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[2015] ZACT 22
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Allens Meshco (Pty) Ltd and Others v Competition Commission and Others, In Re: Competition Commission v Cape Gate (Pty) Ltd and Others (020552) [2015] ZACT 22 (6 March 2015)
COMPETITION
TRIBUNAL OF SOUTH AFRICA
CASE
NO: 020552
In the Stay
Application between:
ALLENS MESHCO
(PTY)
LTD
.....................................................................................
First
Applicant
HENDOK (PTY)
LTD
..................................................................................................
Second
Applicant
WIRE FORCE (PTY)
LTD
............................................................................................
Third
Applicant
AGRI WIRE (PTY)
LTD
..............................................................................................
Fourth
Applicant
AGRI WIRE NORTH
(PTY)
LTD
.................................................................................
Fifth
Applicant
AGRI WIRE
UPINGTON (PTY)
LTD
.........................................................................
Sixth
Applicant
CAPE WIRE (PTY)
LTD
...........................................................................................
Seventh
Applicant
FOREST WIRE (PTY)
LTD
.......................................................................................
Eighth
Applicant
INDEPENDENT
GALVANISING (PTY)
LTD
..........................................................
Ninth
Applicant
ASSOCIATED WIRE
INDUSTRIES (PTY)
LTD
....................................................
Tenth
Applicant
t/a MESHRITE
and
THE COMPETITION
COMMISSION
.............................................................................
Respondent
CAPE
GATE
.............................................................................................................
Second
Respondent
In re:
The complaint
referrals between:
THE COMPETITION
COMMISSION
.................................................................................
Applicant
and
CAPE GATE (PTY)
LTD
..........................................................................................
First
Respondent
ALLENS MESHCO
(PTY)
LTD
..........................................................................
Second
Respondent
HENDOK (PTY)
LTD
.............................................................................................
Third
Respondent
WIRE FORCE (PTY)
LTD
...................................................................................
Fourth
Respondent
AGRI WIRE (PTY)
LTD
..........................................................................................
Fifth
Respondent
AGRI WIRE NORTH
(PTY)
LTD
..........................................................................
Sixth
Respondent
AGRI WIRE
UPINGTON (PTY)
LTD
...............................................................
Seventh
Respondent
CAPE WIRE (PTY)
LTD
.......................................................................................
Eighth
Respondent
FOREST WIRE (PTY)
LTD
....................................................................................
Ninth
Respondent
INDEPENDENT
GALVANISING (PTY)
LTD
.....................................................
Tenth
Respondent
ASSOCIATED WIRE
INDUSTRIES (PTY) LTD
t/a
MESHRITE
.....................................................................................................
Eleventh
Respondent
CONSOLIDATED WIRE
INDUSTRIES (PTY) LTD
........................................
Twelfth
Respondent
Panel: Anton Roskam
(Presiding Member)
Andreas Wessels
(Tribunal Member)
Fiona Tregenna
(Tribunal Member)
Heard on: 22 January
2015
Order issued on: 22
January 2015
Reasons issued on :
6 March 2015
REASONS: STAY
APPLICATION
INTRODUCTION
[1]
On 14 January 2015 the first to tenth applicants filed an application
in which they sought to have the complaint proceedings
referred by
the Competition Commission (“the Commission”) to the
Competition Tribunal (“the Tribunal”)
stayed and
postponed
sine
die,
pending
judgment in a review application brought by them in the North Gauteng
High Court under case number 31044/2013. For the sake
of convenience,
we shall refer to the first to tenth applicants as the Allens Meshco
Group (“AMG”).
[2] In the review
application’s Notice of Motion the AMG seeks to review and set
aside the Commission’s decision not
to grant them leniency for
their involvement in cartel activity in terms of the Commission’s
Corporate Leniency Policy (“CLP”).
The High Court heard
the review application on 15 September 2014 and judgement is still
pending.
[3] The application
to stay was opposed by the Commission and Cape Gate (Pty) Ltd (“Cape
Gate”), the first respondent
in the complaint proceedings.
[4] We heard oral
submissions from the respective parties on 22 January 2015 and on the
same day issued our order dismissing the
stay application.
[5] We set out below
our reasons for dismissing the stay application.
