IN THE COMPETITION TRIBUNAL OF SOUTH AFRICA
(HELD AT PRETORIA)
In re point in limine: Case No: 09/IR/Mar10
Gogga Tracking Solutions (Pty) Ltd Applicant
and
Vodacom Service Provider (Pty) Ltd Respondent
Panel : Takalani Madima (Presiding Member),
Lawrence Reyburn (Tribunal Member), and
Andreas Wessels (Tribunal Member)
Heard on : 26 April 2010
Order and reasons issued on : 07 June 2010
Order and reasons for decision
Background
[1] The applicant is, at least ostensibly, Gogga Tracking Solutions (Pty) Ltd,
which for the sake of brevity will be referred to below as ‘GTS’. The respondent is
Vodacom Service Provider (Pty) Ltd (‘VSP’ below).
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[2] On 12 March 2010 GTS brought an application before the Tribunal on an
urgent basis for interim relief in terms of section 49C of the Competition Act, 1998, as
amended (‘the Act’ below).
[3] The underlying complaint of GTS is an allegation of an abuse of dominance
by VSP. In essence it amounts to an allegation that VSP, which supplies wireless
telecommunications data or ‘bundles’ on a bulk or wholesale basis, raised its price to
GTS for a megabyte of data in July 2007 from 19c to R1.36. After GTS had protested
and held negotiations with VPS, VSP dropped its price to GTS to 86c, and later to
60c per megabyte of data. GTS, which has been a data retailer targeting the market
for data packages smaller than 500 megabytes and a customer of VSP since GTS
was founded in May 2005, was thereafter unable to make a profit from its operations.
[4] VSP is not only a wholesaler but also a participant in the retail market for data
bundles, being vertically integrated at least to this extent, and thus is a competitor of
GTS in the retailing of data bundles. GTS complains that it was the victim of a margin
squeeze by VSP which extinguished its commercial viability. GTS is continuing to
trade, but is financially in a parlous state. It attributes its financial woes to the
allegedly abusive conduct of VSP.
[5] To add to the tensions now existing between GTS and VSP, Vodacom
Ventures (Pty) Ltd) (‘VV’ below), which is a subsidiary of VSP, is a shareholder in
GTS and has been such a shareholder since June or July 2006. Currently it holds
49% of the shares in GTS and has done so since April 2009. It appears that VV took
up its shareholding in stages, on occasions when GTS was short of cash and its
shareholders were prepared to part with some of the equity in order to raise funds
which were in some manner routed to GTS in order to enable it to pay some of its
debts.
[6] The remaining shareholding of 51% in GTS is owned by a trust named the
debts.
[6] The remaining shareholding of 51% in GTS is owned by a trust named the
Somnium Family Trust (‘Somnium’ below), which is represented by Mr Eugene
Beetge (‘Beetge’). He is the sole director of GTS and appears to be the person who
manages its affairs with a high degree of autonomy. We do not have details in the
application papers of the beneficiaries and trustees of Somnium.
[7] It seems that the relationship between GTS and VV is currently distinctly sour.
VV, claims GTS, dances slavishly to the tune of VSP.
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[8] The summary given above of the complaint is brief and does no justice to the
nuances of a complex history and set of facts and relationships. However, it will
serve for the present limited purpose.
[9] VSP denies that there has been an abuse of dominance.
[10] GTS lodged a complaint of an abuse of dominance by VSP with the
Competition Commission (‘Commission’) on 01 February 2010 setting out details of
the history of the matter and of the pricing issues which are at the heart of the
complaint.
[11] The interim relief application now before the Tribunal seems to have been
brought because GTS has accumulated considerable debt to VSP and is running out
of funds. In the notice of motion filed on behalf of GTS the relief sought includes
interdicts which would prohibit VSP from inter alia cutting off the supply of data to
any of GTS’ customers, interfering with the telecommunications facilities provided by
GTS to its customers, and demanding payment from GTS of disputed amounts in
GTS’s account with VSP.
[12] The notice of motion and founding affidavit, which was attested to by Beetge
and was the sole affidavit provided at that stage by GTS, were filed on 12 March
2010. The affidavit comprises18 pages and was accompanied by 29 pages of
annexures.
