COMPETITION TRIBUNAL OF SOUTH AFRICA
Case No:27/CR/Apr11
In the matter between:
THE COMPETITION COMMISSION SA Applicant
And
PENTEL SOUTH AFRICA (PTY) LTD Respondent
Panel : Norman Manoim (Presiding Member),
Andiswa Ndoni (Tribunal Member)
Medi Mokuena (Tribunal Member)
Heard on : 12 September 2011
Order issued on : 27 October 2011
Reasons issued on : 27 October 2011
REASONS FOR DECISION - RESPONDENT’S OBJECTIONS IN LIMINE
The respondent in this case has raised certain jurisdictional issues in its
answering affidavit that if decided in its favour, would end the proceedings
against it. In this decision we consider whether those objections have any
merit.
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Issues to be decided
1] The respondent Pentel SA Limited (Pentel) has been charged by the
Competition Commission (‘Commission’) for violating section 5(2) of the
Competition Act, Act no 89, 1998 ( the Act).1
2] In its answering affidavit Pentel contends that the claim against it has
prescribed and further, alternatively that the Commissioner failed to direct
an inspector to investigate the case against it as required by the Act.
Pentel argues that if its propositions are correct on either of these points
the case against it must be dismissed on jurisdictional grounds.
Background
3] Pentel supplies stationery products on behalf of its Japanese principal. Its
business practice is to sell these products to other independent
distributors, located throughout the country, who in turn supply retailers.
One such distributor is a company named Desco Agencies CC (‘Desco’)
based in Port Elizabeth. Certain restrictions were placed on Desco by
Pentel. One of these restrictions was that as a distributor it was not
allowed to charge prices below those reflected on Pentel’s published price
list.
4] In 2006, Pentel commenced selling in Port Elizabeth directly to retailers in
competition with Desco. Desco alleges that it tried to get Pentel to permit it
to lower its prices, to no avail. Eventually Desco filed a complaint with the
Commission on 15 August 2008 alleging that Pentel had contravened
section 5(2) of the Act.
5] On 6 March 2009 the complainant advised the Commission that it intended
to withdraw the complaint. On 17 April 2009, the Commissioner initiated
his own complaint against Pentel, based on the same allegations.
6] The statement containing this initiation states the chronology of the events:
1 Section 5(2) of the Act provides that: “The practice of minimum resale price maintenance is
prohibited.”
2
“On 06 March 2009, the complainant (Desco) made a request for
withdrawal of the complaint based on efficiency reasons and the
request was noted on the Commission’s meeting held on 31 March
2009. The efficiency reasons referred to by the complainant were
described as the economic position that their business was
operating within and much energy and effort were to be directed to
measures that will help improve their business rather than focusing
on the case that they might lose. It was further agreed and
approved in that meeting that the Commission would continue with
the investigation as if the Commissioner has initiated it. Based on
the above facts, I therefore initiate an investigation into the conduct
set out herein, in terms of section 49(B)(1) of the Act.”
7] On 5 April 2011 the Commission referred the complaint to the Tribunal.
Has the complaint prescribed?
8] The first question we have to decide is whose complaint underpins the
referral. The Act contemplates two forms of complaint initiation; that
initiated by a complainant – section 49(B)(2)(b) and that initiated by the
Commission – section 49(B)(1).2 In this case we have to ask what the legal
effect of the subsequent initiation by the Commission was on the nature of
the complaint. Put more colloquially did the complaint become that of the
Commissioner or did it remain that of the complainant.
9] The reason this distinction matters is that complainant’s complaints must
be referred within one year of submission to the Commission, unless
extended by one of the means contemplated. 3 It is common cause that no
extension has taken place and that the Commission referred the complaint
2 Section 49B (1) of the Act stipulates that “The Commissioner may initiate a complaint against an
alleged prohibited practice.” Section 49(B)(2)(b) states : “Any person may - submit a complaint
against an alleged prohibited practice to the Competition Commission in the prescribed form.”
against an alleged prohibited practice to the Competition Commission in the prescribed form.”
3 Section 50(2) which states “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 ; or
In any other case, issue a notice of non-referral to the complainant in the prescribed form.”
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to the Tribunal more than one year after Desco had filed its complaint.
Desco filed its complaint with the Commission on 15 August 2008 meaning
that one year had long expired by the time the complaint had been
referred.