BACKGROUND
[6] Before dealing
with the stay application itself, it is important to set out the
events leading up to the stay application.
[7] The complaint
proceedings against the AMG and Cape Gate concern two related
complaint referrals.
THE FIRST
COMPLAINT
[8] On 19 December
2003 a complaint was submitted to the Commission by the following
firms: Barnes Fencing Industries (Pty) Ltd
(“BFI”), F&G
Quality Tubes (Pty) Ltd (“F&G”) and Dunrose (Pty) Ltd
(“Dunrose”) ("the
complainants”).
[9]
According to the Commission’s referral affidavit
1
,
the complainants are customers of a steel product called low carbon
wire rod (an essential input raw material required in the
production
of wire and various wire products) which is manufactured by Iscor Ltd
(“Iscor”).
2
[10] The complaint
was made against the following firms: Iscor, Allens Meshco (Pty) Ltd
(“Allens Meshco”), Wireforce
Steelbar (Pty) Ltd
(“Wireforce”), Hendok (Pty) Ltd (“Hendok”),
Independent Galvanising (Pty) Ltd (“Independent
Galvinising”)
and Associated Wire Industries (Pty) Ltd t/a as Meshrite (“the
respondents”).
[11] In the
complaint the complainants alleged that the respondents (other than
Iscor) had organised themselves under a group, i.e.
AMG and had, with
the assistance of Iscor, allocated different geographic locations to
various firms in the group. According to
the complainants, these
firms then allocated the supply of two products, nails and galvanised
wire, in their respective geographic
areas (specifically the Cape
area and Gauteng).
[12] Following its
investigation the Commission on 15 January 2007 referred the
complaint against the AMG to the Tribunal for determination.
In the
referral, the Commission alleged that the AMG had fixed prices of
these products: galvanised wire, galvanised wire products,
nails,
wire and various wire products during the period 2000 to 2007 in
contravention of section 4(1 )(b)(i) of the Competition
Act 89 of
1998 (“the
Competition Act&rdquo
;).
[13] In its
answering affidavit to the referral, the AMG denied all the
allegations made by the Commission against them.
The Second
Complaint
[14]
On 15 July 2008 Scaw South Africa (Pty) Ltd (“Scaw”)
applied to the Commission for a marker
3
in terms of the CLP on behalf of Consolidated Wire Industries
(“CWI”)
4
In the marker application, Scaw submitted that CWI had concluded
agreements with its competitors, i.e. the AMG in contravention
of
section 4(1
)(b) of the
Competition Act.
[15
] On 29 July 2008
CWI applied to the Commission itself for leniency. The Commission
granted it conditional leniency on 28 August
2008.
[16] Following CWI’s
leniency application, the Commission conducted its own investigation
and on 07 September 2009 referred
the second complaint against eleven
respondents. These respondents included the five respondents in the
first referral together
with the following six respondents: Cape Gate
(Pty) Ltd (“Cape Gate”), Agri Wire (Pty) Ltd (“Agri
Wire”),
Agri Wire North (Pty) Ltd (“Agri Wire North”),
Agri Wire Upington (Pty) Ltd (“Agri Wire Upington”), Cape
Wire (Pty) Ltd (“Cape Wire”) and Forest Wire (Pty) Ltd
(“Forest Wire”).
[17] In the referral
the Commission alleged that the respondents had (i) fixed prices of
wire products; (ii) allocated customers;
and (iii) collusively
tendered for contracts to supply cable armouring wire between 2001
and 2008 in contravention of
section 4(1
)(b)(i), (ii) and (iii) of
the
Competition Act.
[18
]
In its answering affidavit to the Commission’s referral, Cape
Gate did not dispute the Commission’s allegations -
it admitted
that contraventions took place between itself, the AMG and CWI, the
leniency applicant. However, Cape Gate has disputed
certain aspects
of the Commission’s referral and in particular the period or
periods in which the Commission has alleged
that the contraventions
took place as well as the administrative penalty that it is required
to pay for its involvement in the
carte!.
5
[19]
While the AMG denied that it had contravened
section 4(1
)(b) as
alleged by the Commission, it also indicated in its answering
affidavit that it had filed a review application in the High
Court in
which it challenged the Commission’s authority to grant
leniency to CWI in terms of the CLP.