[13] An answering affidavit on behalf of VSP was filed on 26 March 2010, after an
earlier date provided for in the notice of motion had been extended by agreement
between the parties. The deponent to the answering affidavit is Mr Michael
Allschwang (‘Allschwang’), whose position is that of managing executive of Vodacom
Business, a business unit of VSP. It extends to 78 pages, with 252 pages of
annexures. There are also three confirmatory affidavits, one being by Mr Livio
Corsaro (‘Corsaro’), the executive head of VV. One of the assertions of Allschwang
that is confirmed by Corsaro is that Allschwang is authorised to make the affidavit on
that is confirmed by Corsaro is that Allschwang is authorised to make the affidavit on
behalf of VSP (see paragraph 1 of Allschwang’s affidavit).
[14] Allschwang states that he relies in his affidavit on information provided to him
by Corsaro in regard to aspects of GTS’s business of which he does not have
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personal knowledge (see paragraph 3 of the same affidavit.) Corsaro does not give
substantive evidence in his own affidavit about the issues in dispute in the
application.
[15] A replying affidavit by Beetge was filed on 20 April 2010. It comprises 59
pages, with 98 pages of annexures.
[16] By the time the hearing took place on 26 April 2010 the record of the case
extended to 551 pages.
Proceedings at the hearing
Application for postponement
[17] At the hearing GTS was represented by Advocates Jansen (‘Jansen’) and
Uys. Jansen stated that although another advocate had previously represented
GTS, she had received the papers in the case only on 22 April 2010 and had been
obliged since then to attempt to master the papers and prepare written heads of
argument in advance of the hearing. Regrettably the length and complexity of the
papers had made this impossible, and she requested a postponement till 29 April
2010 to enable her to steep herself in the matter and then ensure that written heads
of argument were duly produced.
[18] The application for a postponement was opposed by VSP’s senior counsel,
Mr Van der Linde (‘Van der Linde’). He pointed out that the date for the hearing had
been known to GTS’s attorneys by at least 12 April 2010 and he asserted that there
was no justification for a postponement.
[19] Given our decision to strike the instant matter from the Tribunal’s roll (see
paragraph below), we shall not elaborate any further in these reasons on the
application for postponement.
‘Short point’
[20] Van der Linde requested the Tribunal to proceed to hear a preliminary ‘short point’
which in effect was a point in limine, and the Tribunal consented to do so after
establishing that Jansen was familiar with the issues underlying the point and was
prepared to deal with it without further ado.
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[21] Since this is an issue with potentially wider ramifications than the case before it, the
Tribunal ruled that the parties should submit written argument on the point in limine, and
deferred to a later date its decision on Jansen’s application for a postponement.
[22] Written simultaneous heads have been duly filed, as required by the Tribunal, and have
been considered by the Tribunal.
Point in limine
[23] The ‘short point’ was argued orally at the hearing on 26 April 2010. This point entails the
following:
[24] VSP contends that Beetge was not authorised to bring the application on behalf of GTS
and that it is accordingly an irregular application which should be struck from the roll.
The reason for this contention is rooted in a shareholders’ agreement that is in force
between VV and Somnium and was concluded in November 2006. Beetge is also a
party to this agreement. (It will be recalled that Somnium and VV are the only
shareholders in GTS.)
[25] The agreement contains a clause which at face value has the effect that GTS may not
engage in litigation without the consent of both the current shareholders. (A more
comprehensive description of the relevant provisions of the shareholders’ agreement is
given below.) Accordingly, Van der Linde contended, in view of VV’s position as a
shareholder in GTS, the consent of VV was essential if Beetge was to obtain
authorisation to bring the application. VV had in fact withheld its consent, and was
opposed to the bringing of the application. Hence Beetge’s action in purporting to file
and pursue the application as a representative of GTS and on its behalf had been
unauthorised. A document attached to the founding affidavit and purporting to set out
authorisation by GTS for the application to be brought by Beetge was accordingly a
nullity. The document in question, forming Annexure EB1 to Beetge’s founding
affidavit, reads as follows:
affidavit, reads as follows:
Resolution of the Directors of Gogga Tracking Solutions (Pty) Ltd taken on
Thursday 11 March 2010 at Pretoria
Decided that:
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Eugene Beetge (ID ...), in his capacity as Director be and hereby is authorised to
sign all necessary documents on behalf of the Company in order to institute any
legal action and or application on behalf of the Company and/or to oppose and
defend any application or action on behalf of the Company.
