Lekoa Fitment Centre v Competition Tribunal and Another (132/CAC/Dec14) [2014] ZACT 101 (10 December 2014)

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[2014] ZACT 101
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Lekoa Fitment Centre v Competition Tribunal and Another (132/CAC/Dec14) [2014] ZACT 101 (10 December 2014)

IN
THE COMPETITION APPEAL COURT
CAC CASE NO.
132/CAC/Decl4
In the matter
between
LEKOA FITMENT
CENTRE
........................................................................................................
Appellant
And
THE COMPETITION
TRIBUNAL
............................................................................................
Respondent
ALTECH
NETSTAR
....................................................................................................................
Respondent
FILLING SHEET
NOTICE OFAPPEAL
TAKE NOTICE THAT
Lekoa Fitment Centre is making an application to the Competition
Appeals Court for the following order:
1. Dismissing the
Competition Tribunal's decision filed on 20 November 2014, to grant
the exception application on the basis that
(a) no proof was
submitted on the lack of sufficiency for Lekoa Fitment Centre's
submissions according to Rule 15 (2) and Rule 18
(1)
(b) on the basis of
the grounds of Appeal set out in the attached affidavit
2. Dismissing the
Competition Tribunals dismissal of The Referral as contemplated in
section 37 of the Competition Act ("Act")
3. Directing the
respondent to issue the Appellant a restraint of trade waiver
document
4. Granting the
appellant such further relief and/or alternative relief as might be
deemed just.
TAKE NOTICE THAT the
grounds of appeal are set out below in the affidavit of Gombera
Sibanda attached hereto, together with annexures.
Dated at Boksburg on
this the 1st December 2014.
TO:
THE REGISTRAR
Competition Appeals
Court Of South Africa
The DTI Campus,
Mulayo Block C
77 Meintjies Street
Sunnyside, Pretoria
Tel: 012 394 3354
Fax: 102 394 0169
Email:
cac@comptrib.co.za
AND TO:
The Competition
Tribunal of South Africa
The DTI Campus
Mulayo Block C
77 Meintjies Street
Sunnyside, Pretoria
Tel: (012) 394 3355
Fax: (012) 394 0169
Email:
ctsa@comptrib.co.za
:
leratom@comptrib.co.za
AND
TO:
The Competition
Commssion
The DTI
Campus,Mulayo Block C
77 Meintjies Street
Sunnyside, Pretoria
Tel: 012 394 3200
Fax: 012 394 0166
Email:
ccsa@compcom.co.za
AND TO:
WEBBER WENTZEL
Respondent's
Attorneys
10 Fricker Road,
lllovo Boulevard
Johannesburg,219
Tel: 01l 530
5285/5235
Fax: 01l 530 6285
Email:
daryl.dinglev@webberwentzel.com
Ref:
Daryl Dingley/2456364
IN THE
COMPETITION APPEAL COURT
CAC CASE NO.
132/CAC/Dec14
In the matter
between
LEKOA FITMENT
CENTRE
.........................................................................................................
Appellant
And
THE COMPETITION
TRIBUNAL
.............................................................................................
Respondent
ALTECH
NETSTAR
......................................................................................................................
Respondent
NOTICE OF APPEAL
I, the undersigned,
GOMBERA SIBANDA
Do hereby state
that:
1. I am adult male a
co-member of Lekoa Fitment Centre cc, the Appellant in this matter. I
am duly authorised to depose to this
affidavit on behalf of Lekoa
Fitment Centre where I am responsible for overall operations of the
business. The contents of this
affidavit are within my personal
knowledge. I was personally involved in the original complaint of
this matter to the Competition
Commission since 16 October 2013
2. The Appellant is
Lekoa Fitment Centre ("Lekoa") which was established in
2005 in terms of close corporation Act of
South Africa as a juristic
person with its physical address at Shop No 1 Model Complex, 47
Galloway st, Meyerton, 1960 and postal
address as P 0 box 5034,
Boksburg North, 1461.
3. The respondents
are The Competition Tribunal situated at DTI Campus, Mulayo Block C,
77 Meintjies Street, Sunnyside, Pretoria
and Altech Netstar (Pty) Ltd
("Netstar") having its principal place of business at
Central Park Offices, 16
th
Road, Randjespark Extention 5,
Midrand.P.O. Box 2435,Halfway House, 1685
4. The affidavit is
deposed to in support of the notice of appeal, CT7 form in terms of
section 37 and Rule 38(3) the Competition
Act read with rule 16 of
the Competition Appeals Court Rules.
5. The facts
relating to the merits of the appeal hereby reffered are based on the
Tribunal records, Netstar's and Lekoa's heads
of argument as well as
transcripts of the exception hearing
Foreword to the
Appeal application affidavit
6. This affidavit is
divided into two dinstict parts
Part 1 comprises a
founding affidavit filed in support of the notice of Appeal against
the Tribunal's decision and order:
(1) granting the
exception
(2) dismissing the
Referral
7. Part 2 comprises
a replying affidavit to The Tribunal's order and decisions
Part 1
[8] The basis of
Altech Netstar's ("Netstar") exception application was that
Lekoa Fitment centre ("Lekoa")
did not disclose the cause
of action against the respondent and/or does not comply with Tribunal
Rule 15(2), therefore the exception
hearing's objective was limited
to establishing the existence of relevant cause of action.
[9] In terms of Rule
15 (2) and the amendments in accordance with Rule 18 (1) the
exception hearing failed to disclose where and
how the cause of
action was not met.
[10]
In terms of 15 (2) the complaint is complete, clear and not vague
when a concise statement of the grounds of complaint is filed

supported by material facts or points of law, Netstar has inferred
the word AND points of law. In terms of Rule 15 (2) Altech Netstar's

grounds for exception application does not comply with Rule 15 (2) on
the basis that, the compliance with law
1
was
made obligatory, where the Act sets it as an alternative, in this
Netstar was setting up a strategy to rely on legal technicalities

against laypersons where it was not necessary.
[11] In terms of
Rule 22 (c) (ii) with reference to the Appellant's notice of motion
of 16 September 2014, the exception application
should have been
dismissed forthwith
[12] In terms of
Tribunal Rule 16 (5) in their answers Netstar did not specifically
deny or admit allegations of facts set out in
the Complaint Referral
[12.1] In terms of
22 (c) (iv) The Tribunal did not obtain admission of particular facts
or documents.
[13] In terms of
Rule 16 (6) Netstar failed to qualify or explain denials of
allegations when approached by Lekoa.
In
terms of section 72
2
and section 73
3
Netstar's exception application was held under conditions that were a
direct contravention of the Act as it was based on false
evidence.
[14]
In terms of Rule 40 (l)
4
the complainant was not given time to respond to the excipient's
heads of arguments.
[15]
In terms of Rule 22
5
(c), notwithstanding, the Appellant was not afforded the benefit
provisioned for by the Act
[16]
In terms of the impartiality and prejudice contemplated in section 20
(2) (b)
6
and section 32
7
,
the Presiding Officer is a former employee of the legal firm
representing the excipient's.
[17] As a result of
the aforementioned Rules Netstar did not make out a complaint
necessary to sustain an exception application,
save fora misplaced
reliance on interpreting dominance as in a horizontal relationship,
whereas the complaints and allegations
are based on a vertical
relationship.
AND
[18] The Tribunal
shifted from the objective of the hearing in such a way that Lekoa
was prejudiced in the conduct of its defence.
[19] In the
alternative, Lekoa sufficiently addressed the matters raised in the
exception application in that the cause of action
was demonstrated
beyond reasonable doubt as far as the relevant forum had provisioned.
[20] In terms of
section 5 (1) there was no justification or defence for having
engaged in the conduct, as The Tribunal would appreciate
that
engagement in the conduct is the offence notwithstanding the effects.
[21] TAKE NOTICE
THAT the complaints have been filed on the basis of the fitment
centre agreement as contained within the Tribunal
records.
Prior to engaging on
the specifics of the Appeal, I thought it necessary to provide the
Competition Appeal Court with some background.
[22] Background
Netstar ventured
into the business of vehicle tracking services since the mid-1990s.
Since its inception
Netstar reliably outsourced all it's diverse functions of installing,
registering, re-registering its products
and services to the fitment
centres, with which, it concluded exclusive agreements. These fitment
centres formulated the national
foot print for sales and marketing,
as Netstar did not have national technical support, sales and
marketing of its own.
[23] The fitment
centres were responsible for sales, marketing, installations and
servicing of all Netstar clients, the description
of which is stated
as "The fitment centre operations" which the agreement
describes as - the business of installing,
registering, reregistering
and servicing Altech Netstar products.
[24] Lekoa Fitment
Centre was registered in 2005 (2005/155083/23) solely
8
for the business of Altech Netstar as a Black Economic Empowerment
initiative (BEE).
With the acquisition
of Comtech, Netstar introduced operational changes through which they
adapted most of the fitment centres role
of sales, marketing and
installations, described as the "fitment centre operations".
[25] The
relationship between the parties deteriorated due to the progressive
effects of the exclusionary acts and the abuse of
Netstar's market
power lessened and/or prevented the Appellant from expanding into the
market, consequently, impeding the small
and mediumsized enterprises
to have an equitable opportunity to participate in the economy.
[26] The
Complaint and Referral:
On 16 October 2013,
Lekoa filed a complaint with the Competition Commission
("Commission"), in the prescribed form, alleging
that
Netstar had engaged in abuse of dominant position through
exclusionary acts.
The relief sought by
Lekoa was "redress to our losses and alternative approach".
[27] The Commission
investigated the complaint as a contravention of section 5 (1) and
section 8 (c), against Netstar where unfair
pricing, restraint of
trade and unfair practices where summed up as abuse of dominance and
prohibited practices existed in a vertical
relationship, which on 11
June 2014 the Commission issued a Notice of Non-referral in terms of
section 50 of the Act.
[28] Based on the
Commission's reasons and decision for non referral, Lekoa found
Netstar having misled the Commission on the grounds
raised as basis
for pro-competitive gain and technological efficiency and therefore,
Lekoa referred directly to the Tribunal ("Referral")
in
terms of section 51 of the Act, on 7 July 2014, alleging that Netstar
had engaged in exclusionary acts that prevented the profitable

