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THE COMPETITION TRIBUNAL OF SOUTH AFRICA
Case No:16/CR/Feb07
(007302 and 015776)
In the matter between:
Amalgamated Real Estate Principals Group CC
t/a Charter Property Sales
Applicant
And
The Home Trader (Eastern Cape) (Pty) Ltd
t/a East Cape Property Guide Respon dent
Panel : Norman Manoim (Presiding Member)
Yasmin Carrim (Tribunal Member)
Andreas Wessels (Tribunal Member)
Heard on : 12 November 2012
Order issued on : 12 November 2012
Reasons issued on : 08 March 2013
Reasons for Decision
Introduction
1. On 12 November 2012 the Competition Tribunal (“T ribunal”) heard an
application to condone the late filing of an amendm ent to a referral
application, brought by the Applicant in terms of s ection 51 of the
Competition Act of 1998
1 (“the main matter”). The respondent opposed
1 Act No. 89 of 1998, as amended.
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the application to condone the late filing of the a mendment application and
in turn applied for the main matter to be dismissed . The application for
condonation was dismissed and the application for d ismissal of the main
matter was granted (CT case number: 16/CR/Feb07) on 12 November
2012. The reasons for our decision follow.
2. The Applicant in the main matter and in this mat ter is Amalgamated Real
Estate Principals Property Group CC t/a Charter Pro perty Sales
(“Charter”), a business in the estate agency market . The sole member of
the business is Mr Eldrich Page.
3. The Respondent is Home Trader (Eastern Cape) Ltd t/a East Cape
Property Guide (“East Cape Guide”), a property publ ication for the region
of the Eastern Cape.
4. Although the respondent is an applicant and the applicant a respondent in
the dismissal application of the main matter for ea se of reference Charter
will be referred to as the applicant and East Cape Guide as the
respondent.
Background
The referral
5. The basis of the Applicant’s section 51 referral (also referred to as the
main matter) appears to be that the Respondent util ised a “non-reference
policy” in terms of which estate agents cannot make references to the
commission which they charge in the adverts they pl ace in the
Respondent’s publication.
2 The Applicant argued that for an estate agent
to succeed it was essential for it to advertise in the East Cape Guide. The
Respondent’s requirement that Charter may not adver tise the commission
it intended to charge on the basis of the non-refer ence policy was argued
as being anticompetitive, because it effectively de nied him access to the
2 See page 3 of the transcript.
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Property Guide,” 3 alternatively that access was allowed, albeit, on a
conditional basis. 4
6. The referral itself has a complicated history. During January 2006, Charter
had lodged a complaint with the Competition Commiss ion (“Commission”).
The essence of the complaint was that the East Cape Guide would not
permit Charter (and other estate agents) permission to advertise the
commission they would charge to clients. 5 Charter wanted to place an
advertisementin the East Cape Guide to the effect t hat it would only
charge 3% commission as opposed to the customary 7. 5% commission
that may be charged by estate agents. While the Com mission was still in
the process of investigating the complaint, Charter lodged an application
for interim relief against the Respondent and Star Property Guide. 6This
application was heard on 19 January 2007 and on tha t day the parties
arrived at an agreement in terms of which the East Cape Guide agreed to
accept Charter’s adverts on condition these complie d with the ASA rules. 7
Examples of the type of adverts that were acceptabl eto the Respondent(s)
were attached to the settlement agreement.
7. Subsequently and during January 2007, the Commis sion non-referred
Charter’s complaint. 8
8. Charter then referred the complaint to the Tribu nal in terms of section 51of
the Act. 9
9. However, Charter’s referral was difficult to com prehend and lacked
essential factual averments which would support a t heory of competitive
harm. Our earlier summary in paragraphs 5 and 6have been inferred from
the oral arguments made by Mr Page in the hearing of this matter.
3See page 2 of the transcript.
4See page 4 of the transcript.
5The complaint had been extended to the Star Property Guide by the Complainant.
6See CT case number: 44/CR/May07.
7Advertising Standards Authority.
8See Commission Notice of Non-referral dated 22 January 2007.
919 February 2007.
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10. At that time, the Respondent opposed the referral, raised an exception and
also sought a dismissal of the referral on the basi s that the Tribunal lacked
jurisdiction to hear the matter because the complai nt now put forward by
Charter had had not been referred to the Commission beforehand. 10 In
any event, Charter had already been granted relief (as a result of the
interim relief application) 11 and had been afforded an opportunity to place
an advertisement in the East Cape Guide which he ha d failed to take up. 12
Instead, he now insisted on placingan advert isement which in the opinion
of the Respondent was in contravention of the ASA r ules. 13 This was a
regulatory issue and not a competition law concern.14
11. Charter did not amend its papers in response to the exception. Following
a pre-hearing, the Tribunal issued directions on 06 August 2008, directing
Charter to file an application for amendment of its complaint referral by 05
September 2008. Charter failed to do so.The Respond ent filed a dismissal
application on 15 October 2008. On 06 February 2009 after hearing the
dismissal application,the Tribunal did not grant th e Respondent’s
application but granted a costs order against Chart er and barred the
Applicant from taking any further steps until such costs were paid. These
costs were eventually paid by Charter in April 2010. 15
12. Charter was not represented by attorneys in any of these applications. Mr
Page, the sole member of Charter, represented the entity. In an attempt to
assist this unrepresented applicant, the Tribunal, gratuitously referred Mr
Page toa number of attorneys and organisations from which he could
obtain legal assistance. 16 Unfortunately, in spite of these efforts, he was
unsuccessful in securing such assistance.
