Competition Commission v DBS Distributing CC ta Thule Car Rack Systems CC (016840) [2013] ZACT 79 (24 July 2013)

75 Reportability

Competition Law

Brief Summary

Competition — Settlement Agreement — Confirmation of settlement agreement between the Competition Commission and DBS Distributing CC t/a Thule Car Rack Systems CC regarding contravention of section 4(1)(b)(i) of the Competition Act — Thule admitting to price-fixing conduct and agreeing to cooperate with the Commission in future investigations — Tribunal confirming the settlement as an order in terms of section 58(1)(a) of the Act.

Comprehensive Summary

Summary of Judgment

1. Introduction

These proceedings took the form of an application by the Competition Commission to the Competition Tribunal for the confirmation of a settlement agreement as a Tribunal order. The confirmation was sought under the Competition Act 89 of 1998, following the Commission’s investigation and referral concerning alleged cartel conduct.

The parties were the Competition Commission (as applicant) and DBS Distributing CC trading as Thule Car Rack Systems CC (as respondent, referred to in the settlement as “Thule”). The matter formed part of a broader referral involving multiple respondents in the cycling retail and wholesale industry, although the order recorded in this decision concerned only the settlement between the Commission and Thule.

The procedural history reflected in the settlement agreement traced the matter from information received in 2008 regarding an alleged industry meeting, through complaint initiation(s), investigation, a complaint referral, withdrawal of an earlier referral, and the initiation of a fresh complaint under a new case number. After the Commission concluded that Thule’s conduct contravened the Act, the Commission referred the complaint to the Tribunal in July 2012. The Commission and Thule subsequently concluded a settlement agreement and approached the Tribunal to have it made an order of the Tribunal. The Tribunal heard and decided the matter on 24 July 2013, issuing an order confirming the settlement agreement (including Annexure A and an addendum marked Annexure B).

The general subject matter concerned an alleged contravention of section 4(1)(b)(i) of the Competition Act, namely price fixing (or the fixing of trading conditions) through agreement or concerted practice in the context of the sale of bicycles and cycling accessories/equipment.

2. Material Facts

The court record (as captured in the settlement agreement) proceeded from information received by the Commission in September 2008 from an anonymous source. The Commission was provided with minutes of an industry meeting, which were also posted on an online cycling forum (“the Hub Website”). The minutes related to a meeting held on 10 September 2008 in Midrand (referred to as the “September 2008 meeting”).

According to the minutes described in the settlement agreement, the September 2008 meeting included discussions directed at increasing gross margins through increased mark-ups, including an increase in mark-ups for cycling accessories and bicycles, a proposed implementation time for price increases (from 1 October 2008), eliminating discounting and undercutting between shops, and encouraging wholesalers to provide higher recommended retail prices and to advertise such prices to the public. These were the factual allegations underpinning the Commission’s enforcement action.

On the Commission’s version (as reflected in the settlement agreement), a complaint was initiated in March 2009 against two firms identified as instigators of the meeting, and the initiation was later amended to include additional respondents. The Commission ultimately referred a complaint to the Tribunal against multiple respondents, later withdrew that referral, and then initiated a fresh complaint on 18 July 2011 under CC Case No. 2011Jul0155 concerning the allegations (primarily the September 2008 meeting). Following further investigation, the Commission concluded that Thule’s conduct (together with others) amounted to a contravention of section 4(1)(b)(i) and referred the complaint to the Tribunal on 5 July 2012.

A central, undisputed fact for purposes of the Tribunal’s order was that Thule admitted in the settlement agreement that it had contravened section 4(1)(b)(i) of the Act. The settlement further recorded undertakings by Thule concerning future conduct, cooperation, compliance training, and the publication of a notice in its premises for a defined period, all of which formed part of the agreed terms sought to be confirmed as an order of the Tribunal.

The Tribunal’s decision itself did not resolve factual disputes after trial; rather, it proceeded on the basis that a settlement agreement had been concluded and placed before the Tribunal for confirmation in terms of the Act.

3. Legal Issues

The central legal question before the Tribunal was whether the settlement agreement concluded between the Commission and Thule—together with the attached annexures identified in the Tribunal’s order—should be confirmed as an order of the Tribunal in terms of the Competition Act.

The issue before the Tribunal was therefore primarily one of application of statutory power to an agreed set of facts and terms, rather than a determination of contested factual disputes or a value judgment on the merits after adversarial litigation. The settlement itself recorded an admission of contravention by Thule, so the Tribunal was not required (in this decision) to determine whether the conduct constituted a contravention on the evidence; instead, it had to decide whether to formalise the parties’ agreement through an enforceable Tribunal order under the relevant provisions of the Act.

4. Court’s Reasoning

The Tribunal’s reasoning, as reflected in the order, was procedural and statutory in nature. The Tribunal exercised the power conferred by the Competition Act to confirm a settlement agreement as a Tribunal order. The order expressly recorded that the confirmation was made in terms of section 58(1)(a) of the Competition Act, 1998.

The settlement agreement placed before the Tribunal was framed as one concluded for confirmation as an order under the Act, and it included substantive undertakings. These undertakings included Thule’s admission of contravention, an agreement to cooperate with the Commission in relation to proceedings against other respondents, commitments to desist from the prohibited conduct, and internal compliance measures such as competition law training and annual updates. The settlement also included a public-facing notice requirement (Annexure A) to be displayed at Thule’s premises for a defined period, and the Tribunal’s order recorded that the settlement agreement was confirmed together with Annexure A and an addendum labelled Annexure B.

In confirming the settlement, the Tribunal did not provide a detailed merits analysis of section 4(1)(b)(i) conduct in this decision. The Tribunal’s determination was directed at giving legal force to the parties’ agreed resolution by making it an order of the Tribunal, thereby rendering the settlement enforceable in accordance with the Act.

5. Outcome and Relief

The Tribunal confirmed the settlement agreement between the Competition Commission and DBS Distributing CC t/a Thule Car Rack Systems CC as an order of the Tribunal. The confirmation included the settlement agreement “read with” the attached Annexure A and the addendum attached as Annexure B, as stated in the Tribunal’s order.

The order, as presented in the provided text, did not record a separate or additional costs order.

Cases Cited

No case law citations appear in the provided judgment text.

Legislation Cited

Competition Act 89 of 1998 (as amended), including the following provisions as referenced in the provided text: sections 4(1)(b)(i), 19, 22, 26, 49B, 49D, 58(1)(a), 58(1)(b), 59(1)(a).

Rules of Court Cited

No rules of court are cited in the provided judgment text.

Held

The Competition Tribunal made an order confirming, in terms of section 58(1)(a) of the Competition Act 89 of 1998, the settlement agreement concluded between the Competition Commission and DBS Distributing CC t/a Thule Car Rack Systems CC, including Annexure A and an addendum marked Annexure B. The effect of the order was to render the settlement terms binding and enforceable as an order of the Tribunal.

LEGAL PRINCIPLES

The Tribunal applied the principle that, where the Competition Act empowers the Tribunal to do so, a settlement agreement concluded between the Competition Commission and a respondent may be confirmed as an order of the Tribunal, thereby giving the agreement the status and enforceability of a Tribunal order.

The matter proceeded on the basis that a contravention alleged under section 4(1)(b)(i)—agreement or concerted practice to fix prices or trading conditions—could be resolved through a settlement mechanism contemplated in the Act, incorporating admissions, cooperation undertakings, commitments to cease the prohibited conduct, and compliance-oriented remedial measures, and that such settlement may be formalised through an order under section 58 of the Act.