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[2016] ZACT 74
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Shoprite Checkers Proprietary Limited and Others v Massmart Holdings Limited (CRP034Jun15, EXC088Jul15, EXC107AUG15, EXC109AUG15, STA204DEC15) [2016] ZACT 74; [2016] 2 CPLR 1014 (CT) (1 September 2016)
COMPETITION
TRIBUNAL OF SOUTH AFRICA
Case
No: CRP034Jun15
EXC088Jul15
EXC107Aug15
EXC109Aug15
STA204
D
ec
1
5
In
the matter between:
SHOPRITE
CHECKERS
PROPRIETARY LIMITED
First
Applicant
P
I
CK
'N PAY RETAILERS
PROPRIETARY
L
I
M
I
TED
Second
Appl
i
cant
SPAR
GROUP
L
I
M
I
TED
Th
i
rd
Applicant
and
MASSMART
HOLDINGS
LI
M
I
TED
Respo
n
de
n
t
Panel
: Norman Manoim (Presiding Member)
:
Anton Roskam (Tribunal Member)
:
Andiswa
Ndoni(Tribunal
Member)
Heard
on
: 26 & 27 Ju
l
y
2016
Reasons
Issued on
: 01 September 2016
Reasons
for Decision
I
n
troduction
[
1
]
I
n
these
reasons
we
decide
two
applications brought
against
Massmart Ho
l
dings
Limited ("Massmart")
re
l
ating
to
its
referral currently
pending
before the Competition Tribunal (
"
the
Tribunal
"
)
.
The first appl
i
cation
i
s a stay
of proceedings applicatio
n
.
The second concerns exceptions.
[2]
Massmart's referral relates to the alleged anti-competitive
enforcement of exclusivity provisions between each of Shoprite
Checkers Proprietary Limited ("Checkers"), Pick 'n Pay
Retailers Proprietary Limited ("Pick 'n Pay"), Spar Group
Limited ("Spar") and their respective landlords, which have
the alleged effect of preventing Massmart from trading in
fresh food
and groceries.
[3]
On 31 October 2014, Massmart lodged a complaint with the Competition
Commission ("the Commission") against Shoprite,
Pick 'n Pay
and Spar, in terms of section 49(2)(b) of the Act.
[4]
On 20 November 2014, the Commission announced its decision to
incorporate the complaint with similar complaints that were then
being investigated, and proceed with further investigations.
[5]
However
on 12 May 2015, the Commission issued Massmart with a Notice of Non
Referral,
inter
alia
i
nforming
i
t
that
the Commission had
taken
a decision
to
conduct
a
market
inquiry
and
that
the
Commission
would
publ
i
sh
terms
of
reference
for
the
market
inquiry in the Government
Gazette
sometime in May 2015. This it then did and this
inq
u
iry
is
what
i
s
known
as
"the
Grocery lnquiry".
[1]
[6]
Therefore, the
Commission's
non-referral comes as
a
result
of
the
Commission's
decision to conduct a market
i
nquiry
rather than to
i
nvestigate
and consider the
merits
of the complaint.
[7]
After
the
Commission
non-referred
the
complaint
,
Massmart
sought
to
refer
i
ts
complaint
to
the
Tribunal
in
terms of
section 51(1)
of
the
Act on
9
June
2015.
[8]
In response none of the respondents filed answering affidavits.
Instead, all three filed exceptions and, in addition, Spar brought
the stay application.
[9]
As agreed at a pre-hearing
with the parties, the hearing
of both applications took place
before us on 26 and 27 July 2016
.
[
10
]
The exceptions were taken by each of
Shoprite, P
i
ck
'n Pay
and
Spar
.
The
crux of the exceptions
i
s
that Massmart's
referral
to the Tribunal
l
acks
the necessary averments
to sustain its complaint that the
applicants have contravened sections 5(1), 8(c) and 8(d) of the
Competition Act 89 of 1998
("the Act"), and that it
is "vague and embarrassing".
[1
1
]
At
the
hearing
on
27
July
2016,
Mr
Van
der
N
est,
who
appeared
for
Massmart,
conceded
that
the
section
8
argument
put
forth
by
Massmart
needed
clarification
and
was
not
properly
delineated.
In
other
words,
Massmart
accepted
that
the
exception
in
regard
to
the
section
8
argument
was
properly
taken.
F
u
rthermore,
Massmart
requested that it
be
allowed
time
to
rework and
properly
del
i
neate
its
argument,
as is the
norm
i
n
exception
procedures.
[2]
[12]
Spar applied for an order staying Massmart's referral until the
Commission's Grocery Inquiry was concluded. Shoprite, although
not an
applicant, supported this application. Pick 'n Pay did not
participate in the stay application.
