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[2016] ZACT 44
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Goodyear South Africa (Pty) Ltd and Continental Tyres South Africa v Competition Commission (CR053Aug10/INS079Sep12, CR053Aug10/DSC073Aug12) [2016] ZACT 44; [2016] 1 CPLR 333 (CT) (25 May 2016)
THE
COMPETITION TRIBUNAL OF SOUTH AFRICA
Case
No: CR053Aug10/I NS079Sep12 &
CR053Aug1O/DSC073Aug12
In
the application of:
Goodyear
South Africa (Pty)
Ltd
Applicant
The
Competition
Commission
Respondent
And
In
the application of:
Continental
Tyres
South Africa (Pt)
Ltd
Applicant
The
Competition
Commission
Respondent
In
re
the complaint referral between:
The
Competition
Commission
Applicant
Apollo
Tyres South Africa (Pty)
Ltd
First Respondent
Goodyear
South Africa (Pty)
Ltd
Second Respondent
Continental
South Africa (Pty)
Ltd
Third Respondent
Bridgestone
South Africa (Pty)
Ltd
Fourth Respondent
South
African Tyre Manufacturers Conference (Pty) Ltd
Fifth
Respondent
Panel :
Yasmin Carrim (Presiding Member)
:
Medi Mokuena (Tribunal Member)
:
Andreas Wessels (Tribunal Member)
Heard
on :
17 March 2016
Last
submission received on :11 April 2016
Order
issued on :
25 May 2016
Reasons
issued on :
25 May 2016
DECISION
AND ORDER
[1]
On
17
March 2016
the
Competition
Tribunal
of
South Africa
("the
Tribunal")
heard two
applications
filed
by Goodyear
South
Africa
(Pty)
Ltd
("Goodyear")
and
Continental
Tyres
South
Africa
(Pty)
Ltd
("Continental")
(also
referred
to
as
the
"applicants").
The
applications
were
brought
in terms
of
High
Court
Rule
35(
12)
[1]
against the
Competition
Commission
of South Africa
("the
Commission")
in relation
to
documents
which
the
applicants
alleged
were
referred to
by the
Commission
in its
founding
affidavit
and supplementary
affidavit
of a
complaint
referral.
[2]
This matter has a long and convoluted history dating as far back as
2010 when the Commission conducted an investigation into
the conduct
of the applicants.
[3]
We discuss only the salient and relevant facts for purposes of this
decision.
[4]
The Commission initiated an investigation into the applicants and
others following a complaint lodged by a Mr Parsons during
October
2006. Aspects of the Commission's investigation involved a leniency
application filed by Bridgestone Tyres South Africa
(Pty) Ltd
("Bridgestone") and raids that had been conducted by the
Commission on the offices of Apollo Tyres South Africa
(Pty) Ltd
("Apollo") and the industry association, the South African
Tyre Manufacturers Conference (Pty) Ltd ("SATMC").
[5]
The
Commission's
referral
under section 50 of the Competition Act
[2]
("the
Act") was
filed with
the Tribunal on 31 August 2010.
In
the
complaint
referral
the Commission alleges that the applicants together with Bridgestone,
Apollo and the SATMC discussed
and
agreed to
fix the
prices
of
passenger,
light
truck,
bus,
off-the-road, agricultural and earthmover
tyres
over
a period of
years from
1999 to
2007.
[6]
Almost six years later, Continental and Goodyear have failed to file
their respective answering
affidavits.
The
apparent
reason for
their
failure
to file
their
answering
affidavits,
as
can be
gleaned
from
the
correspondence
to date
is that
they
require
certain
documents
from
the
Commission
which
they
allege
they
are
entitled
to
on the
basis of
inter
alia
HCR
35(12).
[3]
[7]
Prior to these applications being lodged, and over the last number of
years, numerous requests for documents by Goodyear and
Continental
have been met by the Commission.
[8]
Significantly the Commission has handed over to the applicants a copy
of the Bridgestone leniency application together with
all annexures
thereto which amounts to a voluminous 111 items.
[9]
Prior to the hearing of these two applications a number of additional
documents sought by Continental and Goodyear, have been
provided by
the Commission. In order to assist the evaluation of the remaining
requests the parties were asked to draw up schedules
of outstanding
requests which schedules were then reconciled by the Commission with
the list of documents that had already been
provided. The reconciled
schedules were submitted to the Tribunal by the Commission on 11
April 2016 and are attached hereto as
Annexures A ("Goodyear
Schedule") and B ("Continental Schedule")
respectively.
