COMPETITION TRIBUNAL OF SOUTH AFRICA
Case No.: 97/CR/Sep08
BMW South Africa (Pty) Ltd
t/a BMW Motorrad Applicant
and
Fourier Holdings (Pty) Ltd
t/a Bryanston Motocycles Respondent
______________________________________________________________
Panel : Yasmin Carrim (Presiding Member);
Medi Mokuena (Tribunal Member); and
Andreas Wessels (Tribunal Member)
Heard on : 14 October 2010
Decided on : 1 February 2011
Reasons: BMW’s Dismissal Application
The Application
1. On 19 April 2010, Fourier Holdings (Pty) Ltd (“Fourier”) applied for declaratory
relief against BMW South Africa (Pty) (Ltd) (“BMW”) in terms of section 58(1)(a)
(v) of the Competition Act, 1998 (“the Act”). This application concerns
objections brought by BMW against Fourier’s application. The objection has
two components. In the first instance BMW submits that it is incompetent for
Fourier to seek relief against BMW in terms of sections 5(1) and 8(c) of the Act.
The second objection alleges that Fourier’s application is vague and
embarrassing in some respects. BMW requests the Tribunal to set aside
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Fourier’s application for these reasons alternatively to grant an order requiring
Fourier to amend its application in order to cure the defects.
2. The historical background is briefly discussed below.
History of the case
3. On 8 October 2004, Fourier submitted a complaint to the Competition
Commission (“Commission”) alleging anti-competitive conduct by BMW in the
domestic market for the sale and distribution of BMW motorcycles and
accessories; which includes for example helmets, rider gear, boots, gloves, and
top boxes. After its investigation the Commission found that BMW had
contravened sections 5(2), 8(c) and 5(1) of the Act.
4. The Commission referred the complaint to the Tribunal on 4 September 2008.
On 11 November 2009, the Commission however unconditionally withdrew the
portion of the complaints based on sections 8(c) and 5(1), which meant that the
only case before the Tribunal involved a contravention of section 5(2) of the Act.
The hearing of this matter was scheduled in March 2010. On 16 March 2010
the Commission and BMW submitted a settlement agreement to the Tribunal in
respect of the section 5(2) case. This agreement did not provide for a penalty
nor did it contain an admission of liability by BMW. It did however provide for
BMW’s future conduct.
5. A hearing of the settlement agreement was held on 17 March 2010. Present in
the hearing was the complainant who opposed the agreement. Fourier’s
concern was that confirmation of the settlement agreement would compromise
its rights to claim declaratory relief in terms of section 49D (4) because it was
being concluded after the Commission had referred the complaint to the
Tribunal.1 In order to address this concern, BMW concluded an addendum to
1 This concern arises from the CAC judgement in the Glaxo case in which the court held that in the
course of its (the Commission’s) case a settlement of a matter after the Commission had referred it to
the Tribunal did not fall under s49D but was merely a settlement in the ordinary course of litigation.
Glaxo Smithkline South Africa deicision – Case No: 62/CAC/Apr06.
the settlement agreement which acknowledged Fourier’s rights to apply for
declaratory relief in terms of section 58(1)(a)(v) or (vi) of the Act, in respect of its
complaint under section 5(2).
6. Fourier has now sought declaratory relief in respect of not only the section 5(2)
case but also in respect of the section 5(1) and 8(c) cases.
7. Apart from this dispute between the parties there is also a pending High Court
matter in which Fourier admitted that it is indebted to BMW in the amount of R1
863 557.01 in respect of goods delivered to Fourier under a dealership
agreement. Fourier however counterclaims that it has an un-liquidated claim for
damages against BMW as a consequence of the alleged anti-competitive
conduct (the subject of this complaint) by BMW which once liquidated, will set
off and extinguish BMW’s claim against Fourier. That matter has been
postponed pending the Tribunal’s determination of the alleged anti-competitive
conduct.