[
1
3]
In
the stay
application, Spar and Shoprite allege that the issues raised by
Massmart in
i
ts
referral
are
the
same
issues
under
i
nvestigation
i
n the
Grocery
I
nquiry,
and
that
having the Tribunal determine Massmart's referral prior to its
conclusion will result
i
n
a
dupl
i
cation
of efforts and resources, is contrary to the principal of
i
nstitutional
comity, and
i
s
not
i
n the
i
nterests
of justice.
[14]
For
purposes of
maintaining
simplicity
in
these
reasons
,
the
exception application
arguments and stay application argument
will be
discussed
separately below.
Stay
Application
[15]
Spar and Shoprite submitted that Massmart's complaint referral be
stayed pending the finalisation of the Commission's Grocery
Inquiry.
They advanced a number of reasons:
a.
Firstly,
the
i
ssue
of the impact of long-term exclusive
l
eases
entered into between the developers and national
supermarket
chains on competition in
the
grocery
retail
sector
will
be
i
nvestigated
by
the
Commission
in its ongoing Grocery
Inqu
i
ry
and that there
is
a real risk that the Tribunal may pre-empt the
results
of the
Grocery
I
nquiry.
The two
processes
may
lead to different
and
competing
determinations being
made
in
relation to
the
key
issues.
[3]
I
t
was
contended
that
the
balance
of
convenience
favours
the staying
of
the
self-referral
proceedings
pending
the
finalisation
of the Grocery
I
nquiry.
b.
Secondly,
refusing
the
stay
application
will
result
i
n
unnecessary
dupl
i
cation
of
expenses and deployment of resources.
[4]
c.
Finally
,
in
terms
of
the
pri
n
ciple
of
i
nstitutional
comity,
the
Tribunal
is
required to defer
i
ts
consideration of the self-referral. The princip
l
e
of
comity, it
was
submitted,
i
s
a self
-
i
mposed
rule of jud
i
cial
restraint
whereby
i
ndependent
tribunals
of
concurrent or coordinate
jurisdiction
act to moderate the stresses of co
-
existence
and
to avoid collisions of authority and potential
u
ncertainty.
[5]
[16]
Massmart, on the other hand, submitted a number of reasons why the
stay application
should
be dismissed:
a.
Firstly,
the Commission's
decision
as to how it
chooses
to address anti-competitive
conduct
with
i
ts
l
i
mited
public
resources cannot eliminate or limit Massmart's statutory right to
pursue
i
ts
complaint before the Tribunal
for
what amounts to
prima
facie
anti-competitive
conduct.
[6]
b.
Secondly,
the inquiry is
l
i
kely
to
focus on
small
and
independent retai
l
ers
i
n
townships, peri-urban areas, rural
areas
and the
i
nformal
economy, rather than on the
likes
of Massmart.
[7]
c.
Thirdly,
the
outcome
of
the
grocery
inquiry
is
not
dispositive
of
Massmart's complaint. In the event that
the Grocery
I
nquiry
produced any of the outcomes contemplated
i
n
sections 43C(3)(a)
to (c), namely, in
i
tiation
of a
fresh
complaint, by
operation
of
the
doctrine
of
functus
officio,
a
regulator
such
as
the
Commission
could not
revisit its
earlier
decisions
and revive
or revisit matters
over
wh
i
ch
i
t
has finally and definitively exercised
its powers.
d.
Fourthly,
the two processes are distinct under the Act and the Tribunal has no
jurisdiction
over the Grocery
Inquiry,
with
i
t
becoming re
l
evant
to subsequent proceedings
only
i
f
the Commission
i
nitiates
or
refers a complaint. Furthermore, any potential duplication arising
from
the two
processes
is minimal and unavoidable.
[8]
e.
Fifthly,
there
is
no
prospect
of
pre-emptive
or
conflicting
conclusions.
[9]
The
Tribunal
does
not reach
a
"conclusion"
after
an "investigation";
i
t
determines a complaint referred
to
it,
as
i
t
should
by
operation
of
section
52. In
contrast,
the
"conclusion"
of the Grocery
I
nquiry
will be a report by
the
Commission, with or without (non binding)
recommendations
to
the
Minister,
and
possibly,
a
decision
by
the
Commission
to
take
further
action
(including
in
i
tiating
complaint
and
referral
proceedings)
or
to
take
no
further
action.
Consequently,
the
two
decisions
are
not
comparable
in
either
l
egal
status
or
effect.
f.
Sixthly
,
the
institutional
comity
principle
is
i
napplicable
i
n
this
matter.
