About SAFLII
Databases
Search
Terms of Use
RSS Feeds
South Africa: Competition Tribunal
SAFLII
>>
Databases
>>
South Africa: Competition Tribunal
>>
2015
>>
[2015] ZACT 141
|
|
Sibanye Gold Limited v Competition Commission of South Africa (020453) [2015] ZACT 141 (17 April 2015)
COMPETITION
TRIBUNAL OF SOUTH AFRICA
CT
Case No: 020453
In
the matter between:
SIBANYE
GOLD LIMITED
APPLICANT
and
THE
COMPETITION COMMISSION
OF
SOUTH AFRICA
RESPONDENT
Panel:
Anton Roskam (Presiding Member)
Mondo Mazwai (Tribunal
Member)
Prof Fiona Tregenna
(Tribunal Member)
Heard
on:
28 January 2015
Order
issued on:
17 April 2015
Reasons
issued on:
17 April 2015
ORDER
AND REASONS FOR THE DECISION
INTRODUCTION
[1]
This is an application in terms of which the applicant, Sibanye Gold
Limited ("
Sibanye
"), seeks to review and set aside
the Form CC19 Notice issued by the respondent, the Competition
Commission of South Africa
("
the Commission
"), on 11
November 2014. The Form CC19 Notice is a
Notice of Apparent Breach
issued in terms of section 14 of the Competition Act, 1998 (Act
89 of 1998)
("the Act"
) and Rule 39 of the Rules for
the Competition Commission ("
the Commission Rules
").
It relates to the conditions that the Competition Tribunal imposed in
respect of a large merger conditionally approved
between Sibanye and
Newshelf 1114 (Pty) Ltd ("
Newshelf
”).
[2]
In the alternative, the applicant seeks an order in terms of Rule
39(2)(b) of the
Commission Rules to the effect that Sibanye has
substantially complied with its obligations with respect to the
conditional approval
of the merger.
[3]
The applicant also sought condonation in terms of Rule 54 of the
Rules for the Conduct
of Proceedings in the Competition Tribunal for
the late filing of its notice to review the issuing of the Form CC19
Notice. The
Commission did not oppose this. We therefore grant
Sibanye condonation for the late filing of the review application.
MATERIAL
FACTS
[4]
On 12 September 2013 a merger referral was filed at the Commission
regarding Sibanye's
intended acquisition of sole control over
Newshelf. At the time Gold One International Limited ("
Gold
One
") ultimately controlled Newshelf. Newshelf was the
corporate vehicle in which Gold One housed its Cooke Mining
Operation,
which comprised Cooke Shafts 1 to 4. Pre-merger, Cooke
Shafts 1 to 3 were housed in Rand Uranium (Pty) Limited, a subsidiary
of
Gold One and Cooke Shaft 4 was housed in Ezulwini Mining Company
(Pty) Ltd, also a subsidiary of Gold One.
[5]
On 5 February 2014 the Competition Tribunal approved the merger,
subject to certain
conditions, including that:
The Merging Parties
shall not retrench any employee, as a result of the Merger for a
period of two years following the Merger Implementation
Date. For the
sake of clarity, retrenchments do not include (i) voluntary
separation arrangements; or (ii) voluntary early retirement
packages.
("
Merger Conditions
")
[6]
On 16 September 2014 Sibanye's attorneys informed the Commission in
writing that Sibanye
had issued a notice in terms of section 189 of
the Labour Relations Act
[1]
("
LRA
")
on all relevant stakeholders. In this letter Sibanye's attorneys
stated that Sibanye had been "unable to curtail or
reverse the
sustained losses that the Cooke Shaft 4 had incurred over a
substantial period of time as a result of,
inter
alia
,
continued production shortfalls, high overhead costs, safety related
stoppages which occurred as a result of 2 fatalities that
occurred at
Cooke Shaft 4 earlier that year, certain unexpected geological
complications
et
cetera."
[7]
The letter reported that Cooke Shaft 4 had experienced significant
losses over a specified
period. The letter stated that there was a
need for Sibanye to either put Cooke Shaft 4 on "care and
maintenance" for
the foreseeable future or for Cooke Shaft 4 to
be closed indefinitely. Notwithstanding this, the letter stated that
the section
189 process was in its infancy and was intended to
commence a consultative process whereby the relevant parties sought
ways to
minimize or avoid the retrenchments and accordingly no
outcome could be determined at that stage.
[8]
The letter concluded with an offer to meet the Commission to provide
it with further
information as regards the Section 189 Process,
namely the process of consultation about contemplated dismissals for
operational
requirements or, what is often more loosely referred to
as, retrenchments. The Commission neither responded to this letter
nor
did it take up the offer to meet.