Incompetent application
8. We first deal with Fourier’s application for relief in terms of section 5(1) or
section 8(c) of the Act. BMW argues that because the Commission had
withdrawn its section 5(1) and/or 8(c) case against BMW, the only case that
Fourier could seek relief for in terms of section 58(1)(a)(v) or (vi) of the Act was
the case in respect of section 5(2). Further that if Fourier wanted to seek a
declaratory order for a contravention of 5(1) and/or 8(c) it ought to bring such an
application under section 51(1) of the Act. The reason for this according to
BMW is that the withdrawal by the Commission has the practical effect of a non-
referral of sections 5(1) and 8(c) cases. Fourier could competently only
approach this Tribunal in terms of section 51(1) of the Act. Also that such a
referral ought to have been brought within 20 days of the date of the
Commission’s withdrawal.
Commission’s withdrawal.
9. The Commission withdrew the case on 11 November 2009. Fourier had lodged
its application in April 2010, some five months later with no explanation and
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therefore, according to BMW, Fourier was out of time. For this reason BMW
argues that the application ought to be dismissed.
10.We understand that BMW’s contention here is not that the complainant is not
entitled to pursue its complaint but that it should do so under section 51(1) and
not section 58(1)(iv) or (v). Once the complaint is to be shoehorned into section
51(1) then the time periods applicable to that section ought to apply to the
complaint. Given that the application was filed some five months after the
Commission’s withdrawal it ought to be dismissed for non-compliance
alternatively a formal condonation application must be filed by the applicant.2
11.Fourier argued that it had always declared its intention to pursue a section 5(1)
and/or 8(c) case against BMW. This was apparent from its complaint lodged
with the Commission. While the Act is clear on what happens when a matter is
non-referred or deemed as such, it is silent on what happens in circumstances
where the Commission withdraws a complaint after having referred it. This is
why the applicant did not rely on section 51(1) of the Act to self-refer its
complaint in terms of sections 5(1) and 8(c). However it was entitled to bring
the application on Notice of Motion as provided for in rule 42(1) of the Tribunal
Rules. If however the Tribunal was minded to direct that the section 5(1) and
8(c) complaints can only be brought in terms of section 51(1) and that the
Commission’s withdrawal amounted to a non-referral then the applicant is not
out of time in making the referral because the clock would only start ticking once
the Tribunal has made such determination.
12. Counsel for Fourier argued that condonation was not necessary because no
irregularity had occurred because the Act and rules were silent on the matter.
All that the applicant was required to do was to file its application on Notice of
Motion and comply with the above-mentioned Rule 42.3
Motion and comply with the above-mentioned Rule 42.3
13.It was common cause that this was not a referral in terms of section 65(2) of the
Act.
2 See transcript pages 37-38.
3 Rule 42 regulates the initiation of proceedings not otherwise provided for in the rules. It requires an
application to be brought on Notice of Motion and Form CT 6.
14.The procedure for initiation and referral of complaints can be found in sections
49B, 50 and 51. Section 49B(1) deals with complaints initiated by the
Commission itself and is not pertinent to this case. Section 49B(2)(b) provides
that any person may submit a complaint against an alleged prohibited practice
to the Commission. The Commission upon receiving such a complaint is
required to conduct an investigation and to refer the complaint to the Tribunal if
it determines that a prohibited practice has been committed. 4 The Commission
may refer all or some of the particulars of the complaint. The Commission may
also decide not to refer a complaint or aspects of a complaint to the Tribunal. If
it decides on the latter then it may issue a notice of non-referral. Where it does
not issue such a notice but does not refer the complaint to the Tribunal, the
complaint is deemed to be non-referred within one year of being submitted or an
extended period that may have been agreed between the Commission and a
complainant.5
15.There is no dispute between the parties that Fourier was a complainant as
contemplated in section 49B(2). In other words this was not a complaint that
had been initiated by the Commission mero motu but had been initiated by
Fourier alleging that BMW had acted in contravention of sections 5(1), 8(c), 8(d)
(ii)6 and 5(2). The only dispute is whether this application should have been
brought within 20 business days from the date of the Commission’s withdrawal
as if it was a section 51(1) referral.
16.Section 51(1) provides that a complainant may refer the complaint directly to the
Tribunal in the event of a non-referral by the Commission. It is important to
emphasise here that a notice of non-referral does not extinguish a
complainant’s complaint. All it does is remove the Commission as dominis litis
from the case. The Commission by issuing a notice of non-referral or as a
from the case. The Commission by issuing a notice of non-referral or as a
consequence of a deemed non-referral indicates to the public and the
complainant that it does not wish to prosecute this complaint before the
4 Sections 49B(3) and 50.
5 Sections 50(2)-(5).
6 Mistakenly referred to as 8(d)(i) by the Commission in its referral.
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Tribunal.