[10]
The
Commission
performs
an
i
nvestigative
function
and
a
quasi-prosecutorial
role
before
the
Tribunal
in
matters
that
it
has
referred
for
determination.
The
two
i
nstitutions
do not both enjoy "authority" that could possib
l
y
collide
.
g.
Lastly,
the
balance
of
convenience weighed
in favour
of
Massmart.
Any
further
remedial actions
arising from
the
Grocery
I
nquiry can
only
be
confirmed
by
the Tribunal
following the in
i
tiation
of a future complaint and
i
ts
referral to the Tribunal.
[17]
In
terms
of
section
50(2)
of
the
Act,
the
Commission
must
do
one
of
two things
when a
complaint is submitted
to
i
t.
I
t must
either refer the complaint to the Tribunal,
i
f
it determines
that
a
prohibited
practice
has
been
established
or
"in
any
other
case,
i
ssue
a
notice
of
non-referral
to
the
complainant".
I
f
the
Commission
fai
l
s
to
do
either
of
them within one
year
of
it receiving
the
complaint,
then
in
terms
of
section
50(5)
the
Commission
is
deemed
to have
i
ssued
a notice
of
non-referral.
However,
in
terms
of
section
50(4)
the
one-year
period
may
be extended
by agreement
between
the
complainant
and
the
Commission
or
on
application
to
the
Tribunal.
[18]
In this matter the Commission did not determine that a prohibited
practice had been established. It did not seek Massmart's
agreement
or request the Tribunal's ruling for the extension of the one-year
period. Rather, it issued the notice of non-referral
well before the
expiry of the one-year period and at about the same time as its
decision to institute the Grocery Inquiry. By implication,
the
Commission was content to see the referral takes its course at the
same time that the Grocery Inquiry proceeded.
[19]
I
n
Novartis
[11]
,
the
Tribunal held that to determine whether a stay appl
i
cation
should be granted or denied, the test to be applied comprises three
requirements. They are: (1)
whether
the
applicant
has
reasonable prospects of
success
in
the
High
Court review
(read
i
n
this case "Grocery
I
nquiry");
(2) whether
i
t
is
in the
i
nterests
of justice
to
stay the
proceedings;
and,
(3)
where
the
balance
of
convenience
li
es.
[12]
The
reasonable
prospects
of
success
is,
of course, to be understood
as
a
sine
qua non
of
a referral (read stay),
not
as a
sufficient
ground.
[13]
[20]
Market inquir
i
es
are not adjudicative processes nor are they
i
n
any
way determinative of
issues
or rights of parties. The outcome
of
a market
i
nquiry
is recommendatory
i
n
nature.
[14]
Furthermore, the
issues to
be
determined by the complaint referral and the
market
inquiry
are
not
the
same. The main
focus
of
this
market inquiry
will
be
to
i
dentify
and
assess
the
causes
of
barriers
and
any
other
factors
and
developments
that
i
mpacts
on competition
i
n
the
grocery retail
sector,
especially in townships, peri-urban
and
rural
areas.
[15]
Noth
i
ng
that wou
l
d
be decided
by
the
i
nquiry
would be definitive of the
Massmart
i
ssue
.
The
appl
i
cants
h
ave
therefore
fai
l
ed
to
meet
the
prospects
of
success requirement.
[2
1
]
The
second
l
eg
of
the
test is
whether
i
t
i
s
i
n
the
i
nterests
of
justice
t
o
stay
the
proceedings.
This
requires
an
equitable
evaluation
of all
the
circumstances of
a
particular case. Spar and Shopr
i
te
submitted that the eval
u
ation
of whether
i
t
is in the
i
nterests
of
just
i
ce
to
stay
the
proceedings
i
nvolves
four
issues
.
They
are
:
(1)
the
overlap of
issues
to be determi
n
ed
by the Tribu
n
al
with
those
to be determined by the market
i
n
qu
i
ry;
(
2)
the
danger
of
divergent
or
co
n
flicting
fi
n
dings
by
the
Tribunal
and the
market
enquiry
;
(3)
the
market
enquiry
being better
placed
to
conduct
an
i
nitial
i
nvestigation
of
the
competitive
effect
of
exclusive
l
eases
;
and
(4)
the
i
nstitutional
comity between the Tribunal and the Commission
.
[22]
As s
t
ated
above, the two processes
are
not the same. The Grocery
I
nqu
i
ry
provides recommendations. The
Tribunal
is
the
sole
i
nstitution
with
adjudicative
powers
over
complaint
proceedings
pursued
under
the
Act.
Therefore
,
there is
no
danger of
conflicting findings.
The
i
ssue
of
i
nstitutional
comity does
not
arise
.