enterprise of a small business, Registered on the CT (1) form as per
attached Annexure GS 2
[29] Lekoa exercised
its right to amend by making these amendments as per attached
Annexure GS 4
To which the
Appellant on the invitation of the respondent replied in support of
the amendments.
[30] The
Exception Hearing
On 21 October 2014
the Competition Tribunal ("Tribunal") was called on to
determine whether an exception raised by the
excipient, Altech
Netstar ("Netstar"), that a complaint brought against it by
Lekoa Fitment Centre ("Lekoa")
discloses no cause of action
was to succeed. As something of a subsidiary issue they were to
required to determine whether certain
amendments which Lekoa sought
to bring to remedy the allegedly defective complaint referral were
validly made in terms of Competition
Tribunal Rule 18.
I now turn to the
grounds of appeal
[31] We appeal the
decision as there are major discrepancies, inconsistencies and
misrepresentation of facts in the reasons provided
for decision as
listed in paragraphs 8 to 21 above.
Further, The
Tribunal erred in that it did not take into account Lekoa's
submissions in their reasons and have not taken into account
that
Lekoa filed its complaint before it was terminated.
Furthermore, The
Tribunal erred in admission of Netstar allegations that had not been
proven, even when Lekoa had presented evidence
to the contrary.
[32] The Appellant
met the objective of the exception hearing, disclosing the cause of
action, through the adopted amendments, heads
of arguments and oral
submissions. Netstar's exception application based on lack of clarity
for cause of action was merely an attempt
to avoid a hearing
considering that the case had previously been filed by the
Commission, Netstar were fully aware what they were
called upon to
answer.
[32.1] The Tribunal
erred in going beyond the objective of the exception hearing, in
seeking to advance what would ordinarily be
covered in a hearing.
[33] Shifting the
objectives
The Tribunal erred
in that the grounds of exception dismissal had been met by all
parties adopting the amendments; the adoption
of the amendments
qualified the cause of action. Disclosure or lack thereof on cause of
action was the objective of the hearing,
which was met, by furthering
the dialogue the Tribunal erred in creating a deflection from the
objectives.
Netstar cannot claim
lack of cause of action when they had admitted to restraint of trade
as a contravention of the Act.
It cannot be left to
Netstar to determine cause of action when they have openly admitted
to the cause of action and the exception
application is irrelevant in
such circumstances.
Exclusivity
clauses
[34]
In terms of the fitment centre agreement clause 15, Lekoa was
prevented from dealing with any products or services of Netstar's

competitors. The agreement was premised on this exclusivity clause
and the same clause gave effect to all other secondary clauses
in the
agreement for Netstar to be dominant in the relationship as the
exclusive supplier. The cumulative effect of the multiple
restraints,
the unfair
9
and abusive practices, had their origins in the exclusive clause,
such as manifested by minimum price maintenance, anticompetitive
acts
of selling and installation work in vertical relationship. The
exclusivity clause while in operation was of undetermined duration
10
and was only waived when the matter had been registered with the
Tribunal.
The Tribunal erred
in that there did not obtain the facts in their chronological order.
The
fact that Netstar admitted to the effects of the exclusivity clause
11
in itself dismisses the exception application on the grounds of
deficiency of cause of action.
[34.1] Adopting the
amendment meant that the exception was summarily dismissed on the
basis of the Appellant's amendment which contained
a prayer to
dismiss the respondent exception application on the basis of failure
to answer truth fully as contemplated in section
72 (2) (b) and
section 73 (2) (a).
[35]
The Tribunal erred fundamentally in permuting Lekoa's submissions to
render an outcome in favour of Netstar, the unamended
complaint
section 2(e) was infused to section 5(1), the unamended
12
relief sought was juxtapose to the amendments. This impressed into
the argument an implication that the Appellant's relief sought
was
incompetent and thereby making an attempt to disqualify section 5(1).
[35]
Since The Tribunal were called upon to determine whether the referral
in its amended form contained the necessary allegations
to sustain a
complaint referral, paragraphs 11 to 17
13
are irrelevant and will only serve as front runners to an argument
that is not addressing what had been set out to be expounded
in
paragraph 10
14
.
[36] The Tribunal
mentions the points of law addressed by the amendments, and seeks to
ingrate Lekoa complaint's by focusing on
unamended relief sought, in
that Lekoa's heads of argument had detailed the qualification of
section 5 (1) as constituting a contravention
of the Act, in that
prohibited practices existed in a vertical relationship.
[37]
Moreover, Lekoa prayed for an order with various reliefs sought, The
Tribunal focused on the unamended relief sought and omitted
the rest
of the sought reliefs. During the oral presentations
15
the
Appellant stressed that withstanding the amended relief sought, in
particular relief 8.7 "granting the complainant such
further
relief and/or alternative relief as might be deemed just"
recognised the power of the Tribunal and subject the prayer
to be
superseded by the ruling of The Tribunal.
[38] In defence of
Netstar position, The Tribunal erred in alleging that "there
were clear pro-competitive justification grounds
for the exclusive
arrangement" without presenting the proof and when the Appellant
had clearly invited proof on the basis
that the Appellant had
evidenced that Netstar did not have pro-competitive reasons for their
admitted exclusive agreement,
[39]
The Tribunal admitted Netstar's allegation of precluding
16
Lekoa from dealing with competitors' products on the basis of trade
secrets, the Appellant has proven that although this a good
thing to
say it did not have merits as Netstar had fitment centres that were
installing the competitors products.( The relevant
fitment centres
will testify) Netstar did not train any technicians let alone give
know how on where to install, that makes the
footnote 7 on page 6 of
Tribunal decisions incorrect. This further evidenced by the Appellant
allegation
17
that returned unchallenged that Netstar did not train anyone neither
did they provide any technical data.
[40]
The technicians were the people who had the know-how and yet they
were no restrictions on their migrating to the competition.

Furthermore key direct employees of Netstar with trade and sales
secrets joined the competition(Cartrack) with no enforcement.
18
It therefore remains
that the agreement precluded the Appellant from dealing with the
competitor for the purposes of restricting
the Appellant's ability to
enter or expand into the market. With no options and access to
alternatives the Appellant was dominated
upon and squeezed on pricing
and exposed to unfair practices such as forced branding, differential
treatment, forced work
Submissions to the
facts above were filed with the Tribunal
[41]
The Tribunal erred by presenting information that is not available in
the records
19
-by
alleging that fitment centres in a position similar to that of Lekoa
had increased their turnover and margins by selling/installing
a host
of products and services
20
.
The aforementioned increased turnover allegation is not in the
records. What is in the records is the fitment centres' collective

complaints and minutes of the forum meetings that were never
resolved.
[42] The Tribunal
erred by omitting such crucial information and by inferences
propagated Netstar innocence at the same time discrediting
the
Appellant's cause.
The
Tribunal records have minutes
21
paged 389 to 415 testifying on the effects of the exclusive
agreements, where the fitment centres through the fitment centre
forum
had registered complaints on the effects of the exclusionary
acts and exclusive agreement which are the same issues raised by
Lekoa
as in the records.
[43]
Netstar alleged that the some fitment centres could undertake other
products in addition to Netstar products and also stated
that other
fitment centre, of which Lekoa was one, could not fit other products
as they were exclusive fitment centres to Netstar.
22
The Tribunal in their reasons and decision page 6, paragraph 24,
rightly conclude that the Appellant was an "exclusive Netstar

agent" but The Tribunal erred in accrediting Netstar with
investment in development of Lekoa, as proven by the direction to

take notice that Netstar had admitted to Appellant's investment.
23
[44]
The Tribunal advanced Netstar's allegations that the agreement
permitted other non conflict products and the fitment centre
was able
to market and sell profitably with such products - The Tribunal
failed to take into account that Netstar had conceded
to this
allegation as they had not responded to it.
24
In addition The Tribunal failed to take into account the Appellent's
submissions
25
.In their possession which pointed them to the clauses of the
agreement which were applied by the Respondent to control and direct