17.The effect of the Commission’s withdrawal was that the Commission was no
longer a party to the dispute. This however did not remove the complaint.
18. Tribunal rule 14(1) regulates the initiation of complaint proceedings in the
Tribunal. Tribunal rule 14(1)(a) regulates the referral by the Commission. No
time periods are provided for this in the rules but the Commission is placed
under time limits in section 50. Rule 14(1)(b) provides that a complaint referral
in terms of section 51(1) must be filed within 20 business days after the
Commission has issued or deemed to have issued a notice of non-referral. Rule
14(1)(c) regulates a referral by a party in a civil action in a civil court to the
Tribunal. Again no time periods are provided. The rule is silent on any other
type of referral to the Tribunal.
19.None of the provisions of the Act or the Tribunal Rules provide for a situation
where the Commission elects to withdraw a case after it has referred it to the
Tribunal and a complainant wishes to self-refer the matter.
20.The Commission’s withdrawal of the section 8(c) and 5(1) complaint after
referral certainly poses a quandary for the complainant. On the one hand the
practical effect of the withdrawal leads to the elimination of the Commission as
party to the complaint proceedings, in the same way that a non-referral or
deemed non-referral would have done. On the other hand, the Act’s silence on
this issue leaves the complainant with uncertainty as to the status of that
complaint. It is no surprise then to see that Fourier was uncertain whether it
should refer this complaint to the Tribunal in terms of section 51(1) or some
other provision of the Act.
21.Significantly the Tribunal Rules are also silent on a complainant’s rights to seek
relief from the Tribunal in terms of section 49D(4). A complainant who wishes to
seek a declaratory order after a confirmation of a consent order is not placed
seek a declaratory order after a confirmation of a consent order is not placed
under any time periods from date of confirmation of the consent order within
which it must lodge such application. Ironically the objection of a late filing is
not available to BMW in respect of the section 5(2) case.
22.We have previously stated that the Tribunal’s proceedings are sui generis in
nature. While we have the discretion to have regard to relevant rules of the
High Court7 we enjoy a wide discretion in the conduct of our proceedings. 8 Our
proceedings are adversarial in form but we are vested with inquisitorial powers
to arrive at the truth.9 We are required to conduct our proceedings with fairness
and to guard against elevating from over substance. Fairness is context driven
and we must have regard to the circumstances of each case to make such a
determination. 10
23.In this case given that the application is already before us we find that it is
unnecessary to decide whether it ought to have been brought under section
51(1) or some other section of the Act. In our view fairness requires that
Fourier’s rights as a complainant ought not to be prejudiced simply because the
Commission at some later stage decided not to pursue a complaint. Given that
no prejudice can be complained of by BMW by the filing of the section 5(2) case
(where no time limits are prescribed for an application under section 49D (4) at
this point in time we fail to see what prejudice is caused to BMW by the filing of
a complaint referral, for which no time limits are prescribed, a few months after
the Commission’s withdrawal. Nothing can be gained to artificially require the
applicant to now bring a formal condonation application in circumstances where
the Act and Tribunal Rules are unhelpful. Indeed it would be advantageous for
all parties concerned to deal with the entire complaint in one application rather
than in separate applications. BMW’s objection is dismissed and the application
is allowed. To the extent that condonation is required because the section 5(1)
and 8(c) complaint was brought under sections 49D(4) or 58(1)(a)(v) 11, this is
and 8(c) complaint was brought under sections 49D(4) or 58(1)(a)(v) 11, this is
7 Tribunal rule 55(1).
8 Section 55 and Tribunal rule 55.
9 Commission and Anglo American Medical Scheme et al v United South African Pharmacies et al
Case No; 4/CR/Jan02; and National Association of Pharmaceutical Wholesale et al v Glaxo Wellcome
et al 45/CR/Jul01.
10 Rooibos decision Case No: 129/CR/Dec08, Menzi Simelane & Others v Seven-Eleven Corporation
& Others Case No: 480/2001 – CLR (2001-2002) CPLR 13 (SCA) para 16.