Signed at Pretoria on this 11th day of MARCH 2010.
...................................................
EUGENE BEETGE
[26] Beetge’s signature is present on this document.
[27] The ‘resolution’ does not specifically identify any item of litigation which
Beetge is purportedly authorised to institute or defend and may accordingly be
criticised as being excessively wide and vague. It does not state that authority for the
passing of the resolution has been obtained in terms of the relevant clause of the
shareholders’ agreement (which is discussed below). It is the only document on
which Beetge relies in his founding affidavit (at paragraph 1.2) for his authority to
bring the interim relief application. His founding affidavit does not refer at all to the
provision in the shareholders’ agreement which requires the consent of all
shareholders of GTS to the bringing of litigation.
The shareholders’ agreement
[28] The shareholders’ agreement is found in the papers as Annexure AA.11 to
Allschwang’s affidavit. It is an agreement between three parties: VV, the Somnium
Family Trust, and Beetge. VSP is not a party to it.
[29] At the hearing a suggestion was made by Jansen that the shareholders’
agreement was a confidential document and that it had been improper of VSP to
attach it to Allschwang’s affidavit without any indication of its confidential status and
without the consent of the other parties to it. We make no comment on provisions of
that agreement not quoted in this decision, but to the extent that they are so quoted
we find nothing in them that warrants protection under the Act as confidential
information, and we rule accordingly.
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[30] Clause 13.1 of the shareholders’ agreement provides that for as long as any
shareholder owns at least 25% of the issued shares in GTS it will be a ‘significant
shareholder’, and ‘material matters’ requiring a resolution of shareholders will require
the approval of the significant shareholders. It is not disputed that VV is such a
significant shareholder.
[31] ‘Material matters’ are listed in clause 13.3 of the shareholders’ agreement,
and one of them, set out in clause 13.3.17, is ‘ the institution of any legal
proceedings.’ The term ‘legal proceedings’ is not defined in the agreement but we
consider that it can be taken to include this interim relief application.
[32] In passing it is worth noting that the laying by GTS of a complaint with the
Commission (see paragraph above) concerning an alleged abuse of dominance by
VSP is not, in our view, the institution of ‘legal proceedings’ by GTS or at least not
the institution of ‘legal proceedings’ as contemplated in the shareholders’ agreement.
It is more strictly an administrative action. One of the important factors characterising
legal proceedings undertaken by a company is that they often have a costs
implication if the court or other body before which they are conducted finds adversely
to the company. There is no adverse cost implication in the mere laying of a
complaint with the Commission as investigative body.
[33] If the complaint laid by GTS with the Commission is ultimately referred to the
Tribunal by the Commission in terms of Section 50(1) of the Act, the Commission will
be a litigating party in the proceedings before the Tribunal, but that does not make
GTS the party who instituted those legal proceedings. If the complaint of a
complainant in the position of GTS is referred to the Tribunal by the Commission, the
complainant then may participate in the hearing of the complaint in terms of Section
complainant then may participate in the hearing of the complaint in terms of Section
53(1)(a)(ii)(bb) of the Act if “ in the opinion of the presiding member of the
Competition Tribunal, the complainant’s interest is not adequately represented by
another participant, and then only to the extent required for the complainant’s
interest to be adequately represented”.
[34] It can safely be assumed that one of the purposes in including litigation (‘legal
proceedings’) in clause 13.3.17 of the shareholders’ agreement as a matter requiring
the consent of significant shareholders was to ensure that while VSP remained such
a significant shareholder, litigation was not to be undertaken by GTS which VV
considered to be unwarranted either because of its merits or because of its costs.
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(The position where VV finds itself in a conflict of interest is dealt with later in this
decision.)
[35] In paragraph 87(4) of his affidavit Allschwang denies that the bringing of the
interim relief application was authorised by GTS, stating that there would have to
have been a unanimous resolution of the shareholders of GTS to authorise the
institution of the application. Further, he states that Corsaro has confirmed that there
has been no such resolution and moreover that VV is opposed to the bringing of the
application.
[36] Beetge’s response in his replying affidavit to Allschwang’s contentions
regarding the lack of authorisation is contained in paragraph 55 of the replying
affidavit. It reads as follows:
“55.1 The deponent, Beetge, on behalf of the Applicant is the only director of
the company.