[9]
On 5 November 2014 the Commission received a complaint from the
National Union of
Mineworkers (NUM). It appears that this complaint
was initially telephonic and was later followed up in writing. In the
Commission's
answering affidavit it is stated that NUM alleged that
Sibanye's conduct was in breach of the merger conditions because it
intended
to retrench employees as a result of the merger before the
end of the two-year moratorium. The answering affidavit also stated
that NUM alleged that during the section 189 consultation meeting
held on 21 October 2014, Sibanye advised it that services provided
to
Cooke Shaft 4 by Support Services were costly and that Sibanye could
provide the same services more cheaply. In support of this,
NUM
submitted the presentations and minutes of the section 189
consultation meeting with Sibanye held on 21 October 2014 to the
Commission.
[10]
The NUM letter of 5 November 2014 stated that the 60-day period for
the retrenchments would lapse
on 12 November 2014 and requested the
Commission to attend to the matter on an urgent basis. It alleged
that after 12 November
2014 Sibanye would retrench and that the
retrenchment would be an irreversible process. The letter also went
on to state that the
NUM intended to approach the Labour Court on an
urgent basis to interdict the retrenchment process, but that the
Commission's failure
to act would leave NUM "with no option but
to approach court wherein ... the Competition Commission [would] be
cited as one
of the respondents."
[11]
NUM confirmed in an email to the Commission dated 6 November 2014
that it was not opposing the
proposed retrenchments of all affected
employees but only to the retrenchment of 217 employees at Cooke 4.
[12]
On 11 November 2014 the Commission served on Sibanye the Notice of
Apparent Breach.
[13]
At the instance of Sibanye, a meeting was convened on 17 November
2014 attended by representatives
of Sibanye and the Commission. At
this meeting Sibanye raised its concern that the Commission issued
the Notice of Apparent Breach
without affording it an opportunity to
engage with the Commission. The Commission, in this meeting and later
in a letter addressed
to Sibanye on the same date, indicated to
Sibanye that it should provide a detailed written submission
regarding its section 189
consultation process. The Commission
indicated that the time periods contemplated in Commission Rule 39
were still applicable.
[14]
In a letter dated 25 November 2014, Sibanye denied that it had
breached the merger conditions
and questioned whether a remedial plan
was appropriate or possible. Notwithstanding this, and in an attempt
to resolve the matter
through co-operation, Sibanye submitted the
information requested by the Commission and enquired from the
Commission whether the
information satisfied the
requirement for the submission of a
remedial plan as contemplated in
Commission Rule 39(2)(b).
[15]
After receiving these submissions the Commission indicated on 9
December 2014 that it would only
be in a position to give formal
feedback to the proposed remedial plan in January 2015. The Applicant
launched its application
in these proceedings on 10 December 2014.
[16]
In its replying affidavit the Applicant indicated that since it had
filed its founding affidavit:
"Sibanye has been
able to reach a solution, in terms of which all employees on the
operational staff could be retained, save
for a limited number of
employees who accepted voluntary separation packages. As regards
support service staff, the jobs of all
remaining employees could be
retained, save only for a potential fifteen members of the medical
ill health gang."
[17]
At the hearing of this application we were informed by Mr Gauntlett,
who appeared for Sibanye,
that the "medical ill health gang"
are sick employees whose futures are uncertain.
CONSIDERATION
OF THE LEGAL ISSUES
COMMISSION
RULE 39
[18]
It is apposite to set out Rule 39 in full:
Breach
of merger approval conditions or obligations
(1)
If a firm appears to have breached an obligation that was part of an
approval or conditional
approval of its merger, the Commission must
deliver to that firm a Notice of Apparent Breach in Form CC19, before
taking any action
–
(a)
in terms of section 15(1)(c) to revoke that approval or conditional
approval; or
(b)
in terms of section 59 or 60.
(2)
Within 10 business days after receiving a Notice of
Apparent Breach, a firm
referred to in subrule (1) may-
(a)
submit to the Commission a plan to remedy the breach; or
(b)
request the Competition Tribunal to review the Notice of Apparent
Breach on the grounds
that the firm has substantially complied with
its obligations with respect to the approval or conditional approval
of the merger.
(3)
If a firm submits a plan to the Commission in terms of subrule
(2)(a), the Commission may
either –
(a)
accept the proposed plan; or
(b)
reject the proposed plan, and invite the firm to consult with the
Commission concerning
the apparent breach, with the aim of
establishing a plan satisfactory to the Commission by which all of
the firm's obligations
with respect to the approval or conditional
approval may be satisfied.