11 It was not clear from the Notice of Motion which section of the Act was being relied upon. However
in paragraph 6 of the founding affidavit the deponent states that the application is brought under
section 58(1)(a)(v).
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granted.
The Pleadings Objection
24. In respect to its objection on the pleadings, BMW argues that Fourier’s
application is vague and embarrassing in that it lacks the necessary
particularity regarding the material facts of its case to enable BMW to know
what case it is required to meet. Initially BMW argued that the vagueness in
the pleadings arose in that Fourier failed to allege in respect of its complaint
under sections 5(1), 5(2) and 8(c), the time periods over which the alleged
prohibited practices endured. However, in Fourer’s heads of arguments, Mr
Fitchner clarified that the relevant period is January 2000 to March 2003.
25.The remaining objections by BMW are that Fourier’s case under section 5(2)
is not substantiated sufficiently to enable it to answer such complaint
meaningfully, and finally that it is not clear what Fourier argues is the relevant
market(s) to enable BMW to answer on a meaningful basis the allegations of
dominance in that market or markets.
26.In respect the section 5(2) complaint BMW contends that Fourier does not
allege material facts such as:
26.1 the factual basis for the allegation that authorized dealers are not
permitted to deviate by charging less than the list prices; and
26.2 whether it is being alleged that BMW prevented authorized
dealers from charging less than list prices; and if so:
26.2.1 in what manner BMW prevented such conduct;
26.2.2 when did BMW prevent such conduct;
26.2.3 who on behalf of BMW prevented such conduct; and
26.2.4 which dealers were prevented from engaging in such
conduct.
27.Further with regards to Fourier’s allegations of threats of sanctions for failure to
adhere to the price lists by BMW, BMW contends that there are no material
facts to discern:
27.1 who on behalf of BMW made such threats;
27.2 to which dealers such threats were made; or
27.3 when such threats were made.
28.In relation to market definition, BMW argues that Fourier’s market definition is
wholly unspecified and unclear, particularly in regard to the relevant upstream
market. It argues that this is not sufficiently clear for it to discern whether the
relevant upstream market is alleged to involve the market for the importation,
distribution and sale of touring and leisure motorcycles, and or sports touring
motorcycles, with the engine capacities mentioned. BMW also argues that it is
not clear whether Fourier alleges that there are separate relevant markets for
accessories and rider equipment, or whether these form part of the broader
motorcycle market.
29.In response to this application, Fourier firstly denies that its application is vague
and embarrassing, arguing that its application provided BMW with sufficient
particularity to enable it to plead. Furthermore, Fourier contends that even if its
application was as contended by BMW, BMW failed to afford it the opportunity
to remove the cause of the complaint through prior notice.
30.The Tribunal has previously set out its approach to exceptions to pleadings.
While we have the discretion to have regard to the rules of the High Court we
have emphasised that the sui generis nature of our proceedings, where parties
are required to file witness statements and assist parties to know the case
against them. We are cautioned against adopting an over-technical approach
to pleadings and are required to assess applications of this sort on the basis of
fairness.
31.Although the Tribunal’s general approach to pleadings has historically been less
stringent than that of the High Court, the Tribunal has reiterated that pleadings
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should adhere to Rule 15 of the Tribunal Rules. In particular Rule 15(2) of these
Rules which provides that a complaint referral must contain not only a concise
statement of the grounds of the complaint but also the material facts and points
of law relevant to the various aspects of the complaint being alleged. This is
important so that respondents understand the case being made out against
them to enable them to reply thereto. We assess each case in its context.
32.In relation to market definition, Fourier states that it adopts the definition of the
relevant market as used by the Commission. 12 This is then further expanded
upon in paragraphs 43 and 44 of its application.
33.In paragraph 43 of the application, the relevant upstream market is defined as
that for the importation, distribution and sale of touring and leisure motorcycles,
in particular and for purposes of this complaint, sports touring motorcycles
(which fall within the segment touring and leisure) with engine capacities of
650cc and 1200cc, accessories as well as BMW rider equipment (“the
products”)”. This has been taken verbatim from paragraph 41 in the
Commission’s referral.
34.In paragraph 44 the relevant downstream market is defined as that “for the on-
sale of the product by the authorized dealers of the respondent including the
complainant when it was an authorized dealer, to end users.” This is the same
downstream market defined by the Commission in paragraph 42 of its referral.
