its own resources, or seeing the complaint lapse and pass
into oblivion. (As another alternative the complainant might lodge a fresh
complaint, but this would be at the cost of some time lost under the doctrine of
prescription, and evidence of continuation of the restrictive practice would be
required.)
28] If a firm accused of a restrictive practice is able to show that a necessary
extension was not obtained or was improperly obtained, it accordingly gains
the obvious advantage flowing from the lapsing of the complaint in the hands
of the Commission.
29] The oneyear limitation in Section 50(2) is there for the benefit of the
complainant: it helps to ensure that a complaint is speedily attended to by the
Commission and not unduly dragged out. An astute complainant will only
consent to an extension on being satisfied by the Commission that there is
good reason for it, and has the power to bargain with the Commission over the
extra time needed by way of extension. In the application of Section 50(2) it is
accordingly necessary to look to the interests of the complainant in the first
place in ensuring that the section has been correctly and fairly implemented. In
these circumstances it is clear that the Commission’s duty to attend to the task
of negotiating and obtaining necessary consents to extensions is a serious
one, and that there is moreover a corollary administrative duty of maintaining
complete, accurate, and accessible records of all extensions concluded.
30] The Act does not specify the manner in which consent to an extension under
Section 50 should be negotiated, concluded, or recorded. It is open to the
Commission to use either oral or written communications to obtain the
consent, although clearly a written record is desirable for the sake of avoiding
disputes and contretempsof the type which have beset this case.
31] Mr Pretorius at one point suggested that the evidence showed that the
Commission had elected to use written communications to obtain the
necessary consents to extensions. This submission was not supported by the
evidence, and Mr Barnes’ evidence directly contradicts it. It is clear that the
Commission’s normal practice was to seek oral consent to an extension and
then, by way of confirmation, get a signed consent document from the
complainant. There is, however, a measure of ambiguity in the wording of the
complainant. There is, however, a measure of ambiguity in the wording of the
form used by the Commission for its extensions, since if it is merely
confirmatory of an oral consent to the extension its significance is not
immediately apparent.
32] The absence of accessible records in the Commission’s files of all the
extensions granted in this matter, and the difficulties faced by Mr Mateane in
attempting to reconstruct the chain of evidence, also suggest that a thorough
review by the Commission of its practices in regard to extensions under
Section 50 is required. It is accordingly urged on the Commission that it takes
this matter in hand.
Tribunal’s order
In the circumstances, the Tribunal makes the following order:
1) The Respondents’ points in limine are dismissed.
2) The parties are required to bear their own costs regarding the points in
limine.
3) The parties are required to consult with one another and with the Registrar of
the Tribunal regarding a date for the hearing of the complaint.
________________ 23 July 2008
L Reyburn DATE
Tribunal Member
N Manoim and Y Carrim concur in the judgment of L Reyburn
Tribunal Researcher : R Kariga
For the Commission : NH Maenetje, instructed by the State Attorney
For the respondents : W Pretorius, instructed by Roestoff Venter and Kruse
Attorneys.