[10]
TheCommission has refused to hand over any more documents on the
basis that the applicants are not entitled to them prior to
them
filing their answering affidavits (i.e. for purposes of pleading).
The Commission submits that it will only discover any further
documents as part of the pre-trial discovery process and that
Goodyear and Continental are pursuing these requests as a dilatory
tactic.
[11]
The Commission argued further that the applicants are not entitled to
bring an application in terms of HCR 35( 12) without
first seeking
leave of the Tribunal.
Legal
Framework
[12]
The Commission argued that the applicants were not permitted to rely
on HCR 35(12) because the Tribunal's rules in relation
to complaint
procedures under Part 4 of the Competition Tribunal Rules ("CT
Rules") made no provision for discovery of
documents prior to
the filing of answering affidavits as provided in CT Rule 16. If
parties wished to rely on any other rule or
procedure not provided
for in the CT Rules they should first seek leave from the Tribunal.
The Commission asked that we should
establish a principle in this
matter that parties could not as a matter of entitlement bring
applications under HCR 35( 12) without
first seeking the leave of the
Tribunal.
[13]
The applicants argued that they were entitled to rely on HCR 35(12)
as a matter of right because the Tribunal has previously
granted
applications brought under it as permitted by section 55 and Tribunal
Rule 55(1). HCR 35(12) did not require the
applicants to show
relevance for a discovery request and nor should the Tribunal
consider whether these were necessary documents
for purposes of
pleading. This is because, as a matter of right, once the Commission
referred to a document in its founding and
supplementary affidavits
in support of an allegation, the provisions of HCR 35(12), as applied
in the high courts, required that
these documents must be handed
over.
[14]
In our view there is no need for us to make a decision such as that
requested by the Commission nor is it necessary for us
to apply HCR
35( 12) in the manner urged by the applicants.
[15]
Tribunal
Rule
55(1)(b)
confers
a
discretion
on this
Tribunal
to
have
regard
to
the high
court
rules if
a
question
arises
as
to
the
practice
or
procedure
to be followed
in cases
not
provided
for
in
the
Tribunal
Rules. The
Tribunal
has
previously exercised
this
discretion
but in so
doing
has
emphasised
that
it is in
the first
instance
discretionary
and
in the
second
requires
us only to
"have
regard
"
.
In other words
the
rule does
not require
us to adopt
without
due
consideration
to the
sui
generis
nature
of our proceedings, the application and jurisprudence
pertaining
to a rule as applied in
the high
courts.
[4]
This is because we
enjoy a
wide
discretion
in the
conduct of our proceedings.
Our
proceedings
are
adversarial
in form
but we are
vested with inquisitorial
powers to
arrive at the truth. We are required to
conduct our
proceedings with fairness
and to
guard against elevating form over
substance.
Fairness
is
context
driven
and
we
must
have
regard
to
the
circumstances
of each case to make such a determination.
[16]
Thus in the context of our proceedings high court rules in relation
to discovery, which include HCR 35(12), are not rights-based
but
serve to provide guidance to the Tribunal in its assessment of
fairness to the parties when requests for documents are made.
[17]
This has
been the approach adopted by the Tribunal in
Allens
Meshco.
[5]
BMW
South
Africa
vs
Fourier
Holdinqs
[6]
and more recently in
Group
Five
[7]
.
[18]
In relation to a request for discovery prior to the filing of
answering affidavits, the Tribunal in
Allens
Meshco
established two principles. The first
principle is that where a document is relied on to support a relevant
allegation in a pleading
it should be provided. The allegation may
quote from or make references to specific contents of such documents
or may even summarize
the content of the document. If the document is
not provided as an annexure or an attachment to the pleading, it
should be handed
over when requested by a respondent.
[19]
The second principle is that the inference of the existence of a
document is not sufficient to create an obligation to disclose
such a
document.
[20]
Both these principles are reflected in HCR 35(12). We turn to
consider the specific requests made by the applicants which remain
in
dispute.
Goodyear
Schedule (with reference to Annexure A)
[21]
In relation to the request pertaining to paragraph 22 of the
Commission's Founding Affidavit ("FA") the application
is
refused for the following reasons. In paragraph 22, the Commission
states as follows -
"22.
As
a
result
of
the
complaint
filed
by
Parsons,
the
applicant
applied
for
and was granted
a
search warrant for the premises
of
Bridgestone, Apollo
and the SATMC.