(4)
If the Commission accepts a proposed plan, in terms of either subrule
3(a) or (b), the Commission
must monitor the firm's compliance with
the plan.
(5)
The Commission may act in terms of section 15(1) to revoke the
approval or conditional approval
of a merger referred to in subrule
(1), or in terms of section 59 or 60, only if-
(a)
the firm concerned does not respond to the Notice of Apparent Breach
within 10 business
days after receiving it, in the manner anticipated
in subrule (2);
(b)
the firm concerned does not agree to meet, or fails to meet as
agreed, with the Commission,
as required by subrule (3)(b);
(c)
the firm and the Commission are unable to agree a plan as
contemplated in subrule
(3)(b);
(d)
the firm acts in a manner calculated to frustrate the Commission's
efforts to monitor compliance
with a plan, as required by subrule
(4); or
(e)
the firm fails to employ its best efforts to substantially comply
with a plan established
in terms of subrule (3).
[19]
The wording of the above rule makes it clear that the issuing of a
Notice of Apparent Breach
may have serious consequences. It could
lead to the approval of the merger being revoked, the imposition of
administrative penalties
or an order of divestiture.
[20]
Before these kinds of measures may be taken, the rule provides for
engagement between the merged
entity and the Commission and the
drafting of a remedial plan or plans.
[21]
It also provides in sub-rule 2(b) for a "review'' before the
Competition Tribunal. This
review is peculiar in the sense that it is
coupled to an implied declaration that the firm has substantially
complied with its
obligations with respect to the approval or
conditional approval of the merger. In essence, the effect of Rule
39(2)(b) appears
to be that, if it is found that the merged entity
has substantially complied with its obligations with respect to the
merger conditionally
approved, then the Notice of Apparent Breach
should be set aside.
[22]
The wording of Rule 39(1) is also important. The first phrase of this
rule is written in the
past tense -
"If a firm appears to
have breached
an obligation... "
(emphasis added). This indicates that the breach must have occurred.
It cannot be a breach that is imminent or about to occur.
[23]
It would appear, therefore, that the Commission is not entitled to
issue a Notice of Apparent
Breach if the breach has not occurred. All
it can do if a breach appears imminent is to warn the merged entity
that should it breach
the merger conditions, it will issue a Notice
of Apparent Breach, which could have the consequences referred to
above.
THE
REASONS FOR THE DECISION
[24]
The Commission justified its decision to issue the Notice of Apparent
Breach as follows: From
an analysis of the presentations and minutes
of the 21 October 2014 section 189 consultation meeting, which were
submitted to it
by NUM, it appeared that employees working at Cooke 4
were to be retrenched in order to eliminate the duplication of
services and
functions, as a result of the merger. Therefore, in the
eyes of the Commission, the proposed retrenchments were as a result
of
the merger. It also appeared that the retrenchments were imminent
because the 60-day period
[2]
for
consultations was due to end. Moreover, during the investigation of
the merger by the Commission, Gold One had issued a section
189
Notice and then had withdrawn it for fear that it might delay the
Commission's approval of the merger. This signified to the
Commission
that the imminent retrenchments were also as a result of the merger.
The Commission was also of the view that "once
the retrenchments
pass muster in respect of procedural and substantive fairness in
terms of the labour laws, the retrenchments
[would] not be reversible
based upon a breach of the merger conditions." For the
Commission this meant that there was an apparent
breach of the merger
conditions.
[25]
Sibanye relied on four grounds in its review application; namely
that: (1) No retrenchments had
in fact taken place. (2) The section
189 consultation process was not the result of the merger. (3) The
Notice of Apparent Breach
exceeded the Commission's remit and usurped
the labour authorities' power. (4) The Notice of Apparent Breach was
issued, on a misconceived
legal premise that the retrenchments, once
effected, would not be reversible.
[26]
Besides the above, the Commission also argued that since Sibanye had
submitted a remedial plan
and the parties were in the process of
engaging about this plan, Sibanye was precluded from bringing the
review application. This
argument was based on the ground that
Sibanye had elected to submit a remedial plan by way of its
attorneys' letter of 25 November
2014 which followed the meeting
between Sibanye and the Commission on 17 November 2014. It is,
however, apparent that the Commission's
contentions in this regard
are based upon a misreading of Sibanye's attorneys' letter.