[23]
With
re
g
ard
to the
balance
of conven
i
ence,
the argument
of
duplicity of efforts
by
the
.
Tribunal
and the market
i
nquiry
does
not
stand,
as
the
iss
u
es
to be deter
m
i
ned
by the two processes are not the same
.
[24]
Accordingly, we find that the prospects of success, the interests of
justice and the balance of convenience do not favour staying
the
application pending the determination of the market inquiry.
[
25]
Accordingly,
the
appl
i
cation
is
dismissed.
Massmart
i
s
entitled
to
its
costs
i
n
oppos
i
ng
the
stay.
Since
Shoprite
,
although
not
an
applicant,
su
p
ported
the
application
i
t
should also be
jointly a
n
d
several
l
y
l
i
able with
Spar
for
Massmart's costs
.
Our
order appears at
the
end
of
these
reasons
.
___________________
Per
Ms Andiswa Ndoni
Mr
Norman Manoim
and Mr
Anton Roskam
concurri
n
g
Exception
Applications
[26]
The respondents collectively have raised a number of exceptions to
the Massmart referral. Some of these overlapped; others
were specific
to a particular respondent.
[27]
Massmart usefully summarised them in its heads of argument as
follows:
"24.
The
cumulative
grounds of
exception
proffered by
the
applicants
are
the
following:
24.1
There is no evidence that
Massmart's
complaint
to the Commission is the same as its referral to the Tribunal;
24.2
Massmart failed
to join
the
counter-parties to
the
impugned
lease agreements in the Tribunal
proceedings;
24.3
Massmart
failed
to allege the specific
terms of
the lease
agreements that it impugns;
24.4
Massmart failed to define the
relevant markets;
24.5
Massmart failed to
establish dominance;
24.6
Massmart failed to establish harm
to competition
;
and
24.7
Massmart
failed to establish anti-competitive
vertical
conduct.
·
[16]
[28]
Common to all
were
the complaints in
respect
of the pleading
of
the relevant markets
and
the
absence
of
an
intelligible
case
on
dominance
.
[29]
As noted earlier at the hearing Massmart abandoned its defense of its
dominance case and stated that it would reconsider it.
We therefore
do not need to decide this objection.
[30]
Certain
exceptions were not pursued in
argument. Thus Shoprite's argument
regarding
whether
the complaint referral was borne out of the complaint
to the Commission need
not be considered either
.
[31]
We now deal with what was left of the complaint which was the section
5(1) complaint. The essence of the objection concerned
the manner in
which the market had been defined in the referral. We deal with this
first. There were other residual objections
which we go on to
consider.
[3
2
]
During
the
heari
n
g
Massmart
responded
to
the
objections
around
the
market
definition by
optin
g
for
a
particular
definition
of
the
market
that
was
clear
in
its
terms.
The
question
arose
as
to
whether
this
restated,
for
want
of
a
better
term,
market
definition
was
to
be
found
on the
papers
and
i
f
it was,
did
i
t
make out a cause of action that was
not excipiable.
[33]
These are the two questions that we go on to consider.
Does
the present referral reflect the section 5(1) case now contended for
by Massmart?
[34]
As noted, in the course of the hearing, Mr. Van Der Nest, who
appeared for Massmart, succinctly articulated what Massmart's
theory
of harm was in respect of its section 5(1) case. It was explained in
this way:
a.
Massmart
seeks to enter the national market for selling fresh grocery products
("fresh")
through
its Game chain, many of
whose
stores are located in
shopping
Malls
nationwide,
where
at
present,
they
sell
general
merchandise.
By
entering
th
i
s
fresh
market
nationally
it
believes
i
t
will
be
able
to
achieve
sufficient
economies
of
scale, and other efficiencies, to be able to compete successfully
with the three
respondents.
However
entering
that
market
(the
national
market)
requires
it
to
be
able
to
sell
fresh
in
shopping
malls.
Access
to these malls
i
s
l
argely
foreclosed
to Game because each of the three
respondents
,
respectively,
have
exclusivity
agreements
with
the
l
andlords
of
these
malls
which
exclude
rivals
from
selling
fresh
in
the
particular
mall.
Thus
entry
on
the
scale
necessary
to
effectively
compete
i
n
the
areas
where
it
is
requ
i
red
to
compete
i
s
denied
to
them.
This
theory
comes
with
several caveats. Massmart accepts that the exclusivity provisions
i.e. the
l
ease
clauses
i
t
seeks to
i
mpugn,
have a
l
ocal,
not national effect. (
I
t
is not clear from even
the
revised
market
definition
contended
for
at
the
hearing
whether
each
mall
constitutes
a
local market on
i
ts
own or whether
i
t
represents an outlet which constitutes
a
portion
of
the
total
outlets
that
are
available
to
competitors
to
be
able
to
enter
the
national
market)
.