6
THE AMG’S
FIRST REVIEW APPLICATION
[20] AMG filed its
first review application on 8 February 2010. In essence this
application challenged the legal validity of the
Commission’s
corporate leniency regime.
[21] Pending the
outcome of this review application, the AMG applied to the Tribunal
for an order to stay the complaint proceedings.
The Tribunal granted
the stay on 28 March 2011.
[22] On 5 July 2011
the High Court dismissed the AMG’s review application and found
that the Commission had the power to grant
leniency. The AMG then
appealed the High Court’s decision to the Supreme Court of
Appeal (“SCA”). The SCA dismissed
the appeal on 27
September 2012 and found that the Commission was empowered to grant
leniency under the CLP. AMG subsequently applied
for leave to appeal
to the Constitutional Court, which dismissed the application for
leave to appeal on 1 November 2012.
THE AMG’S
SECOND REVIEW APPLICATION
[23] Following the
unsuccessful first review application, on 16 May 2013 the AMG
returned to the High Court again regarding the
issue of leniency.
This time, AMG’s contention was that the Commission had
unlawfully refused to grant it leniency. The review
application was
heard on 15 September 2014 and judgement is still pending. This
pending judgement is the reason the AMG filed the
current stay
application.
[24] On 31 March
2014 the parties attended a pre-hearing meeting at the Tribunal. At
this conference the parties agreed to a timetable
with regard to the
process of discovery, the filing of witness and expert statements and
the compilation of trial bundles. In the
Tribunal’s written
confirmation of the directions arising from this pre-hearing nothing
is recorded about the AMG’s
second review application.
[25] On 19 November
2014 a further pre-hearing meeting took place at the Tribunal in
which directions were given to the parties
and the matter was set
down from 22 to 28 January 2015 and 30 January to 4 February 2015.
Again in the Tribunal’s written
confirmation of the directions
arising from this pre-hearing nothing is recorded about the AMG’s
second review application.
[26] The stay
application was lodged approximately five days prior to the
commencement of the trial.
THE APPLICANT’S
REASONS FOR THE STAY APPLICATION
[27] In support of
its application the AMG argued that were it successful in the review
in its second review application, this would
have a profound effect
on the complaint proceedings before the Tribunal. The reason was that
the Commission would be then required
to consider its leniency
application, and if it were granted, it would no longer be necessary
for it to defend the Commission’s
allegations. The AMG further
argued that proceeding with the referrals absent finalisation of the
review application would serve
to irreparably prejudice its rights as
well as result in wasted time and costs for all parties involved.
THE COMMISSION’S
RESPONSE
[28] The
Commission’s reasons for opposing the stay application were
based on two main grounds. The first was that the AMG
has
disqualified itself from the grant of leniency. The second was that
the AMG’s application constituted an abuse of the
Tribunal
process.
[29]
In relation to the first ground the Commission submitted that the
position adopted by the AMG (i.e. contesting under oath that
it has
contravened
section 4(1
)(b) of the
Competition Act) was
inconsistent
with an entitlement to leniency under the CLP. According to the
Commission, this is so because paragraph 3.1 of the
CLP states that
“
[t]he CLP
outlines a process through which the Commission will grant
a
self-confessing
cartel
member, who is first to approach the Commission, immunity
for
its participation in cartel activity
upon
the cartel member fulfilling specific requirements and conditions set
out under the CLP."
(Emphasis
added) Therefore, the Commission argued, a genuine and qualifying
leniency applicant is one that self-confesses participation
in cartel
activity with the object of cooperating fully with the Commission to
prosecute the remaining cartel members, unlike the
AMG, which had
come before the Tribunal on oath denying liability and participation
in cartel activity.
[30] In relation to
the second ground the Commission argued that since the AMG had denied
a contravention of
section 4(1
)(b) of the
Competition Act, in
direct
conflict with a stance adopted by a party seeking leniency, the stay
sought by it would achieve nothing more than a delay
of the complaint
proceedings. According to the Commission, it would not be in the
public interest to the delay the proceedings
for no reasonable
purpose other than a delay. The Commission therefore submitted that
the stay application should be dismissed.