10 See page 2 of the Respondent’s Founding Affidavit, dated 15 October 2008 and page 3 of
the Respondent’s Answering Affidavit, dated 25 October 2012.
the Respondent’s Answering Affidavit, dated 25 October 2012.
11 See paragraph 6 above.
12 See pages 7 and 11 of the transcript.
13 See page 24 of the transcript.
14 See pages 12 and 13 of the transcript.
15 See page 7 of the Respondent’s Answering Affidavit, dated 25 October 2012.
16 Tribunal letter to Mr Page, dated 01 August 2011.
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13. The amendment application which was supposed to have been brought in
2008 was eventually only filed by Charter on 07 Aug ust 2012, almost four
years later.
14. This was met by a letter from the Respondent ob jecting to the application
due to the long delays. The Respondent refused to file an answer
because it considered the matter to be closed, alte rnatively already
decided by the Tribunal due to the res judicata principle in law.17
15. On 03 October 2012, the Tribunal sent a letter to the parties, stating that
the application was extremely late and an applicati on to condone the late
filing thereof would first have to be heard. In res ponse, the Respondent
revived its dismissal application and opposed the condonation application.
Dismissal application
16. The Respondent sought a dismissal of the main m atter on the basis that
relief had already been granted to Charter as a res ult of the settlement
agreement in the interim relief application.
18 However,Charter had not
made use of the relief granted by the Tribunal. 19 Furthermore, the subject
of referral by Charter was not a competition issue (for which it had already
obtained relief) but a regulatory issue. 20 The Applicant’s advertisements
could not be published because such advertisements contained harsh
allegations about other estate agents and contraven ed the ASA’s code of
conduct. 21 That is why the settlement agreement contained the proviso that
the Respondent would only accept Charter’s adverts if they complied with
the ASA rules.
17 See KPMG’s letter to Charter, dated 28 August 2012.
18 See page 26 of the transcript and page 16 of the Re spondent’s Answering Affidavit, dated
25 October 2012.
19 See pages 21 and 29 of the transcript.
20 See page 24 of the transcript.
21 See page 24 of the transcript.
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17. In any event, the Applicants’ pleadings were de fective and incapable of
response, given that there was no cause of action e stablished and that
many attachments were either incomplete or to be added. 22
18. Furthermore, the Respondent argued, the Tribuna l has provided the
Applicant with ample opportunities to amend the original complaint referral.
The Tribunal has also recommended that the Applican t seek pro bono
legal assistance, however, this route proved to be futile for the Applicant
because from the correspondence it seems that the A pplicant would not
heed the advice given by the various pro bono attorneys assigned to the
case.
19. Finally, the Respondentargued that the amendmen t application filed in
August 2012 itself was defective and still did not disclose a proper cause
of action. The Respondent had been required to defe nd itself, at great
cost, against Charter’s persistence in pursuing thi s matter, in which the
latter had already been granted relief. The Respond ent had been
prejudiced and would be further prejudiced if the m atter was allowed to
carry on in this vein. 23 Accordingly it asked for a dismissal of the compla int
referral in the alternative a dismissal of the condonation application.
Hearing
20. At the hearing of the matter, the Chairperson s ought clarity from Mr Page
as to whether or not he understood the application for the dismissal of the
main matter and granted him an opportunity to respo nd to it.
24 From his
submissions it was clear that Mr Page understood th at the Respondent
had applied for a dismissal of the main matter (sec tion 51 referral). 25 When
asked to summarise his complaint against the Respon dent, Mr Page
submitted as follows –
22 See KPMG’s letter to Charter, dated 20 May 2011.
23 See page 15 of the Respondent’s Answering Affidavit, dated 25 October 2012.
24 See page 1 of the transcript.
25 See pages 2 – 4 of the transcript.
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20.1. The Respondent’s refusal to permit him to pla ce an
advertisement in which he justified or explained th e reasons for
his lower commission of 3%, was anticompetitive bec ause it was
“essential for an agent to advertise in the East Cape Guide ”;
20.2. Clients, prospective buyers and sellers, were sceptical about low
commissions and he would therefore have to provide an
explanation for that in his advert;
20.3. The East Cape Guide was owned by estate agent s and this was
unlawful and anticompetitive. 26
21. When asked why he had not taken the opportunity afforded to
him from the settlement reached at the interim reli ef application hearing,
Mr Page provided some garbled explanation. 27 It appears though that in
his mind and despite his consent to the advertiseme nt that had been
attached to the settlement agreement at that time, this type of
advertisement was not “really” the advertisement th at he wanted to place
in the East Cape Guide. However, he accepted that h e ought to have read
that agreement more closely before signing it. 28 This was the first
occasion when this argument was raised by Mr Page.
