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[2013] ZACT 115
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Sasol Chemical Industries Ltd v Omnia (Pty) Ltd; In Re: Omnia (Pty) Ltd v Sasol Chemical Industries Ltd (38/CR/Apr2 (016907), 016907) [2013] ZACT 115; [2013] 2 CPLR 578 (CT) (18 December 2013)
COMPETITION
TRIBUNAL OF SOUTH AFRICA
CT
Case No: 38/CR/Apr12 (016907)
In
the matter between:
SASOL
CHEMICAL INDUSTRIES
LIMITED
APPLICANT
and
OMNIA
GROUP (PTY) LIMITED
RESPONDENT
In
re:
The
complaint referral between:
OMNIA
GROUP (PTY)
LIMITED
APPLICANT
and
SASOL
CHEMICAL INDUSTRIES
LIMITED
RESPONDENT
Panel:
Norman Manoim (Presiding Member)
Yasmin Carrim (Tribunal
Member)
Medi Mokuena (Tribunal
Member)
Heard
on:
3 December 2013
Order
issued on:
18
December 2013
Reasons
issued on: 18 December 2013
REASONS
FOR THE DECISION IN APPLICATION FOR SEPARATION
Introduction
In
this matter we have to decide whether an application brought by Sasol
Chemical Industries Limited (“SCI”) being the
respondent
in main case, to have an issue separated for prior consideration
should be granted.
[1]
On 5 April 2Q12, the Omnia Group (Pty)
Ltd (“Omnia”) referred a complaint against SCI to the
Tribunal, following the
Competition Commission’s decision to
decline to refer any complaint against SCI to the Tribunal.
[2]
In its referral Omnia alleges three
specific complaints against SCI arising from a supply agreement for
ammonia that it had concluded
with SCI in May 1996. In brief Omnia
alleges:
1.
Excessive pricing of ammonia charged to
Omnia by SCI for the period May 2006 to December 2008 in
contravention of section 8(a) of
the Competition Act 89 of 1998
(“Act”) (“the excessive pricing complaint”);
2.
Price discrimination in ammonia prices
charged to Omnia and AECI/AEL by SCI for the period January 2008 to
December 2008 in contravention
of section 9(1), in that SCI is
alleged to have charged AECI/AEL a lower price than that charged to
Omnia (“price discrimination
complaint”);
3.
A catch-all allegation of exclusionary
conduct by SCI in contravention of section 8(c) and/or S8(d) that
impeded Omnia from expanding
within the markets for the supply of
limestone ammonium nitrate and ammonium nitrate solution as well as
other nitrogen-based fertilizers
during the period May 2006 to
December 2008 by failing and/or refusing to negotiate a revised
ammonia price for a period of 30
months as well prohibiting Omnia
from purchasing from other suppliers or importing ammonia during that
period (“exclusionary
conduct”).
[3]
SCI brought this application before the
Tribunal for an order to separate the following issue, referred to by
it as a “question
of law”, from the remaining issues in
the referral proceedings, and to require us to rule on this aspect
first:
“
As
a matter of law, can a price agreed pursuant to a long term
contractual formula, with pricing reviews, that is not excessive
at
the time that it was
negotiatedbecome
excessive at a iater point in time, namely the complaint period?”
(“Separated Question”)
[4]
The
long-term contractual relationship between the firms for the supply
of ammonia is summarised as follows
[1]
:
1.
The parties entered into a long-term
supply agreement for the supply of ammonia in May 1996;
2.
This agreement aimed to approximate
Omnia’s import alternatives for ammonia through the use of a
contractual pricing formula
based on the import parity price of
un-dumped ammonia imports;
3.
The contractual formula accounted for
two key components in replicating IPP, namely the ammonia prices FOB
from the relevant global
sources of ammonia supply and the applicable
freight rates for ammonia to be delivered to South Africa from these
locations. These
components of the contractual formula were then
weighted, utilising Omnia’s actual imports at the time that the
supply agreement
was concluded;
4.
A discount was then applied to the
contractual formula;
5.
The contractual formula was subjected to
an annual review mechanism;
6.
The
agreement itself contained termination provisions for either party on
two years written notice
[2]
[5]
SCI
contends that the price it charged Omnia, for purposes of its
referral, is the contract formula, as amended and applied and
not the
monthly amount required as payment from Omnia, which Omnia contends.