[17]
b.
Second, Massmart makes clear that the
exclusionary effect
i
s
cumulative.
I
t
comes about
not
because of what
happens
at
the
l
ocal
l
evel
of any
i
ndividual
mall,
nor
does
i
t
even
come
about
i
f
we
take
the
collective
malls
of
any
one
of
the
respondents. Rather,
i
t
i
s
the aggregate of the
exclusive agreements of all
three that forecloses Massmart's
effective entry
i
nto
the market. In the referral this
i
s
referred
to
as
a
network.
Perhaps
the
terminology
is
not
correct.
They
don't
mean
a
network
i
n
the
traditional
economic
sense.
What
they
mean
i
s
that
the
cumulative effect
of these
separate
restraints effectively
forecloses
entry
to
r
i
vals
i
n the
national
market
for
fresh.
[35]
The necessary allegations to support this theory can be
found
in
various
places in
the
referral,
provided the reader
digs
hard enough to
find
them, as they do not appear in
any
one
p
l
ace
nor
i
n
the
expected section
which
deals
with
market definition.
I
n
short,
finding
it
requires
one
to
be
a
determined
and
resolute
reader.
[18]
The second problem
is
that
the
reader
i
s
faced
with
having
to
shut
out
the
noise
created
by
other
allegations
about market defin
i
tion
in the referral that are either inconsistent with or
i
rrelevant
to this theory.
[19]
The
combination of these two problems means that the respondents'
criticism
that
the
referral
i
s
vague
and
embarrassing
has
substance.
[36]
Of course
there
is
nothing to stop a pleader
from
alleging
,
based on the
same facts,
alternative
candidates
for
a
relevant
market
or
theory
of
harm
.
However
this choice
should
be
made
clear
i
n the
referral; the
reader should
be able
to
easi
l
y
distinguish between those allegations
that comprise the main
case
,
and
those
the alternatives. The
problem
with the current referral
i
s
that the main
case and the alternative or alternatives
-
i
f
they
are
to
be
considered
as
such
-
are
presented
as
a
single
consistent
case, without the suggestion that they
represent separate or
alternate
theories.
[37]
As was made clear during argument by Mr Gauntlett for Shoprite, the
respondent no less than the complainant, is required to
plead
material facts. Since the respondent's task is by definition
responsive to a referral if the latter is opaque the former
cannot be
any less so. By failing to make out a coherent, internally consistent
case, a complainant
deprives
a respondent
not only of its r
i
ght
to understand the case against
i
t,
but also the concomitant duty to set up a clear and intelligib
l
e
defense.
[38]
The case that
Massmart
advanced in argument does clarify
i
ts
position in the manner the complaint
referral does not. Of course, we find that on a fair reading of the
referral
this
clarity does not emerge from
it.
However, even
i
f
i
t did,
this would not suffice.
A
precise theory
of
harm does
not suffice
to
render
a pleading adequate.
The
pleader
must
allege
the
material
facts
to
support
this.
This
is
the
question
which
we
now
consider.
Do
the material facts
necessary
to sustain the section 5(1) case
appear in the referral?
[39]
Ru
l
e
1
5
requires
the
pleader
no
t
just
to
set
out
i
ts
grounds
of
complaint,
but
the
material facts
on
which
it
rel
i
es.
This means more
than
asserting
that X
i
s
the relevant product and
Y
the
relevant
geographic
market.
I
n
relation
to
market
definition,
a
material
fact
i
s
not simply what the market definition
i
s,
but also why
i
t
is so. This does
not
mean burdening
the
referral
with
reams
of
econometric
data
-
that
i
s
evidence
for
the
trial,
but
i
t
does require
allegations of fact to suggest why the
market
definition
contended for has
been
arrived
at.
These
facts
would
rarely
be
self-evident.
[40]
To give some examples of where the referral needs amplification
:
For
Massmart clearly access to shopping malls
i
s
considered crucial.
I
f
so, it should explain
why.
Expressed
differently,
i
f
these
are
outlets
for
i
ts
sales
from
which
i
t
says
i
t
i
s
excluded, why can
i
t
not go elsewhere? More detail would be required as to the nature of
the foreclosure alleged in the
l
eases.
Why could Massmart not be able to enter
the
market
other
than
through
these
foreclosed
malls?
What
is
the
nature
of
the
exclusivities
-
what
products
do
they
cover;
how
l
ong
are
they
;
are
all
objectionable
or only
those
which
exceed
a
particular
time
per
i
od?