fitment centre business, through which all Netstar requirements
preceded and superseded any fitment centre interests, the call
centre
and quality department had unlimited access to the fitment centre
through clause 9.1.1 and 10.2
26
[45]
The Tribunal promulgated on Netstar's intellectual property-the
Appellant through their submissions has directed The Tribunal
to the
fact that whatever was available to the Appellant from Netstar was
paid for
27
,
Netstar went even further on and made the Appellant chargeable
28
for what was of no benefit to the Appellant.
[46]
The fact that other fitment centres are installing
29
competitor's products nullifies the need for exclusive arrangements
as mentioned earlier.
[47]
Further, The Tribunal erred in supporting the "unlawful"
nature of the agreement as alleged by Netstar, the Tribunal's

implication that the exclusive agreement was not "unlawful"
requires that they attend to the Appellant's allegations
that there
was no
30
pro-competitive gain
31
,
only after the respondent has proven to the contrary, can the
Tribunal statement be justified, as it is, it's just an allegation
by
Netstar that The Tribunal is buying into. Lekoa in its submission
demonstrated that the fitment centres invested
32
into Netstar business by providing, tools, vehicles, premises, staff
development and monetary value in the form of capital and
operational
expenses.
[48]
The Tribunal's assumption of unlawfulness of the agreement did not
address the particular requirement of seeking proof of the

pro-competitive allegations, as indicated the earlier the respondent,
Netstar, gave misleading information to the Commission the
same
strategy was applied and yet adapted by The Tribunal without asking
for proof from Netstar and in turn submit that proof to
Lekoa. In
addition it has been proven
33
that the Respondent, Netstar, failed to comply with the Act by
submitting knowingly providing false
34
information
in contravention of section 73 (2) (a)
/
(2)(d)
[49]
In addition, The Tribunal erred in justifying Netstar's allegations
of investment into Lekoa as by Netstar's own admission
they
benefited
35
from Lekoa through the enforcing
36
of BEE compliance
37
of the fitment centre. Admittedly gaining points on their BEE
ratings.
[50]
As an example the Respondent
38
forced
39
the Appellant to brand, the benefits of which were realised by
Respondent and the costs were borne by the Appellant whose return
on
investment was restricted by the exclusionary pricing and practices.
[51] In addition
Lekoa trained the technicians, which benefitted Netstar as they
simply "poached" the Appellant's staff
as and when they
wished.
[52] Omission of
Lekoa's evidence and submissions
The Tribunal erred
in that it did not take into consideration the Appellant's
submissions in their reasons and decisions.
The Appellant
indicated to the Tribunal that Netstar had misled the Commission
40
in its submissions, the Appellant submitted evidence that was not
taken into account. Considering that the Tribunal had largely,
taken
the trouble to refer to the unamended parts of the Appellant's
submissions, but did not consider the Appellant's material
facts
against the Respondents allegations which were readily accepted,
balance of facts was missing.
[54] The Tribunal
perpetuates Netstar argument that Lekoa did not define a market, when
Lekoa has alluded to the existence of a
vertical relationship and the
effects enjoined by the prohibited practices mandated by the
agreement.
The
maintenance of minimum resale price and the restrictive marketing
confirmed Netstar position of super dominance
41
,
where a total of over 100 fitment centres were limited to 2.5
%
of
sales proceeds and where 97.5% of the relevant market was guaranteed
for Netstar.
[55] Unfair
pricing
On the basis of a
filed complaint on unfair pricing, The Appellant demonstrated
competition in a relevant market were there was
contestation for
clients on the same products. Minimum resale price was maintained
through application documents that gave visibility
to Netstar on all
of Lekoa's transactions.
[56]
The Respondent supplied the Appellant with wholesale pricing
42
and retail pricing, in the same instance selling at preferable
43
pricing in the same market as the Appellant. It remains therefore
that the market is defined
44
and qualified by this action.
The
Appellant demonstrated the effect of exclusionary and unfair pricing
as a basis of anticompetitive practices, which restricted
45
the growth and development of a small business in the market. By
virtue of investing in Netstar through compulsory stock purchases,

the Appellant was naturally disposed to market
46
Netstar
products.
[57] In addition the
Appellant the anti-competitiveness was demonstrated by the
Respondent's unfair prices to the market through
special upgrades and
ongoing specials.
The aforementioned
specials were channelled through the use of Appellant owned stock,
which meant that the anti-competitive practise
of specials was that
the Appellant was unable to sell but reluctantly provide their stock
for Netstar's sells. Confining the Appellant
to the position of
unwilling buyer of goods, as these stocks were only purchased from
Netstar at 100% mark up to Netstar.
Furthermore, the
anti-competitiveness of the agreement was proven by the Appellant's
complaint on introduction of Netstar's internal
installers, which
meant that Netstar was now competition with Appellant on sales and
installations effectively lessening the opportunities
for competition
in that relevant market.
[58]
The anti-competitive nature of unfair pricing was defined
47
in sub-paragraph 23.1, 23.2, 23.3, 23.4
The
Respondents ability to determine
48
pricing structures was not only proof of dominance but
anti-competitive in that it was exclusionary, in that both expenses
of
stock purchase and were dictated by the Respondent.
[59] TAKE NOTICE
THAT all clients cash or rental were paying a premium monthly for
recovery and other services rendered by Netstar,
this meant that all
clients were Netstar's and therefore needed to be protected from the
independent pricing of the fitment centre
that would affect
uniformity of the product and services of Netstar. This was the cause
of fixed pricing and margin squeeze of
the Appellant.
[60]The
Appellant made submissions on Netstar's market power which had
restricted
49
the fitment centres to the alleged 2.5%, the figure of 2.5 % is
unproven and is meant only to infer a sense of not "required
to
market" in pursuit of discrediting the existence of a market.
However, as stated before, the marketing was not limited,
but the
ability of the fitment centre to draw business was limited through
pricing arrangements as clients were poised to go for
preferable
premiums.
[61] Dominance
TAKE NOTICE THAT
Netstar did not disagree on their dominance but argued that it was
mutual in that both parties were signatories
of the agreement.
The Appellant
demonstrated the existence of dominance in the vertical relationship
between the parties:
(a) by the effects
of the exclusionary acts
(b) the agreements
in vertical relationship was prohibited for the reasons of inherent
dominance
(c) Netstar's
admission of dominance on the basis of mutuality in both parties
being signatories of the agreement
(d) Netstar's
justification for exclusive agreement on alleged pro-competitive
grounds
(e) Lekoa was not
the only fitment centre affected, rather the exclusionary acts
affected all the fitment centres as evidenced by
the forum minutes
contained in the records.
(f) No
pro-competitive gain - Netstar did not invest in fitment centre
business
It therefore remains
that dominance was present in that relevant market, hence the
application of section 5(1) which prohibits the
very practice that
existed between the Appellant and the Respondent.
[62] Restraint of
trade
As an example of
Lekoa's relief sought, Netstar has rescinded on the restraint of
trade, only after Lekoa had filed a complaint
on the effects of the
exclusive agreement.
Restraint of trade
as an exclusive clause had its effects in the currency of the
agreement; the rescindment of restraint of trade
after termination of
contract is of no benefit.
Netstar admitted on
the restrictiveness of the exclusive agreement by rescinding the
relief sought by Lekoa.
Rescinding the
restraint of trade on the currently operating 100 fitment centre will
definitely improve the opportunities for the
fitment centre's to grow
and participate in the market.
[63] Since Lekoa
filed their complaint on 16 October 2013 and indicated the effects of
the exclusive clauses, (which are the restrictive
and principal part
of the agreement), with a view to find relief for such effects, Lekoa
holds the view that the trade restraint
was the core exclusive clause
through which all the all other restrictive practices were permeated
and exclusiveness of the whole
agreement.
[64] The fact that
Netstar admitted to rescindment of the key exclusive clause meant
that Netstar had admitted to contravention
of prohibited practices,
the Tribunal chose rather to let Netstar have its way regardless of
Netstar's admission of clear violation
and contravention of the Act.
Had been the
relief(restraint of trade) been granted to Lekoa prior to termination
on 8 January 2014, Lekoa would have been in a
position to expand in
the market as it would bargain it's position with any tracking
company, and would have had the option to
choose when and who to do
work for.
[65] During the
exception hearing Lekoa opposed the application on the basis of
possession of facts and evidence demonstrating that
the independence
of the fitment centres was restricted through the exclusive clauses
such as the restraint of trade which restricted
the fitment centre to
deal with the competitor's products
[66] Impartiality
The
Presiding Officer is a former employee of the Netstar's legal
representative
50
.
On
presumption that all parties
51
were aware of this fact except Lekoa who only discovered this after
the exception hearing, the process was flawed and the decision
is
biased.
[67] Conclusion
Lekoa were given the
applicant's heads of arguments on the eve of the exception hearing.
Lekoa was prejudiced in their attempt to
put up a fair response.
The agreement in all
its form is in current use affecting more than 100 fitment centres,
which are of the same opinion as Lekoa
fitment centre upholding the
exception application is a perpetuation of the contravention of
Competition law.
[68] Considering the
facts presented by Lekoa, the effects, duration of the complaints and
Netstar unqualified response to the charges
it is unfair for the
Tribunal to uphold the exception on the reasons they have supplied.
[69] Lekoa feit it
was unfair to be advised of the set down date by Netstar's legal
representative and thereafter to be given no
time to address the
excipient's heads of argument, Netstar heads of argument were sent at
16:47 on 20 October 2014 when the set
down was at 10:00am 21 October
2014. Lekoa was left with the option of oral defence, which is also
taken out of context, as the
audio records will prove, pursuant of
the interests of the excipient.
[70] Lekoa did not
have ample time to address Netstar heads of arguments adequately,
seeing that the reasons for decision are based
only on Netstar's
heads; this proves that indeed Lekoa was prejudiced in their ability
to respond to The Tribunal's reference documents,
which are Netstar's
heads.
Netstar heads were
submitted same day as Lekoa but there is little or any meaningful
reference made to any of Lekoa's submission,
where such reference is
made it is made in support of Netstar.
[71] In view of the
projected tendency to accept untested allegations and deliberately
obscure Lekoa's contribution while exaggerating
on Netstar's, Lekoa
would like to register the objections to the involvement of the
Presiding Member, Ms Yasmin Carrim, who, as
per information supplied
on the Tribunal's website is a former employee of Webber Wetzel, the
respondent's legal representative.
The Tribunal went
beyond the scope of the exception hearing in that they delved into
other matters that favoured Netstar, instead
of determining the
validity of the amendments and the existence of the alleged cause of
action.
The Tribunal treated
Lekoa submissions as of no substance by failing to recognise them
even when presented with evidence.
[72] The Tribunal
did not take Netstar to account for admitted or denied evidence put
before them, nor did they factor in any of
Netstar's denials,
admissions and misrepresentations
The proceedings and
records of the hearing is not reflected in the reasons submitted by
The Tribunal, after consideration of the
events of 21 October 2014,
one is left with only one conclusion that something took place after
the exception, to sway the outcome
of the exception hearing in the
excipient's favour. Lekoa therefore seeks an appeal as we feel we
were prejudiced in the exception
hearing.
PART 2
APPELLANT'S ANSWERING AFFIDAVIT
[73] Response to
the Reasons paragraphs
[74]
Paragraph 1
The
Tribunal states that they were called upon
(i)
to
determine whether an exception raised by the excipient, Altech
Netstar ("Netstar"), that a complaint brought against
it by
Lekoa Fitment centre {'Lekoa") discloses no cause of action was
to succeed and
(ii) were required
to determine whether certain amendments which Lekoa sought to bring
to remedy the allegedly defective complaint
referral were validly
made in terms of rule 18
[75] It was the
responsibility of the Tribunal to determine whether Lekoa's
submissions sufficiently disclosed cause of action.
The
cause of action emanated from the fitment centre agreement, of which
all parties have access to, in that copies of the same
were
submitted. It is on the basis that all parties are acquainted with
the contents of the fitment centre agreement, where all
Lekoa's
complaints, cause of action are derived from the exclusive clauses
therein. Lekoa indicated that their heads of arguments
demonstrated
the effects of the exclusive clauses in the agreement, the cause of
action, through elaboration of the facts and applicable
law, Chapter
1 section 2 (e), Chapter 2 section 5{1), Chapter 2 section 8 (c),8
(d) and Chapter 2 section 9 of The Competition
Act.
52
[76] Furthermore
Lekoa expounded their cause of action as a continuation to the
outcome of the Competition Commission's ("Commission")