[27]
While the Commission is to be commended for acting pro-actively when
faced with an apparently
imminent breach of merger conditions, the
Commission jumped the gun by prematurely issuing the Notice of
Apparent Breach. This
is because no retrenchments had in fact taken
place. The Commission's argument that the apparent breach was
imminent is not sufficient;
there must be an actual apparent breach
before a Notice can be issued. The term "apparent" also
does not rescue the Commission
because apparent means ostensible and
not imminent.
[28]
The argument that if such a Notice had not been issued the horse
would have bolted because the
retrenchments would have been
irreversible is also not legally valid. This is because a court of
competent jurisdiction could order
the re-instatement of the
dismissed workers.
[3]
[29]
The Commission is not empowered in terms of Rule 39 to prevent or
pre empt a breach through
the issuing of a Notice of Apparent
Breach. In the context of the breach being a retrenchment as a result
of a merger, the Commission
is not empowered through Rule 39 to
prevent the retrenchments through the issuing of a Notice of Apparent
Breach. The employees
are, however, at liberty through their trade
union to apply to the Labour Court to interdict the retrenchments.
[4]
[30]
While we are sympathetic to the Commission's efforts to safeguard
employment, being one of the
public interest issues it is enjoined to
do in terms of section 12A(3) of the Act (especially when employment
conditions have been
imposed in the approval of a merger as is the
case here) we are constrained by the provisions of Rule 39 and the
Form CC19, which
are plain in their meaning as explained above.
[31]
The arguments ably made by Mr Quilliam, who appeared for the
Commission, justifying the issuing
of the Notice of Apparent Breach
cannot avail the Commission in the face of the plain wording of the
Rule 39. As the Commission
argued, it may well be that the horse has
bolted by the time the requisite jurisdictional fact (i.e. actual
retrenchments) to issue
the Notice of Apparent Breach arises.
However, there is nothing in section 15(1)(c) of the Act, Rule 39 or
the Notice of Apparent
Breach that indicates that this is the ill
that the legislature intended to cure by giving the Commission powers
to intervene before
the retrenchments, otherwise it would have said
so.
[32]
The Tribunal is empowered in terms of section 27(1)(c) of the Act to
review any decision made
by the Commission that may be referred to
the Commission.
[5]
We are
constrained on the basis of the legality principle to review and set
aside the Notice, as the Commission was not empowered
to issue it in
terms of Rule 39.
[33]
In the light hereof it is not necessary to consider many of the
numerous legal issues raised
by the parties in this matter, including
whether the intended retrenchments are as a result of the merger and
whether section 6
of the Promotion of Administrative Justice Act
[6]
applies to review applications.
ORDER
[34]
Accordingly, we order that the Notice of Apparent Breach is reviewed
and set aside. In accordance
with our normal practice and in light of
the recent Constitutional Court decision in this regard we are not
competent to make a
cost award against the Commission.
[7]
Therefore there is no order as to costs.
[35]
Notwithstanding the review order, the Commission is entitled, and
legally obliged to continue
to monitor Sibanye's compliance with the
merger conditions and to act in accordance with its Rules insofar as
an apparent breach
has occurred.
ANTON
ROSKAM
17
April 2015
DATE
Mondo
Mazwai and Prof Fiona Tregenna concurring
Tribunal
Researcher:
Derrick Bowles
For Sibanye Gold
Ltd:
Adv.
G. Gauntlett SC and Adv. F. Pelser, as instructed by Edward Nathan
Sonnenbergs
For the Competition
Commission:
L. Quilliam, Legal
Counsel
[1]
Act No 66 of 199.
[2]
The 60-day period is a minimum period prescribed for retrenchment
consultations in terms of section 189A of the LRA.
[3]
However, once employees are retrenched and leave the employer's
premises such as a mine it may be difficult to locate them to
effect
re-instatement.
[4]
This accords with this Tribunal's approach established in
Shell
South Africa (Ply) Ltd v Tepco Petroleum (Pty) Ltd
CD 66/LM/Octo6 at para 58 that competition authorities ought to show
deference to other regulators in dealing with questions
which are
contained in the public interest considerations of the Act because
"the role played by the competition authorities
in defending
even those aspects of the public interest ... is, at most, secondary
to other statutory and regulatory instruments".
[5]
Agri
Wire (Ply) Ltd v Commissioner of the Competition Commission
660/2011 para14
[6]
Act No 3 of 2000.
[7]
Competition
Commission of South Africa v Pioneer Hi-Bred International Inc and
Others
(CCT 58/13)
[2013] ZACC 50
;
2014 (3) BCLR 251
(CC);
2014 (2) SA 480
(CC) (18 December 2013).