55.2 The Applicant identified a major conflict of interest in the following
areas:
55.2.1 The Respondent never opted to appoint a director with the
Applicant; and
55.2.2 The Shareholder, Vodacom Ventures, is a sister company of
the Respondent; and
55.2.3 The directors of Vodacom Ventures serves on the board of
directors of the Respondent; and
55.2.4 Confidential information are passed on to the Respondent by
Ventures, as admitted in the affidavit; and
55.2.5 The shareholders did not agree with the Applicants director
that legal actions would be necessary as last option; and
55.2.6 Vodacom Ventures acted on behalf of the Respondent as
Service Provider, and not in the interest in which they own
shareholding
55.2.7 The Director of the Applicants’ responsibility is to protect the
interest of the shareholder, in this case, the Respondent and
one of the shareholders are the same party
55.2.8 The Applicant indicated clearly to all shareholders, with notice
its intentions to seek legal advice and its intention to exclude
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the Ventures shareholder from the legal proceedings due to
conflict of interest
55.3 I humbly refer the Honourable Tribunal to Annexure R31 hereto.”
[37] Annexure R31 is an e-mail dated 17 September 2009 from Beetge to one
Tlhabeli Ralebitso at the e-mail address Vodacom.co.za, copied to Corsaro at the
same e-mail address. Its first two paragraphs read as follows:
“I thought it prudent to mail you after our meeting the other day and as expected
the fact that you are/were clearly not very happy about the possible action we
might have to take with the Competition Commission.
Please don’t misunderstand my intentions with that strategy, I do not want to fight
with VSP, or go the legal way, or actually bite the hand feeds us. And I fully realize
the fact that we seemingly stand ‘bakhand’ every 6 months with cashflow. That is
100% correct that we do, but why. The model change of 2 years ago has
substantially changed our model and kept us cash negative. We have also never
got the agreed time to increase the customer base to survive on a lower margin.
And VSP must realize that and take responsibility ... The one party did not
perform, and that party was not Gogga.”
[38] While this is not a lucid response to Allschwang’s contention that the
application was brought without authorisation in terms of the shareholders’
agreement, it seems clear that Beetge’s answer is that GTS did not need such
authorisation since VV was no more than an alter ego of VSP and was in a position
of conflict between, on the one hand, its responsibilities to GTS as a shareholder in
GTS, and on the other hand its responsibilities to VSP and perhaps the wider
Vodacom group to protect their interests. Given the conflict, VV was not entitled to
insist that a resolution be provided authorising the institution of this application.
[39] That is also the stance taken by Jansen at the hearing to the ‘short point.’ She
[39] That is also the stance taken by Jansen at the hearing to the ‘short point.’ She
maintained that where a conflict of interest arises between shareholders and one
contemplates taking legal action which is effectively against the interests of another,
a provision in a shareholders’ agreement purporting to require unanimity for the
institution of the legal proceedings is inapplicable. She therefore maintained that the
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Tribunal should ignore the relevant provision of the shareholders’ agreement and
proceed to deal with the remaining issues in the case.
The Tribunal’s approach to the issue of authorisation
[40] The Tribunal’s powers are entirely circumscribed by the Constitution, which
has been the ultimate source of law in South Africa since it came into force, and the
Act.
[41] One of the important roles of the Tribunal as the adjudicative organ in the
competition system is to strike down agreements which are unlawful in that they
contravene the provisions of the Act. The primary context in which the Tribunal does
so is Chapter 2 of the Act, and more specifically Section 4, which deals with
horizontal agreements which are the instrumentalities for prohibited practices, and
Section 5, which deals with vertical agreements that amount to prohibited practices.
An agreement may also play a role inter alia in an exclusionary act which the
Tribunal may declare to be a prohibited practice in terms of Section 8, which
concerns abuses of dominance. The same applies to the price discrimination
provisions of Section 9.
[42] Agreements which underpin prohibited practices are not ipso facto void but
must be declared void by the Tribunal. This is made clear by Section 65(1) of the
Act, which states that:
“Nothing in this Act renders void a provision of an agreement that, in terms of this
Act, is prohibited or may be declared void, unless the Competition Tribunal or
Competition Appeal Court declares that provision to be void.”