decision, whose reasons were put forward by Lekoa as falling short as
a result of misleading submissions from Netstar.
[77] The effects of
the agreement were also elaborated to during the presentation of the
cause of action facts. Netstar did not
contest the demonstrated cause
of action.
In our view the
Tribunal did not consider the inputs and lack of inputs thereof form
both parties in as far as determining whether
the complaint brought
by Lekoa had successfully disclosed the cause of action. Since this
was the main agenda and no attention
had been paid to it, Lekoa has
cause for concern for this development and strategy.
[78] The matter of
cause of action degenerated into a dispute escalating into legal
technicalities and interpretation of definitions
on markets and
dominance, whose veracity where untested.
It therefore remains
that Netstar's attempt in support of their exception application was
inadmissible for lack of material facts
and/or alternatively, Lekoa
indicated their objections to Netstar's allegations of market and
dominance, the submissions of which
were not considered.
[79]
The issue of existence of a relevant market was demonstrated by Lekoa
as the fact that Netstar had market power in its area
of operation.
In that the agreement enforced Lekoa, an exclusive
53
fitment centre
54
,
(i)
not to quote for pricing
55
,
This exclusive clause formed the basis of unfair pricing and unpaid
work
(ii)
to rent
56
tools
57
only from Netstar, This clause reclaimed fitment fee payments even
when there were no payments at all.
(iii)
not deal with Netstar's competitors
58
,
Lekoa was responsible for operational overheads which benefited
Netstar, for the purposes of carrying out the 'fitment centre

operations" which did not benefit Lekoa. Netstar had exclusivity
to Lekoa resources, which they did not pay for.
(iv) to make use
only of Netstar price maintenance documents,
(v) to employ staff
only approved by Netstar,
(vi) exclusive right
of to terms of fitment centre staff employment
(vii)
exclusive rights to determine quality
59
(viii) exclusive
rights to access to fitment centre premises and operations, exclusive
access to fitment centre resources,
(ix) to purchase
products only from Netstar,
(x) Lekoa to sell
the same product at prices determined by Netstar,
(xi) to compete with
Netstar for clients when Netstar had better price offerings to the
client.
[80]
Netstar required the fitment centres to sell
60
and
market the products; Lekoa demonstrated to the Tribunal that Netstar
went into competition with its hundred fitment centres
that formed
the national fitment centre network. Furthermore Netstar went into
competition with its fitment centres to install,
register,
re-register and service Altech Netstar Products.
[81] Lekoa indicated
to the Tribunal the fitment centre forum minutes and the meetings
held in consultation with Netstar on the
harmful effects of the
agreement and the fact that Lekoa had informed Netstar that it will
consider external arbitration to their
cause.
[82] By adopting all
Lekoa's amendments Netstar had inadvertently admitted that the
complaint legally expressed the cause of action,
the perpetuation of
the argument further on was not the objective of the exception
hearing.
[83]
Furthermore, the adoption of the amendments by all parties
necessitated that the Tribunal was directed to take notice of the

notice of motion
61
for the dismissal of Netstar's exception application on the basis of
contravention of section 72 and section 73.
[84] Alternatively
by accepting the amendments of 16 September 2014 which sought a
dismissal of the exception hearing, The Tribunal
should have
dismissed the exception application forthwith, as Netstar was not
compelled to accept the 16 September 2014 but did
so on freewill.
[85]
The matter of Netstar's integrity
62
was raised by Lekoa as the basis of dismissing the exception on the
grounds of confirmed lies and misrepresentation and moreover
this was
Lekoa reasons for
seeking a fair hearing were Netstar would be accountable for evidence
to all submissions made.
[86] The above
demonstrates that the exception hearing was flawed as Lekoa's inputs
were ignored.
The Tribunal was
informed that all Netstar submissions were misleading and Lekoa
justified the need to dismiss the exception application
and proceed
to a hearing where both parties would have had the opportunity to
prove and/or amplify on their disputed submissions.
The Tribunal did not
address the objectives of the exception hearing in that they failed
to address the agendas as applied for.
[87] Paragraph 2
The relationship of
Netstar and Lekoa fitment centre has been briefly described in
paragraph 23 above. Where Lekoa was an exclusive
BEE fitment centre
which was contracted to carry out "fitment centre operations"
[88]
Paragraphs
The
Tribunal summaries the mandate of the fitment centre agreement as
follows:
Lekoa would perform
the "installing, registering,re-registering and servicing of
Altech Netstar Products" to a particular
standard; and
Netstar would pay
Lekoa a predetermined fee for each time it performed the "installing,
registering, re-registering and servicing
of Altech Netstar Products"
[89]
The Tribunal did not take into account facts(evidence) submitted by
Lekoa fitment centre that Netstar only paid
63
for "installing" , which was a once-off
64
fee and that Lekoa's complaint was raising issues on none payment for
registering, re-registering and servicing of Altech Netstar's