SCI submits that it is this conceptual dispute between
the parties in
the referral which should be separated from the other issues in the
referral and be determined by the Tribunal prior
to it hearing the
remainder of the case.
[3]
[6]
SCI’s
rationale for the separation is that such separation will streamline
the resolution of the issues in the referral proceedings
by providing
clarity as to the nature and extent of evidence that is required to
be led before the Tribunal, or, if we were to
decide the separated
issue in its favour, by disposing altogether of the most complex and
evidence-intensive claim against SCI,
namely that for excessive
pricing.
[4]
[7]
SCI
argues that the separated question is capable of separation due to
the fact that it is purely a question of law that can be
determined
by legal argument. Yet it concedes that the issue would require some
consideration of the facts but submits that it
could be determined by
a limited recourse to the common cause facts contained in the
founding, answering and replying affidavits
regarding the contractual
supply relationships between SCI and Omnia.
[5]
No hearing of further evidence is necessary.
[10]
Omnia opposes the separation application. The central plank of its
opposition is that the issue sought to be separated by SCI
is not
only a question of law which could be disposed of by legal argument
only but requires the Tribunal to have some recourse
to factual
evidence regarding the contractual supply relationship between the
parties. The parties’ affidavits differ as
to what the correct
facts are, as well as on what facts are relevant to the complaint
referral. Contrary to SCI’s averment,
there is thus no agreed
or common set of facts in the affidavits against which a legal
question can be determined. Moreover Omnia
takes issue with the very
formulation of the separated question in that it assumes that Omnia
has conceded that the price was not
excessive at the time it
concluded the contract with SCI. It submits that the affidavits filed
in the referral proceedings were
never intended to present all of the
evidence but merely to set out certain key facts and arguments. Omnia
has not pleaded that
the price at the time of the conclusion of the
contract was not excessive, simply because it has limited its
complaint to a particular
time period. SCI cannot, from this, infer
that Omnia has conceded that the price was not excessive prior to
that period. Finally,
it submits, as a matter of fairness, the
parties also have the right to test allegations made in the opposing
affidavits by way
of cross
examination,
which would be precluded by a hearing separated on the basis sought
by SCI.
[6]
Tribunal’s
approach to separation applications
[12]
The
Tribunal has in a previous decision
[7]
acknowledged that no Tribunal Rule exists which expressly deals with
the separation of issues. Tribunal Rule 55(1 )(b) states that
”if
a question arises as to the practice or procedure to be foilowed in
cases not provided by these Rules, the member may
have regard to the
High Court Rules”.
[13]
High Court Rule [Uniform Rule 33(4)]
provides that:
“
If,
in any pending action, it appears to the court mero motu that there
is a question of law or fact which may conveniently be decided
either
before any evidence is ied or separately from any other question, the
court may make an order directing the disposal of
such question in
such a manner as it may deem fit and may order that ail further
proceedings be stayed until such question has
been disposed of, and
the court shall on the application of any party make such order
unless it appears that the questions cannot
conveniently be decided
separately.”'
[14]
According
to Harms “the basis for our jurisdiction to act mero motu is
convenience/’
[8]
The following quotation
[9]
cited by Harms
[10]
is instructive on the proper approach to the issue of convenience:
"The
basis of the jurisdiction is convenience - the convenience not only
of the parties, but also of the Court. The advantages
and
disadvantages likely to follow upon the granting of an order must be
weighed. If overall, and with due regard to the divergent
interests
and considerations of convenience affecting the parties, it appears
that the advantages would outweigh the disadvantages,
the Court would
normally grant the application, when deciding an application under
the sub-rule, the Court is not called upon to
give a decision on the
merits. But it must consider the cogency of the point concerned,
because unless it has substance a separate
hearing would be a waste
of time and costs. So, the Court should not grant an application for
a separate hearing “unless
there appears to be a reasonable
degree of likelihood that the alleged advantages would in fact
results
[15]
We are not persuaded that a separation
will lead to the advantages claimed by SCI or that it would be
convenient for the parties
and the Tribunal alike.