[41]
Given
that
that
foreclosure
is said to operate
in a national market,
how much of
the
market
i
s
foreclosed
by
the respondents,
and
i
f
so, how much and by whom?
Again this
need
not
require exact precision,
but
some
i
nformed
estimate would
at
the very
l
east
be required for each respondent to appreciate how much is allegedly
foreclosed by
i
t.
[42]
Massmart argued that
it does
not
have all this
i
nformation
and would only be able to obtain it
through discovery
.
But
this argument cannot justi
f
y
the paucity of information
it has
alleged. Presumably, since Massmart has, on its own version, been
i
nterdicted
by some of the respondents or been warned
by
l
andlords
about what
i
t
may not do,
i
t
has some
i
dea
of the nature of some of the exclusivity clauses
and can use this as a basis to infer
more generally about the nature of those leases it has not had sight
of.
[43]
This
is
not an exhaustive issue
of
the points to be covered in a revised
referral, but it gives
some
i
dea
of the factual detail that
i
s
l
acking
i
f
the present theory of harm
i
s
to be pursued
Does
the theory show if
properly pleaded disclose an
infringement of section 5(1)?
[4
4
]
Dur
i
ng
the
course
of
the
hearing
we
raised
another
concern
with
the Massmart's
l
egal
representatives.
Assuming
its
theory
of
harm
was
adequately
pleaded
with
the
material
facts alleged, did
i
t disclose
an
infringement
of
the
Act? The current case as
pleaded relies
not
on
the
foreclosure
effect
of
any
sing
l
e
respondent's
exclusive
l
eases
in
malls,
but on the aggregate, as shown by the excerpt below from the Massmart
founding
affidavit:
"
1
3.2.1.2
In
this
context
and
while
a
single
exclusive
agreement
between
a
landlord
and an incumbent retailer may not necessarily have
a
net
anti
competitive
effect, the likelihood
of
foreclosure
effects are heightened
due
to
the
cumulative effect
of
exclusivity
agreements
between
landlords
and
incumbent
retailers that
prevail
on
a
national
basis
and
at
strategic
entry
points.
[20]
[45]
Thus, on Massmart's case the foreclosure comes about because of the
aggregation or
foreclosure
ach
i
eved
by
the
three
firms
not
anyone
i
ndividually.
To
support
their contention
about
foreclosure
Massmart
referred
to
certain
EU
decisions
and
a
UK
market
enquiry. Both are supportive of the theory that foreclosure of
outlets essential
to
a r
i
val
to compete in
can
be
exclusionary
.
However
in
the
one case,
Stergios
Delimitis v Henninger Brau AG
the
respondent was a single firm.
[21]
[46]
The UK market enquiry related to the
cumulative effect of separate exclusivity deals.
I
t
thus
more
closely
resembles
the
case
Massmart
now
seeks
to
bring,
than
does
Delimitis.
However,
it does not appear to assist Massmart
in
framing its concern as a
contravention of section 5(1) of the
Act. As the authors of a leading text remarked, the market enquiries
which had been conducted
under two successive statutes had:
"...
allowed
the UK competition authorities to intervene in markets where there
is
a
perceived
competition problem but not necessarily
an
infringement
under
Art
101
or
102.
[22]
[47]
The same observation could be made about section 5(1) of our Act.
[48]
Nor is there any suggestion that these exclusivity arrangements are
the product of collusive relationships between the respondents.
[49]
Although we raised this difficulty with Massmart during the hearing
of argument it was not a point raised as an exception by
any of the
respondents. As a matter of fairness we consider that Massmart must
be given an opportunity to consider this aspect
and either remedy it
or consider arguments that meet this concern.
Other
exceptions
[50]
Shoprite argued that section 5(1) can only apply to a single
agreement as opposed
to
a class or category of agreements.
Since Massmart
'
s
case required having regard to the effect
of
a
wide variety of agreements
and
not a
single agreement,
it did not the
meet the
l
egal
requirement of the section.
[51]
I
t is
correct that
the
Act is drafted
i
n
the singular.
B
ut
there
is
little significance
to
this. This
is
the
approved
mode of drafting
i
n
plain
l
anguage
,
as the
editor
of
Black's
Law
Dictionary,
Bryan
Garner, points out
i
n
his book on
l
egal
writing
i
n
plain English where he advises drafters to prefer the singular over
the plural:
"You'll
find
an
age
old
provision
in
statutes
and
contracts:
"The
singular
includes
the
plural;
the
plural
includes
the
singular.
"
Only
the second part
of
this
formulation
ever
mattered.