products.
65
[90] The agreement
was harmful to the small business in none payment for exercises that
were responsible for high operational costs,
the losses premised on
these practices constituted a practice that defeated the purpose of
the Act, hence the emphasis on section
2(e) demonstrated through
sections 5 (1), 8(c), 8(d) and 9 (1)
[91] The enforcement
of the fitment centre agreement resulted in extending beyond the
"installing, registering, re-registering
and servicing of Altech
Netstar products" as Netstar compelled the fitment centres to
sell and market their products. Both
Netstar and the fitment centres
were in competition for the "installing, registering,
re-registering and servicing of Altech
Netstar business as well as
the sales and marketing.
{92} In the course
of the exception hearing, there arose a question of legal
representation for Lekoa behind the scenes, Lekoa was
given an
opportunity to define the market in layman terms and did so, which
was not contested by Netstar
[95]
Paragraph 4
The
Tribunal states that the relationship between the parties reached
breaking point during the course of 2013, resulting from alleged
non
compliance by Lekoa with certain technical and other performance
standards provided for in the agreement. Lekoa, on the hand
other
hand, alleges its grievances stems from monies owed to it. The
contractual relationship ended in early 2014 when Netstar
terminated
for alleged material breach by Lekoa.
[96] Lekoa is
failing to understand why The Tribunal find it necessary to mention
paragraph 4,as it is not correct and far from
the facts of the case.
Lekoa submitted to
The Tribunal proof by dates, that several meetings had taken place to
try and resolve disputes between the parties,
prior to 2013. Lekoa
submitted proof that the fitment centre forum was opened for the
reasons of addressing the agreement that
was the root causes of all
problems and that these problems persisted until Lekoa filed its
complaint on 16 October 2013.
[96] Furthermore,
Lekoa presented evidence that they enquired on the role of the
Competition Authorities as early as 2012 by way
of emails.
[97]
Moreover the breaking point can only be that when Lekoa filed the
complaints to The Tribunal, Netstar responded by terminating
the
agreement as proven to The Tribunal in Netstar's communications to
its legal team.
66
[98] TAKE NOTICE
THAT only Lekoa's notifications were served by Netstar's legal team
as from 19 November 2013 in preparation of
the quality allegations as
a counter charge against Lekoa for filing complaints with the
Commission. Thereafter quality issues,
even as perpetuated by the
Tribunal have been a red herring to divert attention from the
complaints.
Tribunal repeats the
same technique this time accusing Lekoa of making long drawn
justifications for deficiency.
It therefore remains
that Lekoa was terminated for filing a complaints with the
Commission.
[99] Unfair
practices
Lekoa listed a host
of the exclusionary and restrictive practices and their effects as
the reasons for filing a complaint, through
the submitted proof in
the form of the forum minutes, most of the complaints were common to
ail fitment centres.
[100] For example
,The fitment centre forum's main concern was that Netstar was going
into competition with its fitment centres
by employing internal
installers, this and not monies owed to Lekoa was the basis of
Lekoa's complaints, unfair practices in a
vertical relationship
through the agreement amongst others
[101]
Paragraph 5
The
Tribunal states that, on 16 June 2013, Lekoa filed a complaint with
the Competition Commission("Commission"), in the
prescribed
form and sought relief of among others rescinding of the termination
of the contract.
[102] When one
considers the reasons put forward by the Tribunal in paragraph 4 and
5, even cursorily; it becomes immediately evident
that certain
aspects thereof, particularly in respect of termination in paragraph
4 and relief sought in paragraph 5, are inherently
contradictory.
TAKE NOTICE THAT Lekoa filed their complaint on 16 October 2013 and
not 16 June 2013 as alleged by The Tribunal.
TAKE FURTHER NOTICE
Lekoa was terminated on 8 January 2014 and therefore Lekoa could not
have filed a relief for rescinding of termination
before they were
terminated.
The Tribunal having
adapted Netstar arguments and supporting them failed to separate on
facts as they occurred.
[103] Paragraph 5
demonstrates that the Tribunal erred in that they did not put any
effort to establish the merits and facts of
the complaints,
investigations and reasons for nonreferral put forward by the
Commission, instead, in the bid to legitimise Netstar's
heads of
argument, The Tribunal adapted Netstar heads of arguments as can be
demonstrated in the comparisons of Netstar's heads
paragraph 38,
Reasons paragraph 32, heads 42 reasons 33.
[104] Paragraph 6
The Commission investigated the complaint and on 11 June 2014 issued
a Notice of Non-referral in terms of section
50 of the Act, on the
basis of "reasons provided by Netstar for concluding exclusive
agreements with its fitment centres"
attached hereto as Annexure
GS 2.
The reasons of which
Lekoa disputes as untested and misleading.
[105] Paragraph 7
The Tribunal states that Lekoa referred the matter because they were
dissatisfied with the Commission's decision
not to refer.
Lekoa as a
complainant was never asked by the Commission to weigh in on Netstar
response, The Commission accepted Netstar response
without seeking
verification on any of it. Lekoa has proven in its heads of argument
that Netstar's submission to the Commission
was misleading.
[106]
Paragraph 8 The Tribunal alleges that Lekoa amended its CT 1 form in
an effort to cure the alleged "defects". The
Tribunal is
aware that such curing as provisioned for in Competition law
67
.
The purposive Act of section 2(e) and the prohibitory acts in chapter
2 conclusively form the basis of our filing the complaint
to the
Tribunal and our testimony through the nominated platforms are cause
of action, as already proven in our submissions
Paragraph 9 Netstar
accepted the amendments
[107] Paragraph 10
The Tribunal was called upon to determine whether the referral in its
amended form contained the necessary allegations
to sustain a
complaint referral. Paragraph 10 has been addressed in paragraph [35]
above, where it was demonstrated that The Tribunal
did not take into
account the amendments in drawing their reasons. Furthermore, when
Netstar addressed the unamended relief sought,
The Tribunal did not
only follow suit in Netstar footsteps but exaggerated on the points
raised by Netstar, for example the amendments
had been accepted by
all parties, the reasons were supposedly concluded after the
exception hearing which had adopted the amendments
and yet The
Tribunal still referred to the unamended relief sought because
Netstar had mentioned it in paragraph 35 of their heads
of argument,
the heads of which had been altered by acceptance of the amendments
[107.1] Paragraphs
11 to 17 are front runners to an argument that is not addressing what
had been set out to be expounded in paragraph
10, in that it has not
taken into account the amendments.
Furthermore the
Tribunal is undermining the relevance of section 2(e) by seeking to
imply that Lekoa misapplied its significance,
when Lekoa in its
amendments made it clear that section 2(e) is not a prohibitory
practice.
[107.1]
The relevance of Section 2(e) should never be undermined by any
party, moreso by the Tribunal in light of the facts that
the
exclusivity clauses, integrated
68
the small business into Netstar and were made economical dependants,
who could not realise a return on investment
69
due the aforementioned
70
effects of the agreement.
71
It is as a direct result of the agreement inclusive of the
exclusivity clauses, in its entirety, within a vertical relationship