35.In both the Commission’s referral and in this application the markets are
described - the upstream market has in it “motorcycles of engine capacity
650cc and 1200cc, accessories pertaining to these motorcycles and rider
equipment”.
36. The complainant’s world view of the market clearly incorporates a number of
products. It is these products that are imported, distributed and sold to dealers.
products. It is these products that are imported, distributed and sold to dealers.
The relevant downstream market is described simply as the market for the on-
sale of these products to end-users. While the market has been defined as
such, it is difficult for the reader of the pleadings to gauge from this definition
12 Paragraph 35 FA.
who the other players in the market are and on what basis the alleged market
share of 45% is computed. This raises a number of questions. Is the market
only that for BMW products or does it include other manufacturer’s products? Is
market share calculated on the basis of turnover? If so does it include total
turnover or only that of motorcycles? Is it alleged that BMW enjoys dominance
in all the products listed in that relevant market or only in motorcycles?
37.In relation to the section 5(2) objection, we find that BMW’s objection is more in
the nature of a request for further particulars rather than an exception.
Paragraphs 49 – 52 set out the basis for this complaint. The deponent cites the
relevant paragraphs of the dealership agreement that deals with prices and then
sets out in paragraph 52 what occurred in practice. The deponent alleges that a
price list was provided by BMW to dealers, that it did not indicate on the list that
the prices were not binding on the dealers and that compliance with the price list
was monitored through the reporting obligations imposed by BMW in clause 7.4
of the dealer agreement. BMW is able to determine from this reporting whether
a dealer has deviated from the price lists, and the extent of the deviation and
that there was a threat of termination of the dealership if these prices were not
adhered to. In paragraph 16.5.2 the deponent alleges that where a dealership
attempted to discount in contravention of the stated policy, BMW decreased the
dealer margin, thereby limiting the ability of the dealership to discount, “starved”
the dealership of product and/or cancelled the dealership agreement.
38. Tribunal rule 15 requires that an application be accompanied by a concise
statement of the grounds of the complaint and the material facts relevant to the
complaint and relied upon by the complainant. We have previously assessed
compliance with this rule on the basis of fairness and enquiring whether
compliance with this rule on the basis of fairness and enquiring whether
sufficient facts are alleged so as to enable the respondent to answer in a
meaningful way.
39.From the quoted paragraphs all that the respondent knows is that there is a
section 5(2) allegation against it and that dealers had been subjected to broadly
speaking threats and sanctions in order to ensure compliance (the manner).
What it does not know is the identities of the players and when such
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sanctions/threats took place. In our view and in the context of this case, where
uncertainty and delays have been visited upon the complaint, it would help a
great deal if Fourier provided BMW with the particularity that it seeks at this
stage of the proceedings.
The Order
40.We therefore grant the following order:
A. The application for dismissal is denied and condonation for Fourier’s
application for a declaratory order (self-referral) of the section 5(1) and/or
section 8(c) case is hereby granted.
B. In relation to the pleadings, Fourier must within 10 business days of date
hereof, file a supplementary affidavit in which the following issues are
clarified/expanded upon -
a. Whether the relevant markets described in paragraphs 43 and 44 of
its founding affidavit include only BMW products;
b. Provide details of how BMW’s alleged market share in paragraph
62 of the founding affidavit was computed;
c. In relation to paragraphs16.5.2 and 52.5 of the founding affidavit-
i.who on behalf of BMW prevented the granting of discounts;
ii.which dealers were prevented from engaging in such
conduct;
iii.who on behalf of BMW made such threats;
iv.to which dealers such threats were made; and
v.when such threats were made.
C. BMW must file its answer to the founding affidavit read with the
supplementary affidavit within 20 business days of the filing of the
supplementary affidavit.
D. Fourier may file its replying affidavit within 5 business days of the filing of
the answer.
E. There is no order as to costs.
_______________
Yasmin Carrim
Presiding Member
Concurring: Andreas Wessels and Medi Mokuena
Tribunal Researcher : Londiwe Senona
For the Commission : Adv. Maenetje instructed by the Commission
For the Applicant : Adv. Wilson instructed by MacRoberts Attorneys
For the Respondent : Adv Engelbrecht instructed by Johan Strauss
Incorporated
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