[43] If the conclusion and implementation of an agreement alone constitutes a
prohibited practice the agreement or relevant provision(s) thereof may be prohibited
in terms of an order made by the Tribunal under one of the sections mentioned
above declaring the relevant conduct to be prohibited. The agreement or relevant
provision(s) thereof is then void and the fact that it has been rendered void will be
provision(s) thereof is then void and the fact that it has been rendered void will be
clear from the Tribunal’s order or decision.
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[44] However, there are other situations in which an agreement may be struck
down. To find the Tribunal’s powers in this regard one must turn to Section 58(1) of
the Act, which reads as follows:
“(1) In addition to its other powers in terms of this Act, the Competition
Tribunal may -
(a) Make an appropriate order in relation to a prohibited practice, including:
(i) interdicting any prohibited practice;
(ii) ordering a party to supply or distribute goods or services to
another party on terms reasonably required to end a prohibited
practice;
(iii) imposing an administrative penalty....... with or without the
addition of any other order in terms of this section;
(iv) ordering divestiture.........;
(v) declaring conduct of a firm to be a prohibited practice in terms
of this Act..........;
(vi) declaring the whole or any part of an agreement to be void;
(vii) ordering access to an essential facility on terms reasonably
required;
(b) confirm a consent agreement ...... as an order of the Tribunal; or
(c) .......... condone, on good cause shown, any non-compliance of –
(i) the Competition Commission or Competition Tribunal rules; or
(ii) a time limit set out in this Act.”
[45] It is significant that the power mentioned in Section 58(1)(a)(vi) to declare an
agreement or part thereof void is not a power in the abstract but is constrained by
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being a power ‘in relation to a prohibited practice.’ This means that it is not open to
the Tribunal to declare an agreement or part thereof to be void unless the agreement
or relevant provision(s) thereof is an integral element of the prohibited practice.
Often there will be little more than the conclusion of an agreement and its
implementation to constitute the prohibited practice, and it then in most cases will be
struck down by an order under one of the sections mentioned above (i.e. Sections 4,
5, 8 and 9). But it is conceivable that an agreement or part thereof may have a
secondary or ancillary role in the broader scheme of a prohibited practice. An
example of the latter would be an agreement between parties who engage in a
prohibited practice to conceal or destroy evidence of the practice, or an agreement
which seeks to extinguish a firm’s rights of access to the fora in which competition
disputes are resolved.
[46] It should be borne in mind in this connection that the Act, although doing so in
a circuitous manner, makes the Tribunal the only institution in South Africa
empowered to rule at first instance upon prohibited conduct. This is the effect of
Section 65(2) of the Act, which states:
“If, in any action in a civil court, a party raises an issue concerning conduct that is
prohibited in terms of this Act, that court must not consider that issue on its merits,
and –
(a) if the issue raised is one in respect of which the Competition Tribunal or
Competition Appeal Court has made an order, the court must apply the
determination of the Tribunal or the Competition Appeal Court to the issue;
or
(b) otherwise, the court must refer the issue to the Tribunal to be considered on
its merits, if the court is satisfied that –
(i) the issue has not been raised in a frivolous or vexatious manner; and
(ii) the resolution of that issue is required to determine the final outcome of
the action.”
(ii) the resolution of that issue is required to determine the final outcome of
the action.”
[47] It is also important to bear in mind that the Constitution itself does not
condone agreements or any other measures which curtail the rights of citizens to
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obtain redress for wrongs. Section 34 of the Constitution is pertinent in this regard. It
reads:
“Everyone has the right to have any dispute that can be resolved by the
application of law decided in a fair public hearing before a court or, where
appropriate, another independent and impartial tribunal or forum.”
[48] In a case where, as at present, the authority of a party to bring a case to the
Tribunal is challenged, the Tribunal must in fairness to all participants investigate the
challenge and in doing so must apply the law that is decisive of the presence or
absence of authorisation. If the position regarding authorisation is governed by an
agreement that is valid and in force, that agreement must be considered and applied,
in much the same way as the articles of association of a company or the founding
deed of a trust will be considered and applied to determine who is authorised to
represent the company or the trust in instituting or defending legal proceedings
before the Tribunal. But the proviso that the agreement must be valid is an important
one.
[49] In the present case there is evidence that the shareholders’ agreement was
concluded and is in force. Beetge signed it on behalf of Somnium and in his personal
capacity. After his authority to bring the application had been challenged by
Allschwang’s answering affidavit, he did not disavow the agreement but on our
reading of paragraph 55 of his replying affidavit, cited above, has raised the defence
that the relevant provision is inapplicable because VV is subject to a conflict of
interest.