that Netstar exercised its dominance.
72
[108] Par graph 18
Section 5(1) at its simplest prohibits an agreement between firms in
a vertical relationship if it has the effect
of substantially and
adversely affecting competition in a defined market.
The effects of the
agreement which lessened and or prevented substantial competition
were filed by Lekoa. Section 5(1) has been
covered since ail the
effects which were put forward by Lekoa were showing the lessening of
competition and growth. Take Notice
that unfair pricing and unpaid
works were a result of the exclusive clause in the agreement where
the Fitment Centre was not allowed
to quote as described above. The
last part of the 5(1) clearly states that......"unless a party
to the agreement can prove
that any technological, efficiency or
pro-competitive, gain resulting from that agreement outweighs that
agreement." In Lekoa's
founding affidavit we vehemently refused
the allegations that were submitted by Netstar to Competition
Commission and to the Tribunal.
Lekoa even said could invite
witnesses to dismiss these submissions or Netstar was supposed to
provide proof of whatever form of
technological efficiency or
pro-competitive gain they offered to the Fitment Centre.
[109] In Paragraph
19 The Tribunal alleges that the relief sought by Lekoa was
incompetent.
Paragraph 19 is
addressing the unamended relief sought. The relief sought was
addressed by the amendments as illustrated by Annexure
GS 3 and The
Tribunal did not apply the amendments in their reasons. The
rescindment of termination was no longer a relief sought
for.
[110] As
demonstrated in paragraph [108] above, the agreement contravened the
section 5 (1) of the Act, hence, it was supposed to
be declared a
vertical anti-competitive agreement. Furthermore if the agreement was
prohibited, the Tribunal is expected to exercise
its authority to
grant the complainant such further relief and/or alternative relief
as might be deemed just.
The Tribunal had
options to explore all of Lekoa's sought relief and yet opted on the
rescindment of termination that was bng invalidated
by the
amendments.
[111] As an example
of Lekoa's relief sought, Netstar has rescinded on the restraint of
trade, only after Lekoa had filed a complaint
on the effects of the
exclusive agreement. This typical change does not imply that the
relief sought in this regard was expecting
the Tribunal to draft a
new contract and impose it on Netstar but rather that the Tribunal
was approached by Lekoa to remedy that
which was defective according
to the Act.
In the same way that
Netstar admitted to the contraventions premised on the restraint of
trade the same is applicable to the exclusive
clauses raised in
paragraph [79]
[112] Paragraph 20
The Tribunal enquired on Mr Sibanda's understanding of the relief
sought.
Mr Sibanda confirmed
that he understood clearly he further pointed out to the amendments;
this was in reference to the relief sought
in the amendments.
[113] Paragraph 21
The Tribunal states that "Not withstanding the inherent
difficulty in the relief sought by Lekoa"
The Tribunal's
follow up of paragraph 20, addressed above in [112}, describing the
relief sought as "inherent difficulty"
is an exaggeration,
considering that as explained above this was an inference of old
amendments into the new referral founded on
Chapter 1 section 2 (e),
Chapter 2 section 5(1), Chapter 2 section 8 (c), 8 (d) and Chapter 2
section 9 Furthermore, the Tribunal
alleges that they "sought to
enquire whether the alleged vertical arrangement between Lekoa and
Altech warranted cause for
concern",
Lekoa responded by
summarising it's submitted papers and pointing out to consideration
of their heads of argument.
The exception
hearing did not accommodate a full enquiry to substantiate whether
the vertical arrangement between Lekoa and Netstar
warranted cause
for concern but rather a dialogue ensued between the Tribunal and
Lekoa, in which Lekoa responded duly.
But as stated by The
Tribunal in paragraph 10 above The Tribunal was "ultimately
called on to determine was whether the referral
as amended, contained
the necessary allegations to sustain a complaint referral", the
amendments were admitted by all parties
but the Tribunal focused on
the unamended relief that had been argued in Netstar heads of
arguments that were concluded before
the amendments had been
addresses and accepted by all parties.
[114]
Paragraph 22
The
Tribunal states that, Lekoa alleges the terms of agreement "imposed"
upon it by Netstar prevented it from dealing
with any products or
services of Netstar's competitors
.
This, so it is
argued, contravened section 2(e
)...
it is undoubtedly not
the appropriate test to employ when determining whether a particular
agreement runs afoul of a specific provision
of the Act.
[115] Netstar
founding affidavit
73
attests to prevention of Lekoa from dealing with competitor products.
The effect of this clause, restraint of trade, prevented
Lekoa, a
small business from expanding into the market, this is the direct
contravention of section 5 (1) in that the effects prevented
the
small business from entering into the market by dealing any products
or services of Netstar's competitors.
With
the fitment centres as a collective, restricted to 2.5% of market. By
dealing with the competitor's products and services Lekoa
would have
had an opportunity to increase their sales from the 2.5%
74
;
this would have translated into growth of a small business. Therefore
the clause impeded
75
growth as illustrated in paragraph [60] above.
[116]
Paragraph 23
The
Tribunal alleges that Lekoa 'could in no way refer The Tribunal to
some lessening of competition in any relevant market; let
alone in
its area of operation"
In
Lekoa's interaction with The Tribunal, Lekoa gave an example on the
effect of the practice of unfair pricing
76
and explained that Netstar and Lekoa were competing for clients. In
paragraph 25, The Tribunal admits to having read Lekoa's heads

although that particular paragraph the heads of arguments were quoted
in bad light
[117] However, The
Tribunal having consulted with Lekoa's heads, they should have noted
that paragraph's 2.4 and 2.5 of Lekoa's
heads of argument describe
the market in which, in a vertical relationship the supplier's,(
Netstar's) agreements rendered the
downstream activities of its
competitors,Lekoa, unprofitable, while the supplier, Netstar,
supplies its own operations at a preferential
rate.
This
is further demonstrated in detail by means of calculations and
examples in Lekoa's heads of argument, in paragraphs 7.4 up
to
paragraph 7.7.12 page 15 to page 20
77
Lekoa illustrated by way of charts, the effect of the clauses that
restricted them from claiming payment for work done by means
of
graphs and charts
78
The Tribunal has
chosen to ignore Lekoa's input and have largely exaggerated Netstar's
contribution.
Lekoa received
Netstar heads of argument on the eve of the exception hearing, which
prejudiced Lekoa on their preparations, although
Lekoa submitted
their heads of argument on the same day as Netstar, Lekoa heads of
arguments have not been considered.
The reasons are
actually based on fault lines as they based on one line of argument,
defending Netstar admitting allegations that
have not been tested.
[118] Paragraph 24
The Tribunal states that "Netstar explained that the agreement
was an exclusive arrangement, which was not
per se unlawful under the
Competition Act"
It is not what one
party alleges but what the Act dictates, based on the Competition
Act; Lekoa in its heads of argument page 12
demonstrated the relevant
laws pertaining to their complaint
As an example
5
(1) An
agreement
between
parties in a
vertical relationship
is
prohibited if it has the effect of substantially preventing or
lessening competition in a market, unless a party to the
agreement
can prove that any technological,
efficiency or other pro-competitive, gain resulting from that
agreement
outweighs
that effect.
8
(d) engage in any of the following
exclusionary acts,
unless the
firm
concerned can show technological,
efficiency or other pro-competitive gains which outweigh the
anti-competitive effect of its act
-
Section 5(1) is very
clear as admitted to by The Tribunal in paragraph 18 above.
Through the
agreement Netstar was the Exclusive supplier Exclusive rights to
pricing
Exclusive rights to
pronounce on quality (in that there was no quality referencing
standard, anyone appointed by Netstar would determine
quality on
their behalf)
[119]
The Act
79
states that Netstar, in this case, must prove that there was
pro-competitive benefits, and Lekoa must prove that there was no
pro-competitive gain
80
,
which Lekoa has maintained from their first affidavit
81
that there was no pro-competitive gain for the exclusive agreement.
Therefore, since
Netstar did not provide proof of the said pro-competitive gain and
seeing that The Tribunal had already reached
a conclusion, how was
this possible without proof from Netstar?
[120]
The Tribunal's implication that the exclusive agreement was not
"unlawful" requires that they attend to the Complaint's

allegations that there was no pro-competitive gain, only after
Netstar has proven to the contrary, can the Tribunal statement be

justified, as it is, it's just an allegation by Netstar that The
Tribunal is buying into. Lekoa in its submission demonstrated
that
the fitment centres invested
82
into Netstar business by providing, tools, vehicles, premises, staff
in the form of capital and operational expenses.
[121] The Tribunal's
assumption of unlawfulness of the agreement did not address the
requirement for proof to any allegations of
technology, efficiency or
pro-competitive gain, as indicated earlier that this was the strategy
applied by Netstar to the Commission
and yet adapted by The Tribunal
without asking for proof from Netstar and in turn submit that proof
to Lekoa.
[122] The Tribunal
states that there were "clear pro-competitive justification
grounds for the exclusive arrangement."
There
could not have been "clear" pro competitive grounds where
no proof had been submitted, as Netstar did not present
any proof,
Lekoa opposed the exception application on the basis of possessing
proof that Netstar did not invest in any way that
Lekoa or any other
fitment centre benefited
83
[123] Netstar have
been proven to have misled the Commission and Netstar has submitted
misleading information to the Tribunal, which
has been pointed out to
the Tribunal, even though it was available for them to see, on this
basis proof should have been demanded
before admitting any of Netstar
allegations, failure of which the exception should have been
dismissed.
The
Tribunal again is taking Netstar's side unjustifiably, passing
allegations for facts by stating that Netstar had "invested
in
the development of Lekoa as an exclusive Netstar agent." When
Netstar admitted
84
to Lekoa's capital and operational investments.
[124]
The Tribunal's unjustified defence and exaggeration on behalf of
Netstar is very apparent once more, Netstar agreed to Lekoa's

investment and therefore cannot at the same time suggest that they
invested in Lekoa's development, Netstar admittedly benefited
85
from Lekoa through the enforcing
86
of BEE compliance
87
of the fitment centre.
[125] The Tribunal
alleges that, "however Lekoa was never concerned about the
exclusivity clauses prior to the hearing"
The
basis of Lekoa filing a complaint was that the exclusivity clauses
affected the small business to expand into the market, the
summed
effect of which is premised on section 2(e), the means and process
was through the listed prohibited practices of sections
5(1), 8(c),
8(d) and 9(1) and through Annexures demonstrated that the fitment
centre was controlled and directed by Netstar
88
The multiple effect of the exclusivity ciause was apparent in that
while it was anti-competitive
89
and precluded Lekoa from dealing with competitor products it confined
Lekoa to carry out unpaid work due to high volumes of repairs
caused
unreliable products and system.
90
Lekoa has addressed
this point in paragraph [79]
Moreover, the harm
by exclusivity clauses has been documented in Lekoa's communications
as in the paginated bundle and heads of
argument.
The Tribunal did not
pay attention to Paginated Records para. 16 to para 24 page 4 to page
7. 36 page 213 and Paginate Records page
523 as these submissions are
all recorded in the founding affidavit as causing harm, whose effect
was lessening and preventing
competition in Netstar's area of
operation with its fitment centres.
The
effects such as forced branding
91
have created a dialogue
92
that is very apparent to all parties
93
and yet this forced
94
marketing escaped The Tribunal even when they had evidence that the
fitment centres were forced to market and sell Netstar products
The
exclusive clauses are one and the same thing with the agreement; the
agreement without the exclusive clauses will not have
given Netstar
the dominance factor. The Tribunal did not consider Lekoa's heads of
argument on the exclusivity factor of pricing,
as it is demonstrated
on page 16 to 20 of Lekoa's heads of argument.
The
Tribunal did not consider the submissions by Lekoa that the
exclusive
95
pricing was unfair
96
as it was exclusionary
97
and restrictive.
It has been proven
that Lekoa was an exclusive fitment centre for Netstar operations
only and was not able to diversify on area
of operation due to
Netstar enforcement of the exclusivity rights.
Fitment centre was
forced to work pursuant of the agreement clauses 10.2 and 9.1.1; this
again has been proven to the Tribunal.
[126]
TAKE NOTICE THAT Lekoa raised the harmful effects of exclusive
clauses in the agreement and Netstar admitted to the harm and