The
search
was conducted
on
4
April
2008 and
numerous
documents
were seized. The investigation revealed the following:"
22.
1
Representatives of
the
tyre
manufacturers discussed the
reduction of dealer price
list;
22.2
Tyre manufacturers
discussed
and
agreed
on
the
timing
for
requesting price
adjustments
from the STB;
22.3
That
during
2006
representatives of
the
tyre
manufacturers discussed price
increases;
and
22.4
The tyre
manufacturers coordinated
the percentage
and
timing
of price increases.
[22] The
Commission's FA is structured in a number of sections each with its
own heading. In this paragraph read in context of the
entire FA, what
the Commission is doing is merely providing a description of the
steps it took in its investigation as a whole.
As prefaced by the
heading of the section, the Commission lists the steps it took in its
investigation following the complaint
by Parsons. These steps
involved obtaining warrants, searches of premises and the seizure of
"numerous documents". It
then goes on to conclude what
"
the
investigation"
revealed in
paragraphs 22.1-22.4. The remarks in para 22.1-22.4 summarise the
broad findings of the Commission's the
investigation
- and not
what the numerous
documents
- revealed. The investigation of
the Commission is clearly broader than the raids it had conducted. It
includes as gleaned from
these paragraphs the complaint by Parson,
and presumably any statements or documents he may have provided to
the Commission, as
well as product of the raids conducted by the
Commission. The concluding remarks in 22.1-22.4 are couched at the
level of generality
and no reference to any particular document,
whether seized in the raid or provided by Parsons, is made.
[23]
We see then that the Commission's
specific
findings
and further details are then pleaded in the subsequent paragraphs
under the sections "Application for Immunity" and
"Contraventions
of the Act". In relation to these specific
findings and allegations the Commission has already discovered a raft
of documents
which include the application for leniency, all the
annexures thereto, including witness statements.
[24]
Applying the first principle articulated in
Allens Meshco
the
request relating to para 22 of the FA, we find that Goodyear is not
entitled, as a matter of fairness, to the "numerous
documents"
that were seized in the raids conducted by the Commission simply
because the Commission does not rely upon them
to make its concluding
general remarks about its investigative process. The Commission's
investigation is broader than the raids
it had conducted. The mere
fact that an investigation may be premised on documents does not
suffice to trigger a request for productions
of those documents.
[25]
The position
would be
the same if
we had
regard
to
the
jurisprudence
pertaining
to
HCR 35(12).
The intention of that
rule is
quite clear.
It is meant
to cover a
situation
where an
averment
flows
from or is
related
to
something
contained
in
a
document.
However
inspection cannot be
demanded of
documents
not
referred
to
but
the
existence
of
which
can
be
inferred
from
an
affidavit
or
pleading. This was
clearly
stipulated
in
Nedbank
Limited
vs
Jean-Pierre
Jordaan
[8]
wherein the
court held that the wording of HCR 35(
12) is
clear in
that it
only refers to
"documents
referred"
to
by
a party
in
an affidavit.
We
are of the
view
that
in relation
to
paragraph
22
of
the
Commission's
FA
there
is
no
"reference
to
a document"
as contemplated in HCR 35(12) which warrants production as argued by
the
applicants.
[26]
Our conclusion on Goodyear's request in relation to para 22 of the
Commission's founding affidavit also applies to the request
made by
Continental under item 2 of its Schedule (see our discussion on
Continental's application below).
[27]
The request
in relation to paragraphs 6, 7, 9, 11 and
13 of the
Commission's Supplementary Affidavit ("CSA")
[9]
are denied. Goodyear has couched its requests
as "the
price increase announcements" referred to in
these
paragraphs. However in
these
paragraphs the Commission makes
no
reference
to
price
increase
announcements or that these were contained in documents. All that is
alleged is that the manufacturers "agreed to
increase prices".
[28]
The requests in relation to paragraphs 16 and 18 of the CSA are
denied. In both these paragraphs the Commission details dates
on
which tyre manufacturers "announced price increases"
pursuant to their agreement. The Commission does not allege that
these announcements were in writing. In some paragraphs the increases
are stated as a range between two percentages, in others,
the word
"approximately" is used, both suggesting the Commission was
not relying on any documents to plead these allegations
but very
likely the testimony of a witness. On the same basis the requests in
relation to paragraphs 25, 26, 27 and 28 of the CSA
are denied.