22. Further probing of the issues by the panel reve aled the following. Charter
followed a different business model to other estate agents in the industry.
Mr Page explained that unlike certain other estate agents he only charged
a commission of 3%. He did not market properties f or sale in the East
Cape Guide but instead marketed them through word o f mouth, the
internet and through newsletters distributed at sch ools. 29 Because of this
different model, sellers were sceptical of his abil ity to market their
properties and he was unsuccessful in procuring the right mix of stock
(relating to properties for sale). 30 In his view, if he simply advertised his low
commission rate in the East Cape Guide without explaining the reasons for
26 Our summary of Mr Page’s arguments.
26 Our summary of Mr Page’s arguments.
27 See pages 29 and 30 of the transcript.
28 See page 29 of the transcript.
29 It seems that he raised some advertising revenue through these newsletters.
30 See page 36 of the transcript.
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it, prospective clients would remain sceptical abou t the low
commission.This is why he was insistent on insertin g an explanation in his
advertisement which had been rejected by the East Cape Guide.
23. During this exchange, it also emerged that Char ter was no longer in
operation and Mr Page himself had now moved to Kuil s River in the
Western Cape. 31
24. The Respondent argued that this complaint was a new one and directed
against the entire industry rather than only the Re spondent. 32 Charter had
already been given relief by the Tribunal. To date Mr Page had not
approached them to place an advertisement in accord ance with the
settlement agreement namely an advertisement that w as in compliance
with the rules of the ASA. 33 If Mr Page had a complaint about the ASA
rules he should lodge his grievance in that forum a nd not at the Tribunal.
Nevertheless, and despite the fact that Charter was no longer in business,
the Respondent was still willing to accept an adver tisement along the lines
of that in the settlement agreement and gave such u ndertaking to the
Tribunal. 34
Assessment
25. Charter has already been afforded an opportunity to test it s unique business
model by being allowed to place advertisements in t he East Cape Guide
stating the level of his commission. It was granted this relief in the interim
relief application. To date Mr Page has not taken t hat opportunity and
therefore is not in a position to assess whether hi s advertising would or would
not benefit his business model or the level of scep ticism of prospective
clients. Given that Charter still has the opportuni ty to approach the
Respondent with an advertisement that is compliant with the ASA rules,
nothing can be gained by allowing him to persist wi th abadly articulated
31 See page 32 of the transcript.
32 See page 19 of the transcript.
33 See page 21 of the transcript.
34 See page 26 of the transcript.
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complaintand for which the relief sought was clearl y not competent for the
Tribunal to grant. For example, in the course of t he hearing, Mr Page alleged
that ownership by estate agents of the publication was unlawful and that we
should order a divestiture. 35 Apart from the fact that such ownershipwas not
per se unlawful under the Competition Act, Mr Page could not identify who
these agents were. No names were put forward and n or were these entities
joined as parties.
26. In any event, by Mr Page’s own admission, and notwi thstanding the low
commission, the concern from prospective clients wa s not that he did not
advertise his own servicesas an agent in the East C ape Guide but that he did
not market their properties in that publication, which he did not do pursuant t o
a different business model which he had adopted.
27. We are of the view, that nothing can be gained for the Applicant by permitting
it with yet another opportunity to amend his papers , which itin any event has
been unable to do in the last 4 years, in circumstances such as these where
1) Charter has already been given the relief ithas sought, namely to
advertise the level of commission charged by Charte r in the East Cape
Guide;
2) a complaint that is more a regulatory issue than a competition issue,
supported by the fact that despite the length of ti me and the indulgences
extended to it by this Tribunal, Charter is still u nable to articulate a theory
of harm under competition law;
3) Charter is no longer in business in the Eastern Cape; and
4) the relief of divestiture sought against unknown persons which is not
within the Tribunal’s competence.
28. Moreover, in our view permitting an unrepresented Applicant -w hose case
is not properly articulated and who by his own admi ssion seems to have a
gripe with the industry (not merely with the Respon dent) and then by his
own actions fails to take the opportunities offered to him - would not be in
35 See page 16 of the transcript.
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the public interest. Both parties in a case such a s this stand to be
prejudiced by the continued time, effort and money spent in proceeding
with this matter at the Tribunal. Fairness to both parties requires us to
dismiss the main matter (16/CR/Feb07) referred in t erms of section 51 of
the Actand consequently to dismiss the application to condone a late filing
of the amendment to that application.
CONCLUSION
Having regard to the facts above, t
he Tribunal accordingly makes the following
order:
1. In the application for condonation:
a) The application is dismissed.
b) The Applicant is to pay the costs of the Respond ent, including the
costs of one counsel.
2. In the main application, namely the complaint re ferral (CT case
number: 16/CR/Feb07):
a) The application is dismissed.
b) There is no order as to costs.
__________________ 08 March 2013
YASMIN CARRIM DATE
Norman Manoim and Andreas Wessels concurring
Tribunal Researcher: Nicola Ilgner
For the Applicant:
EL Page
For the Respondent : Greta Engelbrecht instructed by Strauss Scher