rescinded the restraint of trade
98
[127] Lekoa fails to
understand the effort by The Tribunal to distance themselves from
admitting Lekoa's submissions. In their notification
for set down
date the Tribunal advised both parties to prepare heads of argument
as they might be required. In view of this Lekoa
prepared their
heads, when heads were requested Lekoa observed that Netstar
submitted their heads of argument, Lekoa followed suit,
as an
obligation to the set down notification. Netstar introduced new
issues in their heads of argument but The Tribunal is not
asking
questions. Our heads of argument was not the first time to oppose the
exception application; Lekoa opposed the exception
application from
the first day it was submitted, on the basis of possessing evidence
on the effects of the fitment centre agreement
within the vertical
relationship.
[128] TAKE NOTICE
THAT The Tribunal has noticed the lengthy record of correspondence
evidencing the origin of Lekoa's complaint
and The Tribunal has also
come to the conclusion that Lekoa's complaint has been about
defending itself against allegations of
deficient service. In all
this The Tribunal was biased and failed to see the source of the
allegations from which the allegations
are originating. It cannot be
correct that The Tribunal has update not conceded to the fact that
Lekoa filed a complaint before
they were terminated. The quality
allegations are a decoy and attempts to destroy evidence of
anti-competitive practices. The Tribunal
is assisting Netstar to
avoid addressing the basis of the complaints, through the decoy of
termination and quality allegations.
[129] Paragraph 26
The Tribunal alleges that "the exclusivity clause has become
irrelevant" The reasons in paragraph 26
could not have been
presented by a mediator, especially in this case that all parties are
fully aware that the complaint was filed
on 16 October 2013(not 16
June 2013 as suggested in paragraph 5 of the decision and reasons),
the contract was terminated on 8
January 2014.
[129.1] The
termination was not part of the initial complaint but was in addition
Lekoa's filing on the effects of the exclusive
clause post
termination.
Furthermore
The Tribunal is aware
99
of the period and time frames for one to lodge complaints after
practise ceased. Reasons based upon such an approach is not
admissible,
moreso when the Tribunal has been informed
100
that this harmful practice although admitted and promised to be
waived, is still in practice and affecting other fitment centres
101
.
The Tribunal has allowed Netstar to waiver it only for one out more
than 100 fitment centres.
Unfair for The
Tribunal to continually make reference and affirm quality of service
that has not been proven, the fact that this
is matter for them to
repeatedly consider confirms it's subject to a hearing and therefore
dismissal of the exception application.
The logic applied in this
paragraph, in the absence of and outside of a formal hearing, is
unfair.
[130] Paragraph 27 a
relevant market has been demonstrated, proof of such marketing
exists, in that prior to the introduction of
Tracker and other
tracking companies a vehicle tracking market existed. Netstar as the
pioneer of this market operated within this
market without other
tracking companies. Netstar operated in this market with its fitment
centres that is why Lekoa states that
a market existed and Netstar
was in competition with its fitment centres in that market and area
of its operations. This market
is relevant to both parties area of
operation.
[131] Paragraph 28
The Tribunal alleges that Lekoa's response on market definition was
unsatisfactory.
Lekoa explained that
this market still exists even though Lekoa was terminated as the same
agreement is still affected to more than
100 fitment centres. Lekoa
case is not an isolated incident and cannot therefore burden upon the
reasons supplied by the Tribunal.
The Tribunal was informed of the
fact that Lekoa is not the only fitment centre and the same agreement
is currently in force, regardless
of the waiver awarded to Lekoa, the
same exclusivity clauses are still in force.
[132] Paragraph 29
the recordings of the exception hearing can prove what Mr Sibanda
said
[133] Paragraph 30
The Tribunal is using untested and unproven allegations submitted by
Netstar without hesitation, these statistics
are based on Netstar
whose integrity on submissions has be proven as misleading. Lekoa
prayed for a hearing to prove these statistics
to be false.
[134] Paragraph 31
The Tribunal has registered sympathy to Lekoa for the difficulties
and investment.
The effects based
test is admittedly noted by the Tribunal and it is only by an
opportunity through a hearing that dominance can
be proven, as
evidence and witnesses play a pivotal role in such a matter that
cannot be conclusively addresses in an exception
hearing.
Lekoa has proven in
all its documentation the effect of the vertical arrangement, that it
substantially lessened and prevented competition
through Netstar
unfair pricing, unfair practices and abuse of dominance.
[135] Paragraph 32
The Tribunal alleges that Lekoa is making contractual disputes.
This is a clear
adaptation of Netstar argument, however, this argument is the other
side of Lekoa's complaint that the agreement
which they refer to as
the contract is the root cause of the complaint, this is both an
admission and a denial of section 5(1)
the difference is that The
Tribunal, just like Netstar are instructing us to address our matter
in a civil court, Lekoa is simply
stating that the agreement/contract
was prohibited in a vertical relationship.
[136] The contract,
that is the agreement ,is one and the same with its exclusivity
clauses, which had the effect of substantially
lessening and
preventing completion as demonstrated by Lekoa through its
amendments, affidavits and heads of argument is what The
Tribunal is
directing us to refer to a civil forum.
[137] The exclusive
clauses had their effects in the currency of the agreement post
termination.
The
Tribunal were informed that the exclusivity clauses
102
used to justify the outcome for termination, still affects the
operating fitment centre, The Tribunal has to bear in consideration

that this complaint although lodged by Lekoa affects other 100
fitment centre as evidenced by the fitment centre Forum minutes.
Although some
fitment centres have not come forward they are victims of the same
agreement.
[138] Paragraph 33
Tribunal alleges that Mr Sibanda failed to prove relevant market, I
am sure the audio records are available.
It is unfair that Netstar's
allegations are taken as gospel truth and Lekoa's submissions are
ignored. Netstar lied on all their
submissions and did not submit a
single proof or facts but simply relied on points of law, The
Tribunal bases its arguments trying
to find conflict in Lekoa's
submissions where it does not exist. In paragraph 33 The Tribunal
once again conflicts it's facts on
the amendments, the amendment were
accepted by all parties and yet The Tribunal demonstrates that they
did not have the amendments
in mind for their reasons and decisions.
[139] Paragraph 34
The Tribunal alleges that Lekoa did not adequately lay a foundation
for competition law case.
The
Tribunal did not apply the amendments in their reasons and decisions.
Lekoa heads of arguments have not been admitted at all,
even though
they were submitted on the same day as Netstar and even though Lekoa
prayed for their consideration.
103
The Tribunal as mentioned above, did not apply the amendment in the
build up to their reasons but rather used the unamended especially

the relief sought. The introduction of the unamended part of the
complaint and the introduction of the amendments as substitution
in
conclusion infuses an unfair logic and consequently reasons that are
not based on the developments of the case.
[140] Conclusion
Lekoa were given the
applicant's heads of arguments on the eve of the exception hearing.
Lekoa was prejudiced in their attempt to
put up a fair response.
The agreement in all
its form is in current use affecting more than 100 fitment centres,
which are of the same opinion as Lekoa
fitment centre, upholding the
exception application is a perpetuation of the contravention of
Competition law.
Considering the
facts presented by Lekoa, the effects, duration of the complaints and
Netstar unqualified response to the charges
it is unfair for the
Tribunal to uphold the exception on the reasons they have supplied.
Lekoa felt it was
unfair to be advised of the set down date by Netstar's legal
representative and thereafter to be given no time
to attend Netstar
heads of argument which were sent at 16:47 on 20 October 2014 when
the set down was at 10:00am 21 October 2014.
Lekoa was left with the
option of oral defence, which is also taken out of context, as the
audio records will prove, pursuant of
the interests of the excipient.
Lekoa did not have
ample time to address Netstar heads of arguments adequately, seeing
that the reasons for decision are based only
on Netstar's heads; this
proves the unfairness and that indeed Lekoa was prejudiced in their
ability to respond to The Tribunal's
reference documents, which are
Netstar's heads.
Netstar heads were
submitted same day as Lekoa but there is little or any meaningful
reference made to any of Lekoa's submission,
where such reference is
made it is made in support of Netstar.
In view of the
projected tendency to accept untested allegations and deliberately
obscure Lekoa's contribution while exaggerating
on Netstar's, Lekoa
would like to register the objections to the involvement of the
Presiding Member, Ms Yasmin Carrim, who, as
per information supplied
on the Tribunal's website is a former employee of Webber Wetzel, the
respondent's legal representative.
The Tribunal went
beyond the scope of the exception hearing in that they delved into
other matters that favoured Netstar, instead
of determining the
validity of the amendments and the existence of the alleged cause of
action.
The Tribunal treated
Lekoa's submissions as of no substance by failing to recognise them
even when presented with evidence.
The
Tribunal did not take Netstar to account for denied evidence put
before them, nor did they factor in any of Netstar's denials,