'
[23]
[52]
As it
happens
the
I
nterpretation
Act, no
33
of 1957,
contains Garner's
"age
old provision
"
.
I
n
terms of section 6(b):
"In
every law
,
unless
the contrary intention appears-
(a)
words imparting the
masculine gender include females
;
and
(b)
words in the
singular number include
the
plural.
and wards in the
plural
number
include the
singular
.
"(Our
emphasis)
[53]
This
makes
the position
clear.
The
only
question
then
i
s
whether the
contrary
i
ntention
appears from the text of the Act, but none does. Nor can one be
i
nferred.
I
ndeed
i
t
wou
l
d be
absurd if
iii
t
did.
S
i
nce
section
5(1)
i
s
concerned
with
anticompetitive conduct
i
n
a market und
e
r
p
i
n
n
ed
by an agreeme
n
t
,
it
wou
l
d
seem a
l
ogical
conclusion
that
if a respondent made use
of
more than one such
exclusive
agreement, the
more
l
i
ke
l
y
i
ts
anticompetitive effect.
I
t
i
s hardly
like
l
y
i
n
this context that the
l
egislature
would have
i
ntended
the
word
agreement
to
be
lim
i
ted
to
the
singular
.
This
exception
i
s
dismissed.
[54]
The
next
exception
that
some
of
the
respondents
raised
i
s
that
Massmart
had
not
joined any of the
l
andlords
to the referral. They argued that in respect of the section 5(1)
complaint since the
agreement
is at the heart of the
complaint both
parties to
an
agreement sought to be
i
mpugned
shou
l
d be
joined.
I
n
response, Massmart argued that since the
respondent tenants were the beneficiaries of the exclusivity and they
were e
n
tered
i
nto solely
for their benefit,
i
t
was not
n
ecessary
for
the
l
andlords
to be jo
i
ned
.
In
the
alternative, Massmart argued
that, as it
had
joined
SAPO
A
,
an
i
ndustry
organ
i
sation
that most
shopping
centre
l
andlords
belong
to,
the
l
andlords
would
h
ave
knowledge of the application.
I
n
addition
,
Massmart pointed out that SAPOA had,
i
n any
event,
brought
a
si
m
i
l
ar
complaint
about
exclusive
l
eases
to
the
Commission.
[55]
We
do not need to give a definitive answer to this
exception
as
Massmart
will be redrafting
its
referral
i
n
i
mportant
respects
including
possib
l
y
the
relief
sought.
I
t
would
be
premature
until
then
to
decide
this
point.
Nevertheless
we
offer
the
following
guidance:
Where
a complai
n
a
n
t
seeks to attack the specific terms of an agreement that it seeks
to
have expunged,
ordi
n
arily
both parties to the agreement should be jo
i
ned
.
Where
,
as
i
n
prayers
one
and
two
,
the
practice
i
s
the
subject
of
the
rel
i
ef,
rather
than a
specific
clause
i
n
a
l
ease,
citing
the
l
andlord
may
n
ot
be
required
.
[24]
[56]
The remaining issue raised by Spar was that the agreements in
question should have been attached. Massmart pointed out that
it does
not have these agreements since they are between the respondent firm
and its particular landlord. Again, we do not need
to
determine this point definitively now;
i
t
would seem that this might depend on the way
the
referral
is
framed
and
the
nature
of
the
relief
sought
once
the
amended
referral
is
filed.
Conclusion
[57]
The exceptions in respect of the failure to define and allege the
material facts concerning the definition of the relevant
market and
consequent anticompetitive effects are upheld. However Massmart will
be given an opportunity to amend its referral to
remedy this
deficiency. Since the excipients have been largely successful, they
should be entitled to their costs.
ORDER
1.
The
appl
i
cations
for
exception
are
partially
upheld.
Massmart
is
given
l
eave
to amend its referral affidavit in
accordance with the guidance provided, subject to
it
doing
so within
40
business days from date of this decision.
2.
Massmart
i
s
liable
for
the
costs
of
the
first
to
third
appl
i
cants
i
n the
exception appl
i
cation,
on a party and party scale
,
including the costs of two counsel.
3.
The
appl
i
cation
for
a
stay
i
s
dismissed.
4.
Spar and Shoprite are
jointly and severally liable for
Massmart
'
s
costs in respect of its opposition to the stay application
,
on a party and party scale, including
the costs of two counsel
,
the one paying
the other to be absolved.
01
September 2016
DATE
______________________
Mr
Norman Manoim
Mr
Anton Roskam and Ms Andiswa Ndoni concurring
Case
Manager:
Kameel Pancham
For
the First Applicant:
JJ Gauntlett SC, L Kuschke (heads of argument only)
SC, MJ
E
ngelbrecht
i
nstructed
by
Werksmans
Inc.