CAPE GATE’S
STANCE
[31]
Although Cape Gate had not filed any papers regarding the stay
application, it submitted at the hearing that it was in a position
to
carry on with the proceedings and a stay would be inconvenient, as it
would mean that the amount of time it had taken in order
to put
itself in position to proceed would be completely wasted. Cape Gate
further submitted that a tender for wasted costs by
the AMG would go
some way in addressing the prejudice it would suffer due to the
stay.
7
AMG made no such tender.
REASONS
[32]
The granting of a stay in the proceedings is always a matter of
discretion.
8
That discretion must be exercised sparingly and in exceptional
circumstances
9
.
[33] As noted above,
the Commission referred the second complaint as far back as 07
September 2009. The AMG then, unsuccessfully,
challenged the legality
of the CLP regime which delayed the proceedings for years, i.e. from
8 February 2010 when the first review
application was made to the
High Court to ultimately taking the matter to the Constitutional
Court that dismissed the application
for leave to appeal on 1
November 2012.
[34] This stay
application evinces a peculiar situation where, in one forum, the
Tribunal, the AMG adopts a position on oath that
it was not part of
cartel activity, and in another, the High Court, that the Commission
should reconsider giving it corporate leniency
thereby indicating
that it is a self-confessed participant in cartel activity. Mr Geach,
who appeared for the AMG, submitted on
behalf of his client that
there was nothing wrong with this apparently contradictory approach.
We disagree.
[35] Therefore, in
the light of the delays in the prosecution of these complaints to
date, the fact that the possibility of this
stay application was
raised only a few days before the hearing was to commence, the
inconsistent approach of the AMG to the question
of its involvement
in cartel activity, which includes its denial in the papers filed at
the Tribunal that it had contravened
section 4(1
)(b) of the
Competition Act, we
were of the view that there were insufficient
circumstances justifying the stay notwithstanding that it could
possibly be successful
in its second review application. It would, in
our view, be inappropriate, not be in the public interest and a
denial of justice
to grant the stay application.
6 March 2015
Date
Mr. Anton Roskam
Professor Fiona
Tregenna and Mr. Andreas Wessels concurring
Tribunal
Researchers: Ipeleng Selaledi and Caroline Sserufusa
For the Allens
Meshco Group : Adv. BP Geach SC instructed by Roestoff and Kruse
Attorneys
For Cape Gate : Adv.
John Campbell SC instructed by Bowman Gilfillan Attorneys
For the Commission :
Adv. Hamilton Maenetje SC instructed by the State Attorney
1
Founding
Affidavit, record page 4, para 9.
2
Iscor
is now called ArcelorMittal South Africa.
3
A
“marker” is a mechanism which allows a firm to establish
where it is in line and to reserve its place in line to give
it time
to collect all the necessary information to submit to the Commission
should it ultimately decide to submit a leniency application.
4
Scaw
at the time held 50% plus one share of the issued share capital of
CWI.
5
Answering
Affidavit, record, pages 70 and 75.
6
Answering
Affidavit, record page 95, para 6 and page 118, para 74.2.
7
Transcript
pages 26 - 28.
8
Southern
Metropolitan Substructure v Thompson
1997
1 All SA 571
(W) 577;
1997 2 SA 799
(W);
Seapoint
Computer Bureau (Pty) Ltd v McLoughlin and De Wet
1996
8 BCLR 1071
(W);
1997 2 SA 636
(W);
Williamson
v Schoon
1997
3 SA 1053
(T);
Spier
Properties (Pty) Ltd v Chairman, Wine and Spirit Board
1999
2 All SA 446
(C) 452I;
1999 3 SA 832
(C);
Western
Cape Housing Development Board
v
Parker
2006
3 All SA 84
(C);
2005 1 SA 462
(C).
9
Abdulhay
M Mayet Group (Pty) Ltd v Renasa Insurance Co Ltd
1999
JOL 5498
(T);
1999 4 SA 1039
(T) 1048H-I;
Clipsal
Australia (Pty) Ltd v Gap Distributors (Pty) Ltd
2009
3 All SA 491
(SCA) overruling
Clipsal
Australia (Pty) Ltd v Gap Distributors (Pty) Ltd
2009
3 SA 305
(W).