[29]
Notwithstanding the fact that no obligation arises on the part of the
Commission to hand over any documents in relation to
the averments
made in any of the abovementioned paragraphs, the Commission has, in
a spirit of co-operation, already handed over
to Goodyear a number of
price increase letters which have to date come into its possession in
the course of the leniency application.
The Commission has indicated
in the third column of the Goodyear Schedule where it has handed over
relevant price increase letters
in its possession to date. Thus
Goodyear is already in possession of a number of documents which the
Commission has indicated would
serve to support the allegations in
these paragraphs.
Continental
Schedule (with reference to Annexure B)
[30]
In relation to items 1 and 3 of the Continental Schedule, the
Commission has already provided a copy of the search warrant.
[31]
In relation to item 2 of the Continental Schedule, we have already
decided in our discussion regarding the same request made
by Goodyear
above that paragraph 22 of the FA does not give rise to any
obligation on the part of the Commission to hand over the
numerous
documents that were seized in the raids conducted simply because the
Commission places no reliance on any specific document
in arriving at
its concluding remarks about its broader
investigative
process.
[32]
In item 4 of the Schedule, Continental requests a copy of the
agreement referred to in paragraph 26 of the FA. In this para
the
Commission states that
"
The tyre manufacturers
have contravened
section
4(1)(b)(i)
in that they entered into an
agreement, in terms
of which..:"
.
The Commission
does not allege that the agreement was in writing. On the contrary,
the allegations that follow in the subsequent
sub-paragraphs suggest
that there was no written agreement but that such agreement came into
existence through meetings and discussions.
By no stretch of the
imagination can the Commission be ordered to produce a document it
has not alleged to be in existence.
[33]
In item 5, Continental requests a copy of the escalation formula
referred to in para 26.15 of the FA. In that paragraph the
allegation
is that
'the tyre
manufacturers
discussed
and agreed on the escalation
components
to be inserted into the escalation formula".
Once
again there is no reference to a document in the allegation and no
suggestion that the Commission relies upon the escalation
formula
itself to allege an agreement on the escalation components of it.
Again no obligation arises on the part of the Commission
to provide a
document that may or may not exist and on which the Commission does
not rely to make its allegation.
[34]
In items 6 and 7 of the schedule requests are made for "electronic
mail discussions" and "electronic communication"
respectively. Continental alleges that the Commission has partially
provided these. It has received copies of SATMC and Apollo
emails but
requires "all electronic mail discussions and electronic
communications referred to in paragraphs 4.3 and 4.4 of
the CSA. We
agree that a reference to "electronic mail discussions" and
"electronic communication" might
prima facie
suggest
that these exist and the Commission has had sight of them. The
Commission has already provided the applicants with copies
of some
email communications. To the extent that the Commission has copies of
any other electronic mail discussions and electronic
communications
it should provide these. If it is not in possession of any other such
communications/discussions at this stage,
it should state this under
oath.
[35]
The request under item 8 of the Schedule is for the "standard
format for reporting industry statics"
referred to in
paras 12 and 15 of the CSA. However we see that in para 12 the
emphasis is on the "agreement" arrived
at among named
individuals to have a standard format for reporting industry
statistics. There is no reference to a document containing
industry
statistics. In para 15 the allegation is that named individuals
exchanged price lists in pursuance of their earlier agreement
to
"have
a
standard
format
for reporting
industry
statistics".
This is clearly not a reference to a document in existence but
rather that there was an agreement reached amongst tyre manufacturers
to produce such standard format. This is not to say that a standard
format reporting document exists at all which may or may not
be in
the possession of the Commission or for that matter the Applicants.
But what is clear from the wording in these paragraphs
is that the
Commission is not relying on any document when it alleges that the
named individuals agreed to
"have
a
standard
format
for
reporting
industry
statistics".
There is
no obligation for the Commission to provide a copy of a document it
has not referred to in making its allegations in paras
12 and 15 of
the CSA.
[36]
In items 9 and 10 of the Schedule the request is for the "price
lists" referred to in the aforesaid paras 12 and
15 of the CSA.
The Commission argues that it has not relied on any documents and
that it is merely recording the fact that the
named individuals
exchanged
price lists pursuant to their agreement to
have a standard format for reporting industry statistics. However the
ordinary meaning
of a price
list
clearly contemplates some
written form, in hard or soft copy, of a firm's prices. To the extent
that the Commission is in
possession of these it should provide
them, and if it is not, it should file an affidavit to that effect.
[37]
The request under item 11 has already been complied with as indicated
by the Commission in the last column of the Schedule.