For
the
Second
Appl
i
cant
:
DN
Unterhalter SC, GD Marriot, J Wilson SC
(heads of
argument
only) instructed by Nortons Inc.
For
the Third Applicant:
A Annandale SC, M du
P
l
essis,
A Coutsoudis instructed by Garl
i
cke
and Bousfield
For
the Respondent:
M van der Nest SC, F
Snyckers SC, MM Le Roux, N Muvangua
i
nstructed
by Cl
i
ffe
Dekker Hofmeyr
[1]
Market
i
nquiries
are a new form
of
procedure set
out
in sections
43A
to 43C of the Act, which came
i
nto
effect
on 1April2013
.
[2]
Transcript
pa
g
e
1
88
lines
7-23
.
[3]
Transcript
page 89 lines 21-25 & pa
g
e
90 lines 1-2
.
[4]
Transcript
page
90 lines
1
6
-
20
.
[5]
Transcript
page 89 lines 1
-
5
.
[6]
Transcript
page
238
lines
24-25
&
page
239 lines
1
-5
.
[7]
Transcript
page 228 l
i
nes
16-22
.
[8]
Transcript
page
191
l
i
nes
6
-
21
.
[9]
Transcript
page 207 l
i
nes
3-5
.
[10]
Transcript
page 193lines 23-25
.
[11]
Novartis
SA (Pty) Ltd v Main Street Ltd (2)
22/CR/B/
June01.
[12]
See
Olympic
Passenger Services (Pty) Ltd Ramlagan
1
957(2)
SA 382(0) at 383F,
where
it was held that
by
the
balance
of
convenience
is
meant
the
prejudice
to the applicant
i
f
the
interdict
i
s
refused, weighed against the prejudice of the respondents if
the
interdict
i
s
granted
.
[13]
Novartis
SA
(Pty)
Ltd
v Main Street Ltd (2)
22/CR/B/
June01 at [16]
.
[14]
See
section 43C(a) and (b) of the Act.
[15]
Grocery
Retail
Sector
Market
I
n
quiry
,
St
a
tement
o
f
I
ssues
,
15
J
u
l
y
2016
,
para
36
.
[16]
Massmart
Consolidated Heads of Argument
in
respect of the stay and e
x
ception
applications par 24
pages
1
0-11.
[17]
Case examples Massmart used in argument referred to the beer
industry where rivals had complained of being foreclosed from
outlets. See Footnote 21 infra. The theory of harm was based on how
a firm wishing to compete in a national market through which
one
needed access to such outlets had a percentage of the national
market foreclosed to it by the existence of exclusive agreements
in
outlets. Since the outlets customers were local not national there
was an interrelationship between the two.
[18]
Massmart
does
not
define a market with
clarity
,
it
makes
several
attempts
but
arrives
at
different
formulations
and
delineations.
For
example
,
in
i
ts
referra
l
affidavit:
Paragraph
8.1
provides
for
a
geographic market of grocery stores with "a
local
and
a
national
dimension
";
paragraph
8.2 provides for
"a
subset
of
local markets"
;
paragraph
8
.
3
provides for
a
market which comprises
"larger
formalised
retailers which offer full range or more limited one stop shopping"
and
"other
types of grocery shopping mission";
paragraph
8.4
provides
for
a narrower market
"fo
r
anchor
grocery tenancy in
malls"
;
and
finally
paragraph
1
3.3.1
provides
for "a
market
for securing grocery tenancy in malls".\
[19]
For
example
i
n
paragraph
8
.
3
of
the
referral
affidavit,
Massmart
provides
that
"The
precise
boundaries
of the product market will depend on the nature of shopping missions
that consumers seek to carry out
,
the
available choices for those shopping missions and the degree to
which consumers consider those
choices
to be substitutable with one another".
[20]
See
para
1
3.2
.
1
.
2
on pa
g
e
1
8
of the Trial Bun
d
l
e.
[21]
Case
C-234/89
Stergios
Delimitis v Henninger Brau
AG
[1991] ECR l-935
[199
2
].
[22]
Economics
for Competition Lawyers,
Gunnar
Neils, Helen Jenkins and
James
Kavanagh 2011, page
325
footnote
21.
[23]
See
Bryan
Garner
"Legal
Wri
t
i
ng
in Plain
E
n
g
sh"2001
page
1
14
.
Garner
gives a useful
example
of the ambiguity that can ari
s
e
from the use of the plural which he says can be avoided by the use
of the
singular
.
[24]
See
paras 1-2 of the Massmart notice of motion on page 3 of the Trial
Bundle
.