[50] GTS’s position may well deserve some sympathy if the shareholders’
agreement is not merely a mechanism for regulating in an orderly way the
relationships of Somnium and VV as co-shareholders in GTS, which is what a
shareholders’ agreement will normally attempt to do, but was designed and
shareholders’ agreement will normally attempt to do, but was designed and
implemented by VV and companies associated by shareholding with VV as a
mechanism to frustrate GTS’s rights of access to the Tribunal or other organs of the
competition system. If this is happening at the level of VV in its relationship with
GTS in conjunction with the alleged margin squeeze of GTS by VV’s parent or
associated company, VSP, of which Beetge complains, then there might be grounds
for the Tribunal to impugn clause 13.3.7 of the shareholders’ agreement.
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[51] The difficulty faced by GTS in this connection is that nowhere in the papers
filed on its behalf in the case are such averments made and nowhere is evidence
given to support the notion. Apart from Beetge’s response in paragraph 55 of his
replying affidavit, cited above, his affidavits are silent about the shareholders’
agreement and its workings and effects. This omission cannot be made good at this
stage, when the exchange of affidavits has been completed and the case has
proceeded to a hearing. It would be entirely unfair on VSP to have to deal with an
argument along these lines based on evidence that is not before the Tribunal, raising
issues which were nowhere stated in the record of the case.
[52] A further nail in the coffin of the application before us is the failure by GTS to
cite VV as a party to the application and to enable the Tribunal to have the benefit of
evidence from VV in regard to the shareholders’ agreement and its implementation
and VV’s response to the argument that the agreement should be impugned as
being an element of the abuse of dominance of which GTS complains. Corsaro and
Allschwang are ad idem on the averments made in Allschwang’s affidavit, but it is
possible that their approach to the case might have been different if the role of
clause 13.3.17 of the shareholders’ agreement as an element of the abuse of
dominance of which Beetge complains had been an issue placed in contention in the
founding papers. Who knows if they might not then have chosen to attest separately,
or differently, since the interests of VV and VSP might then not be entirely aligned on
the central issues, or they might have chosen to present further or different facts in
their affidavits. However, it is not the task of the Tribunal to speculate about these
and similar possibilities.
[53] Somnium should also have been cited if the shareholders’ agreement was to
[53] Somnium should also have been cited if the shareholders’ agreement was to
be attacked, at least if Somnium is anything more than a legal transmogrification of
Beetge.
[54] GTS’s written heads of argument on the ‘short point’ raise the question
whether VV has an obligation to act in the interests of GTS in view of VV’s status as
a shareholder in GTS and in view of provisions in the shareholders’ agreement
pertinent to their relationship. In clause 27.1.1 of the shareholders’ agreement it is
stated that:
“the relationship between them shall be governed by the principles of good faith
as such principles are understood in the context of a partnership.”
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[55] The argument proceeds that VV, which chose not to have a director on the
board of GTS although the agreement makes provision for it to have a nominee
director, should necessarily have supported the sole director, Beetge, in bringing the
application to the Tribunal since he had support from VV in occupying the sole
directorship. We do not see this contention as correct. The fact that VV supported
Beetge’s appointment as the sole director does not mean that VV had to agree with
or support every action taken by Beetge in running the company, specifically actions
related to the ‘material matters’ cited in the shareholders’ agreement requiring a
resolution from both the shareholders in GTS.
[56] In VSP’s written heads of argument reliance is placed on the following extract
from the decision of the Competition Court of Appeal in the case of Mike’s Kitchen
and others v Astral Foods Ltd and another [2004] 1 CPLR 40 (CAC):
“The only power that the Tribunal has to ‘void’ contracts is derived from section
58(1(a)(vi) of the Act, which permits the Tribunal to make an order in relation to a
prohibited practice, including ‘declaring the whole or any part of an agreement to
be void’. The Tribunal can thus only ‘void’ a contract if it relates to a practice
prohibited in terms of Chapter 2 of the Act........ A contract that does not offend the
Act (and more particularly Chapter 2 thereof) is beyond the scope of the Tribunal
to terminate.”