admissions and misrepresentations The proceedings and records of the
hearing is not reflected in the reasons submitted by The Tribunal,

after consideration of the events of 21 October 2014, one is left
with only one conclusion that something took place after the

exception, to sway the outcome of the exception hearing in the
excipient's favour. Lekoa therefore seeks an appeal as we feel we

were prejudiced in the exception hearing.
1
In
terms of 15 (2) the complaint is clear and not vague when a concise
statement of the grounds of complaint is filed supported
by material
facts or points of law, Netstar has inferred the word AND points of
law.
2
Section
72 (b) gives false evidence, knowingly or believing it to be false
3
73.
Failure to comply with Act (1) A person commits an offence who (d)
knowingly provides false information to the Commission;
4
The
respondent, in this case Lekoa was served with Netstar heads f
argument on eve of hearing
5
Rule
22(c) directive to obtain evidence, technical or formal amendments
to correct errors in any document filed in the matter,
any pending
notices of motion, obtain admissions of particular facts or
documents, calling of witnesses, clarifying and simplifying
of
issues
6
(2)
The Commissioner, each Deputy Commissioner and each member of the
staff of the Competition Commission, must not (b) participate
in any
investigation, hearing or decision concerning a matter in respect of
which that person has a direct financial interest
or ary similar
personal interest;
7
Section
32. Conflicts and disclosure of interest by members ofCompetition
Tribunal (1) A member of the Tribunal may not represent
any person
before a panel of theTribunal. (2) If, during a hearing, it appears
to a member of the Competition Tribunal that a
matter concerns a
financial or other interest of that member contemplated in section
20(2) (b), the member must - (a) immediately
and fully disclose the
fact and nature of that interest to the Chairperson and to the
presiding member at that hearing; and (b)
withdraw from any further
involvement in that hearing.
8
Tribunal records page 82 para 30.1.2 Lekoa an exclusive fitment
centre
9
Tribunal
records page 221 para 159 to 161
10
Fitment
centre agreement clause 4.1 and 4.2 90 days probation thereafter
indefinite duration
11
Fitment
centre agreement clause 15 Restraint of trade
12
Tribunal
reason and decision page 5 para 19
13
Tribunal
reason and decision para 11 to 17
14
Tribunal
reason and decision para 10
15
Tribunal
reason and decision page 45
16
Tribunal
reason and decision para 24
17
Tribunal
records para 131 page 219,para 331 page 229
18
Tribunal
records para 27.3 page 9
19
Tribunal
reason and decision para 24
20
Tribunal records page 82 para 30.1.1
21
Tribunal
records fitment centre forum minutes
22
Tribunal
records page 82 para 30.1.2 Classification of fitment centre types
23
Tribunal
records para 35 page 86 and para 162 page 221 Netstar admitted to
fitment centre investment
24
Tribunal Rules 16(5) An allegation of fact set out in the
Complaint Referral that is not specifically denied or admitted in
an
Answer will be deemed to have been admitted.
16
(6) In an answer, the respondent must qualify or explain a denial of
an allegation, if necessary in the circumstances.
25
Tribunal records page 218 para 122
26
Tribunal
records page 19,20 para 9.1.1 and 10.2 Fitment centre agreement
27
Fitment
centre agreement clause 6.5/12.1/12.2/12.3 The Appellant paid for
all costs
28
Lekoa
heads of argument page 23 para 7.10.9
29
Lekoa
heads of argument page 25 para 7.12.7 Netstar admitted to other
fitment centres installing competitor products
30
Tribunal
records page 86 para 35 Respondent admission of Lekoa's investment
31
Tribunal
records page 221 para 155
32
Lekoa
Heads page 22 to 25 para 7.9.0 to para 7.12.7
33
Tribunal
records para 329 page 229
34
Tribunal
records para 54.1.1 page 93
35
Tribunal
Records 27.1 page 80
36
Tribunal
Records page 379
37
Tribunal
Records para 121 page 218
38
Tribunal
records para 35 page 86
39
Tribunal
page 318
40
Tribunal reason and decision page 21, 49
41
Tribunal
records page 222 para 176
42
Tribunal
records page 170 to page 173
43
Tribunal
records page 393
44
Tribunal
records page 7 para 23
45
Tribunal
records page 221 para 159
46
Tribunal
records page 214 para 58
47
Tribunal
records page 7
48
Tribunal
records page 16 para 6.6 and para 6.7 restricted the Appellant to
set payment structures, regardless of work labour and
expenses
49
Tribunal
Records page 73 para 11
50
Ms
Carrim completed her articles at law firm Webber Wentzel.
51
Section
31 (6)
52
Lekoa
heads of argument pages 12 - 26
53
Tribunal
noted the classification of Lekoa as exclusive Netstar agent
54
Tribunal
records page 82 para30.1-2 Netstar's classification of Lekoa
55
Fitment
centre agreement clause 6.6 Lekoa was prevented from seeking costs
to work done.
56
Tribunal
records page 5 para 20.2
57
Fitment
centre agreement clause 6.2 and clause 8.1.4 these tools were of no
benefit to fitment centre as they were for programming
Netstar
products, which could have been programmed by Netstar prior to
purchase and delivery
58
Fitment
centre agreement clause 15.1
59
Fitment
Centre agreement clause 5.1 Netstar did set standards
60
Fitment
centre agreement schedule 1 a minimum of 40 fitments was compulsory
61
Rule
22 (c) (ii) addressing of any pending notices of motion
62
Lekoa
fitment heads of argument page 7 para 3.8 to para 3.8.13
63
Tribunal
records page 85 para 32 Netstar admitted
64
Tribunal
records page 4 para 14
65
Tribunal
records page 4 para 18 Netstar did not pay for registering,
re-registering and servicing of Altech Netstar's products.
66
Tribunal
records page 116 Netstar received complaints for Commission on 29
October 2013 and initiated charges against Mr Sibanda
on 30 October
2013
67
Rule 18 (1) provisions for amendments
68
Tribunal
records page 222 para 164 The fitment centre was the income
generator
69
Lekoa
heads of argument page 27 para 8.5Through clause 9.1.1 and 10.2 of
the agreement Netstar claimed ali monies paid to Lekoa
70
Paragraph
[79] above
71
Tribunal records page 4 para 16 and para 19
72
Tribunal records page 4 para 9
73
Tribunal records page 80 para 27.2
74
Tribunal
records page 87 para 38.1 "....this is evidenced in the
independent fitment centre sales comprising only approximately
2.5%
of the Netstar's total device sales.
75
Tribunal
records page 221 para 159
76
Tribunal
transcript page 29
77
Lekoa
heads of argument page 15 to 20
78
Tribunal
records page 272 to page 274
79
5
(1).......unless a party to the
agreement
can
prove that any technological, efficiency or other pro-competitive,
gain resulting from that
agreement
outweighs that effect.
80
Records para 25.3 page 8
81
Records
para 25.3 page 8 Records para 17 page 4
82
Lekoa
Heads para 7.9.0 to para 7.12.7 pages 22 to 25
83
Lekoa
heads of arguments page 22 up to page 26 para 7.9.1.1 to 7.14,2
84
Records
para 35 page 86
85
Records
27,2 page 80
86
Records
page 379
87
Records
para 121 page 218
88
Tribunal
records page 214 para 56and 215 para 62
89
Annexure
LK 12 The fitment centre forum issues an attempt to address the
exclusivity clauses.
90
Annexure
LK 10 system unreliability resulting in formation of fitment centre
forum
91
Records
para. 20.11 page 6
92
Records
para. 47 page 90
93
Records
page 316 to page 331
94
Records
page 503
95
Lekoa
heads para. 7.6.4
96
Records
para.23 page 7
97
Lekoa
heads para.7.4 page 15
98
Fitment
centre agreement clauses 15.1 to 15.3 Lekoa not allowed to deal with
competitor products
99
In
terms of section 67 a complaint in respect this prohibited practice
it is within three years.
100
Lekoa
heads of argument page 27 para 8.3
101
Tribunal
records page 231 para 369 100 fitment centres precluded from dealing
with competitor products
102
Fitment
centre agreement clauses 9.1.1 and 10.2 No convectional quality
standards, Netstar reserved to determine on quality
103
Netstar
heads were acknowledged by the Tribunal page 1 "...Mr Mooki we
received your Heads of Argument last night, thank
you.”