[16]
At
inception, the very formulation by SCI of the separated issue is in
dispute. As we pointed out earlier Omnia opposes the contention
by
SCI that the price charged by SCI to Omnia was ‘
e
...not
excessive at the time that it was negotiated”. Omnia denies
this contention and states “although we focus on
a particular
period for purposes of the investigation, what we do contend is that
it [price] was unreasonable, it [price] was excessive
and we do not
accept that it wasn’t excessive at the time that it [price] was
negotiated”.
,
[11]
[17]
Such a fundamental dispute - namely over
the formulation of the very question to be determined separately -
renders it difficult,
if not impossible to assess whether a separated
hearing would confer any convenience or advantage to the parties and
the Tribunal
alike. How are we able to answer the question put up by
SCI, in the affirmative or in the negative, when the formulation of
the
question itself is in dispute? Put another way, if the prior
question of what is to be separated is uncertain then it follows that
an assessment of whether it would be convenient to do so - the
subsequent question - cannot be made with any certainty either.
[18]
Even if for arguments’ sake we
were to accept that the formulation of the separated issue is not in
dispute, the separated
issue - as conceded by SCI - is not only a
question of law but rather a mix of law and fact in which the facts
are disputed i.e.
are not common cause. Because of this the Tribunal
would be unable, were it to grant a separation, to arrive at a
determination
of the separated issue without first having to
determine the disputes between the parties in relation to at least
those facts that
are required for the determination of the issue.
Such a determination cannot be arrived at without permitting parties
to lead evidence
though witnesses and affording each of them an
opportunity to cross-examine the other’s witnesses.
[19]
Whilst SCI contended that the matter
could be decided on the papers without the necessity for oral
evidence, Omnia as we noted earlier
disputes this and its view is the
pleadings are insufficient to make this determination. This means
that hearing oral evidence
is unavoidable and this is likely to
render the scope and duration of such a separated hearing
unpredictable.
[20]
We cannot see any advantage to be gained
by separating this issue from the others when the separated hearing
itself would lack focus
and be rendered open-ended by the myriad of
disputes between the parties.
[21]
Furthermore there seems to be a degree
of overlap between the facts relied upon by Omnia in the excessive
pricing complaint and
in its other complaints against SCI, giving
rise to the likelihood that the same evidence may have to be
traversed both in the
separated hearing and in the hearing of the
merits of the remaining complaints.
[22]
In
Hotels, Inns and Resorts SA (Pty) Ltd v Underwriters at Lloyds
[12]
the Court cautioned that if evidence will overlap, it may be
inconvenient to grant a separation.
[23]
For the reasons discussed above we find
that there is no convenience to be served by the separation. The
formulation of the separated
issue is itself in dispute, there are no
common cause facts that the Tribunal could rely upon in the
determination of the separated
issue thus rendering the scope of the
separated hearing open-ended and unpredictable and there may be an
overlap of the factual
evidence between the separated hearing and the
other complaints,
[24]
Accordingly the application is
dismissed. Costs are awarded in favour of Omnia, such costs to
include the costs of two counsel.
18
DECEMBER 2013
DATE
YASMIN
CARRIM
Norman
Manoim and Medi Mokuena concurring
Tribunal
Researcher:
Derrick Bowles
For
Sasol Chemical Industries Ltd: Adv. D Unterhalter SC and Adv. M Le
Roux, as instructed by Bowman GilfiHan Attorneys
For
Omnia Group (Pty) Ltd:
Adv A Subel SC and Adv P Farlam,
as instructed by Norton Rose Fu I
bright.
[1]
Applicant's Heads of Argument paginated page 65 and 66 para 10.
[2]
See page 5 of the Transcript.
[3]
Applicant’s Heads of Argument paginated page 66 para 11.
[4]
Applicant’s Heads of Argument paginated page 62 and 63 para
3-4.
[5]
Applicant’s Heads of Argument paginated page 71 para 19.1.
[6]
Respondent’s Heads of Argument paginated page 95 para 21.1.
[7]
South African Breweries Ltd and Others v Competition Commission CT
Case No. 134/CR/DEC07.
[8]
See Harms, “Civil Procedure in the High Court’,
paragraph B33.11.
[9]
S v Malinde 1990 1 SA 57 (A) 68.
[10]
Opcit 8.
[11]
See Transcript page 48
[12]
1998(4) SA 466 (C).