[57] We agree that this decision of the Competition Appeal Court correctly points
out the limit of the Tribunal’s powers to void agreements or parts thereof. It follows
that if an agreement is shown to govern a relationship falling for consideration by the
Tribunal and the agreement is not attacked as being a part of a prohibited practice,
the Tribunal must apply the agreement as it stands to the facts before it. In the
present case the only attack made on clause 13.3.17 of the shareholders’ agreement
present case the only attack made on clause 13.3.17 of the shareholders’ agreement
was based on an alleged conflict of interest and not on any averment that it
represents a part of the alleged abuse of dominance by VSP. Accordingly VSP had
no reason to mount any defence to the latter notion, and VSP’s evidence was
formulated accordingly.
Conclusion
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[58] We conclude that effect must be given at this stage to the shareholders’
agreement as it stands regarding the issue of authorisation to bring an interim relief
application as GTS.
[59] The Tribunal cannot speculate about what might have happened if Beetge in
his notice of motion and supporting evidence had raised the existence and
implementation of clause 13.3.7 of the shareholders’ agreement as an element in a
strategy by VSP and VV or related companies in the Vodacom group to abuse
dominance. On the completed papers in the case it is not a part of his complaint.
Cautions
[60] The following cautions are added to this conclusion:
[60.1] The first is that shareholders should not perceive this decision as a source
of encouragement to draft and implement shareholders’ agreements in
such a manner that their effect is to impede or prevent access by firms
with co-shareholders to the competition authorities if disputes arise about
competition issues. Those provisions would be ill-fated and the
consequences to the relevant shareholders if they are unmasked would
be highly unwelcome to them.
[60.2] The second is that nothing in this decision should be taken as expressing
a view on the merits or demerits of the interim relief application of GTS or
the complaint lodged by GTS with the Commission. The decision to strike
the application off the Tribunal’s roll reflects this position (see paragraph
below).
Order
[61] In the circumstances, the Tribunal makes the following order:
1. The matter is struck from the Tribunal’s roll.
2. No decision is made regarding the application for postponement.
3. No order is made as to costs.
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Costs
[62] Competition law must be prosecuted with fairness but also with expedition.
Expedition is particularly called for in interim relief cases where the Act requires us to
have regard to “ the urgency of the proceedings ”. Unfortunately the hearing of the
merits of many restrictive practice and abuse of dominance related cases is
significantly delayed because of all manner of conceivable technical points taken by
respondents in the Tribunal and the Competition Appeal Court (‘CAC’). 1 This
inevitably delays these cases from being brought to finality. This is also the approach
taken by the respondent, VSP, in the instant interim relief case.
[63] The Tribunal is acutely aware that from its perspective the legitimate
commercial interests of parties are not the only consideration at stake but ultimately
the interests and welfare of all South African consumers are at issue. The preamble
of the Act and its stated purposes make it abundantly clear that one of its primary
purposes is “ to provide consumers with competitive prices and product choices ”.
Another primary purpose is to ensure that small and medium-sized enterprises, such
as the applicant, GTS, in the instant interim relief case, “ have an equitable
opportunity to participate in the economy ”. These and other objectives of the Act are
inhibited by the laborious litigation of technical points. We have a discretion in terms
of the Act to award costs because as an administrative tribunal which deals with
cases which have an impact not only on the parties to the dispute, but potentially
also consumers it is not always in the public interest to award costs against the
unsuccessful party. Where, as in this case, the respondent has succeeded on a
technical point, and not on the merits, we do not think it appropriate to award it costs.
_____________________ 07 June 2010
Lawrence Reyburn Date
Takalani Madima and Andreas Wessels concurring.
Lawrence Reyburn Date
Takalani Madima and Andreas Wessels concurring.
1 See, for example, the comments of the Honourable Justice Davis JP in
regard to technical arguments in the application for leave to appeal in the
High Court of South Africa (Cape of Good Hope Provincial Division) in the
matter between Clover Industries (Pty) Ltd and Others v Competition Commission and Others
and Clover Industries (Pty) Ltd and Another v Lewis NO (79/CAC/JUL08 [2008].
17
Tribunal Researcher : I Selaledi
For the Applicant : Adv MM Jansen SC and L Uys instructed by
Hartzenberg Inc
For the Respondent : Adv WHG Van der Linde SC and FA Snyckers
instructed by Cliffe Dekker Hofmeyr Inc
18