10]However if the complaint on which the referral is based is that of the
Commissioner, then no prescription problem arises as the Commission is
not required to bring a referral in any stipulated time period where it is the
initiating party.4
11]Pentel argues that the Commission did not refer a new initiation
commenced by the Commissioner on 17 April 2009. It continued with the
Desco complaint. Pentel relies as a factual basis for this proposition on the
statement set out in the Commission’s initiation statement in which it
stated that “... the Commission would continue with the investigation....”
12]Pentel’s legal proposition is based on rule 16 of the Commission Rules
which provides for the withdrawal of the complaints:5 This Rule provides as
follows:
“At anytime during an investigation, a complaint may withdraw a
complaint lodged with the Commission. In such circumstances, the
Commission will accept the withdrawal but may decide whether to
continue investigating the Complaint as if the Commissioner had
initiated it or whether the complaints withdrawal should be accepted
and the matter non-referred/closed.”
13]Pentel argues that rule 16(2) means that the Commission can take over a
complaint after a complaint has been withdrawn as if it had initiated it. This
means the complaint remains the complainants’ complaint; it is simply
taken over by the Commission and is, most significantly, subject to the
prescription period provided for in section 50(2). This proposition is
unsound for several reasons.
4 Section 50(1) provides that “At any time after initiating a complaint, the Competition Commission
may refer the complaint to the Competition Tribunal.”
may refer the complaint to the Competition Tribunal.”
5 What we refer to as the Commission rules are more formally described as the “Rules for the conduct
of proceedings in the Competition Commission.”
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14]Firstly, the language of the rule is limited to the notion that the Commission
may continue to investigate the complaint as if it had initiated it. Thus it
means no more than that the Commission’s investigation does not have to
recommence from the beginning in these circumstances. If it acquired
documents or information during the time it was investigating the
complainant’s complaint it may continue to use them. That does not make
the Commission initiated complaint the complainant’s complaint for the
purpose of section 50. If the rule makers had intended this consequence
they would have made specific reference to section 50, as they do later in
dealing with Commission Rule 17, which deals with multiple complaints.
Here the rule provides for the consolidation of multiple complaints if they
concern the same respondents. It states in 17(3)(c) that:
“If the Commission consolidates two or more complaints as permited by
sub-rule (2) –
a) ....
b) ....
c) After referring one of those consolidated complaints to the
Competition Tribunal, or issuing a notice of non-referral in respect
of it, the Commission may continue to investigate any of the
remaining consolidated complaints, subject only to the time
constraints set out in section 50”
15]Secondly, even if the rule can be given the interpretation that Pentel
contends for, this would mean using the rules impermissibly to interpret
the Act.6 The Act sets out the complaint initiation regime. Had the
legislature intended that the Commission could continue with a
complainant’s complaint after withdrawal, but still be subjected to the time
restriction in section 50(2), it would have said so. All the various
consequences of initiation are set out in detail in sections 49A, 50 and 51.
6 See Hamilton Brown v Chief Registrar of Deeds 1968 (4) SA 735 and Moodley and Others v
Minister of Education and Culture, House of Delegates, and Another 1989 (3) SA 221 (A)”
Minister of Education and Culture, House of Delegates, and Another 1989 (3) SA 221 (A)”
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If the legislature had intended this outcome it would surely have provided
for it in the Act and not the rules.
16]Thirdly, the construction contended for is inconsistent with the logic of the
Act’s complaint regime. As we explained in SAB, the time constraint
imposed on the Commission when a complainant’s complaint is referred,
exists to permit the complainant to refer the matter if the Commission does
not do so within the stipulated time period. 7 It protects the complainant’s
right to privately prosecute if it elects to do so. Once it has withdrawn a
complaint this interest ceases because there is no complainant waiting to
continue the complaint if the Commission does not refer it timeously.
There is thus no purpose served by Pentel’s interpretation – it is
anomalous.
Conclusion on prescription objection
17]We therefore find that there is no provision in the Act for the Commissioner
to takeover a complainant’s complaint. Once the complainant had
withdrawn the complaint, it ceased to exist as a complaint in terms of
section 49(B)(2)(b) of the Act. When the Commission initiated the
complaint on 17 April 2009, it became a complaint in terms of section
49(B)(1), which in terms of section 50(1) could be referred at any time and
was thus not subject to the one year time limitation imposed in terms of
section 50(2) for the referral of complainant’s complaints, and accordingly,
the complaint was referred in time. The first point in limine fails.