Conclusion
[38]
In light of the above, the application by Goodyear is dismissed.
The application by Continental is granted only
in relation to
items 6, 7, 9 and 10 of the Continental Schedule.
[39]
We note however that Goodyear and Continental both know what case the
Commission is alleging against them, as can be gleaned
from the
contents of the Commission's founding affidavit and its supplementary
affidavit, as well as from the myriad of documents
that have been
handed over to them by the Commission, as reflected in annexures A
and B. Both applicants have already been placed
in a position by the
Commission that would enable them to file their answering affidavits
and thereby permit the matter to proceed
to trial. This matter has
been dragging on for a considerable period of time. Any further
delays in the applicants' filing of their
answering affidavits would
not be in accordance with the principles of justice. In order to
prevent any further delays we have
included in our order provisions
for the further conduct of proceedings.
ORDER
[40]
The application for documents in respect of all items listed on the
Goodyear Schedule is dismissed.
[41]
The application in relation to items 1, 2, 3, 4, 5, 8 and
11
of the Continental Schedule is dismissed.
[42]
The application in relation to items 6, 7, 9 and 10 of the
Continental Schedule is granted and the following documents must
be
provided by the Commission within 10 business days of this order:
42.1.
All electronic mail discussions or electronic communications referred
to
in
paras 4.3 and 4.4 of the Commission's Supplementary
Affidavit (items 6 and 7 of the Continental Schedule);
42.2.
All price lists referred to in paras 12 and 15 of the Commission's
Supplementary Affidavit
(items 9 and 10 of Continental's Schedule).
[43]
In the event that the documents in paras 42.1 and 42.2 above do not
exist or are not in the possession of the Commission this
should be
stated under oath within 10 business days of this order.
[44]
Goodyear and Continental must file their answering affidavits within
20 business days of receipt of the documents or the affidavit,
as the
case may be, referred to in paragraph 42 and 43 above.
[45]
The Commission may if it so elects file its replying affidavit within
10 days thereafter.
[46]
There is no order as to costs.
25
May 2016
DATE
__________________________
Ms
Yasmin Carrim
Ms
Medi Mokuena and Mr Andreas Wessels concurring
Tribunal
Researcher: Caroline
Sserufusa
For
Goodyear Tyres: Adv.
Gotz instructed by Judin Combrinck Inc.
For
Continental Tyres: Adv.
Engelbrecht instructed by Bowman Gilfillan
For
the Commission: Adv.
Daniel Berger instructed by the State Attorney
Please
consult PDF for the Annexure's
[1]
HCR 35(12)
[2]
Act
89
of
1998
as amended
[3]
Continental had previously relied on rule 14 and 15 of the
Commission's
Rules but
declined to
persist
with
this
after the
ruling
in the
Group
Five
Ltd
vs
Competition
Commission:
case
number:
CR229Mar15/DSC124Sep15
Tribunal
decision.
[4]
See
in
general
Allens
Meshco
&
others
vs
Competition
Commission
&
Others,
page
4,
paragraph
6, case number: 63/CR/Sep09;
BMW South
Africa (Ply) Ltd
!
/a
BMW Motorrad vs Fourier
Holdings
(Ply)
Ltd
t/a Bryanston Motorcycles,
page 7,
paragraph 22; case number:
97/CR/Sep08,
and Group Five Ltd vs Competition Commission,
page 8,
paragraph 21: case number:
CR229Mar15/DSC124Sep15
Tribunal
decisions.
[5]
Allens
Meshco &
others vs Competition Commission
&
Others,
page 4,
paragraph
6 case
number:
63/CR/Sep09.
[6]
BMW South Africa (Pty) Ltd t/a BMW Motorrad v Fourier Holdings (Pty)
Ltd t/a Bryanston Motorcycles, page 7, paragraph 22, unreported
judgment of 1 February 2011, 97/CR/Sep08
[2011]
ZACT.
[7]
Group Five Ltd vs
Competition
Commission,
page 8,
paragraph 21: case number: CR229Mar15/DSC124Sep15.
[8]
Nedbank Limited vs Jean-Pierre
Jordaan
N.O, page
5, paragraph 9-10: Case no: 16335/2014.
[9]
The CSA was filed by
the
Commission in
response
to an exception by SATMC that the FA
did not
disclose a
cause
of
action
against the
SATMC. In
its
Supplementary
Affidavit the Commission seeks to make its case out against the
SATMC.