Appointment of inspector
18]In its answering affidavit Pentel made the following allegation. We quote
this as the language used is confusing:
“9. In this instance however and contrary to these principles, the
Commission –
7 The Competition Commission v SAB 134/CR/Dec07.
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9.1 Investigated the Respondent [Pentel] before initiating a
complaint against the respondent;
9.2 Failed to appoint an inspector as mandated by section 49(B)
(3)”
19]Later in the same pleading, Pentel goes on to allege that the
Commissioner failed to appoint an inspector as required by law and that
this resulted in the Commissioner’s investigators acting ultra vires when
they investigated it. 8 By failing to make the appointment it is alleged, the
Commissioner ousted the jurisdiction of the Commission.9
20]This allegation was stated baldly and no facts were alleged to back up this
conclusion.
21]In its replying affidavit, the Commission clearly misconstrued the point and
assumed that the criticism was that the persons directed to investigate
were not appointed as inspectors. The Commission alleged they were and
attached their respective certificates of appointment. This is not surprising
as the use of the term appointment is not found in section 49(B)(3) but in
section 24 which provides for the appointment of inspectors. 10 Inspectors
are not ‘appointed’ to specific cases. They receive an appointment to the
office of inspector in term of section 24 of the Act. This is a general
appointment not one specific to any particular complaint investigation.
Section 49(B)(3) on the other hand states:
“Upon initiating or receiving a complaint in terms of this section, the
8 See answering affidavit paragraph 16.
9 See answering affidavit paragraph 17.
10 Section 24 of the Act provides that:
“(1) The Commissioner may appoint any person in the service of the Competition
Commission, or any other suitable person, as an inspector.
(2) ......
(3) An inspector must be provided with a certificate of appointment signed by the
Commissioner stating that the person has been appointed as an inspector in terms of this Act.
(4).......”
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Commissioner must direct an inspector to investigate the complaint as
quickly as practicable.” (Our emphasis).
22]Thus the allegation that Pentel appears to be making is that inspectors
were not directed to investigate the complaint against them. The
Commission in its replying affidavit, despite misconstruing the objection,
nevertheless alleges in paragraph 8.2 that:
“The Commissioner received a complaint from Desco agencies on 15
August 2008 and on the strength of a complaint, the Commissioner
assigned inspectors to investigate the complaint.” (Our emphasis)
23]In a further supplementary affidavit Pentel repeated its allegation although
now it alleged that the Commissioner “ did not properly appoint an
inspector as required by law.”
24]The Commission in yet another supplementary affidavit responded to this
by repeating its earlier denial.
25]During argument Pentel stated that the allegation that an inspector had
been ‘assigned’ in the replying affidavit was insufficient to comply with
section 49(B)(3), which required that an inspector be ‘directed’. This is not
the point made in the papers, where Pentel had itself been less precise in
its language, referring to the ‘appointment’ of an inspector, which as we
have seen is the language of section 24 not section 49(B)(3) which uses
the term ‘direct’.
26]Nothing turns on the fact that the Commission used the term ‘assign’ as
opposed to ‘direct’ in dealing with this allegation in its replying affidavit.
Both terms presuppose an instruction from the Commissioner to an
inspector to investigate a complaint. 11 Once the Commission has made
this allegation of “assignment”, in the absence of any evidence to the
contrary, we may assume that an inspector has been directed to
investigate the relevant complaint. There is no formality for the manner in
11 The Shorter Oxford English Dictionary gives as one of the definitions of the verb ‘assign’ as“ to
appoint, designate, for an office, duty or fate.”. The word ‘direct’ is not defined in the Competition
Act, however, according to Concise Oxford English Dictionary the word direct means inter alia “give
an order to.”
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which the inspector is directed in terms of section 49(B)(3). Thus an oral
instruction would suffice. It therefore cannot be expected that the
Commission would have to furnish documentary proof of the instruction.
27]The onus to establish the point in limine rests with Pentel. In the face of
the Commission’s denial it must fail on this point too.
28]The second point in limine is dismissed.
ORDER
1. The application is dismissed.
2. There is no order as to costs.
____________________ 27 October 2011
NORMAN MANOIM DATE
Andiswa Ndoni and Medi Mokuena concurring.
Tribunal Researcher: Thabo Ngilande
For the merging parties: Arnold Subel S. C. instructed by Fluxmans Attorneys
For the Commission: Mr Bongani Ngcobo
Mr Bukhosibakhe Majenge
Mr Tlabo Mabye
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