Brief Summary

Competition — Consent Order — Variation of consent order — Foskor (Pty) Ltd seeking to vary terms of 2011 Consent Order regarding pricing of phosphoric acid — Tribunal determining that Foskor's request for variation based on alleged mistake and changed circumstances was not valid — New consent agreement reached between Foskor and the Competition Commission allowing for amended pricing conditions — Tribunal confirming new agreement as a consent order.

Comprehensive Summary

Summary of Judgment

1. Introduction

This judgment concerns an interlocutory (jurisdictional) determination by the Competition Tribunal of South Africa arising from an application connected to the variation or amendment of an earlier consent order. The proceedings stem from Foskor (Pty) Ltd’s attempt to alter the terms of a consent order confirmed by the Tribunal on 28 February 2011 (“the 2011 Consent Order”), which had regulated Foskor’s pricing conduct following a Competition Commission investigation into alleged excessive pricing.

The applicant was Foskor (Pty) Ltd (“Foskor”), a vertically integrated supplier in phosphate-based products in South Africa. The first respondent was the Competition Commission (“the Commission”). The second respondent was Omnia Group (Pty) Ltd (“Omnia”), a downstream fertiliser manufacturer and a major domestic purchaser of Foskor’s phosphoric acid. The third to sixth respondents were the complainants in the original Commission complaint (case no: 2007Dec3382).

Procedurally, the matter followed a “convoluted history”. After the 2011 Consent Order was confirmed, a dispute arose in 2014 regarding whether Foskor remained obliged to price domestic phosphoric acid on an FOB Richards Bay basis. Omnia approached the High Court for declaratory relief on interpretation; Foskor resisted and advanced contentions including ambiguity and reliance on an unsigned “third addendum”. The High Court, and later a Full Bench on appeal, rejected Foskor’s interpretation and confirmed that the third addendum did not form part of the order. After those proceedings, Foskor pursued a variation application at the Tribunal. During the course of the Tribunal proceedings, the Commission and Foskor concluded a new consent agreement (filed on 25 April 2017) intended to amend the pricing obligation in clause 5.4. Omnia opposed confirmation of that agreement, contending that the Tribunal lacked power to amend its prior consent order except on the limited grounds in section 66(b) of the Competition Act.

The general subject-matter of the dispute was the Tribunal’s statutory power to vary or amend an existing consent order regulating pricing conduct, particularly where the Commission and the respondent now agree on amended terms in light of alleged changed circumstances and/or hardship, and where an interested third party (Omnia) objects.

2. Material Facts

Foskor produces rock phosphates and phosphoric acid and operates at upstream and downstream levels in phosphate-based fertiliser supply. It is the only local miner of phosphate rock and, at the time described in the judgment, the only supplier of phosphoric acid in South Africa. Omnia operates primarily in downstream fertiliser markets and is described as Foskor’s largest South African purchaser of phosphoric acid, buying about half of Foskor’s domestic phosphoric acid sales. Phosphoric acid is an input into Omnia’s NPK fertilisers.

In 2007, the Commission received complaints against Foskor from animal feed producers. After investigation, the Commission formed the view that Foskor charged domestic customers an FOB Richards Bay price plus a 75% notional freight cost to India, which the Commission regarded as excessive pricing contrary to section 8(a) of the Competition Act 89 of 1998.

Foskor and the Commission concluded a consent agreement in July 2010. At the confirmation hearing on 26 January 2011, the Tribunal required greater clarity on the pricing methodology, resulting in a signed addendum (the “first addendum”) that substituted clause 5.4 and recorded, in substance, that Foskor would not revert to its past import-parity policy with notional freight to India and that, henceforth, Foskor would charge “a price based on the FOB Richards Bay Port” in respect of phosphoric acid. A second addendum (23 February 2011) introduced an express admission of contravention and an administrative penalty. A third addendum (containing monitoring provisions for three years) was mentioned at the 28 February 2011 hearing but was not signed by the Commissioner by then and was not confirmed as part of the 2011 Consent Order.

After the 2011 Consent Order, Foskor priced domestic phosphoric acid on an FOB Richards Bay basis until mid-2014. From around September 2014, Foskor priced above the FOB Richards Bay price. Omnia then approached the Commission for clarity, contending Foskor was in breach.

While the Commission engaged Omnia, Omnia applied to the High Court seeking a declaration that the 2011 Consent Order required Foskor to sell domestic phosphoric acid at an FOB Richards Bay-based price. In that litigation, Foskor argued clause 5.4 was ambiguous and sought variation, including on the basis that the third addendum had been excluded by omission or error and that its pricing obligation was limited to three years. The High Court held that the remedy was removal of the notional India freight charge and that clause 5.4 required Foskor to desist from charging additional charges to the FOB price. It also held the third addendum did not form part of the order and stated that if there was an obvious error or omission, the affected parties should approach the Tribunal for rectification. Foskor’s appeal to a Full Bench was unsuccessful; the Full Bench confirmed the clause 5.4 interpretation and rejected reliance on mistake to set aside the consent order.

Foskor then applied to the Tribunal seeking (i) amendment of clause 5.4 and (ii) a declaration that the unsigned third addendum formed part of the 2011 Consent Order. Foskor initially relied on grounds of common mistake (invoking section 66(c)) and obvious error or omission (invoking section 66(b)), but in reply introduced changed circumstances/hardship. Omnia brought an application to strike out parts of the replying affidavit, and Foskor sought leave to file a supplementary affidavit (including evidence from a former Commission employee on alleged intentions during settlement negotiations). The Commission did not oppose supplementation insofar as it related to changed circumstances but opposed the introduction of the former employee’s evidence.

During this period, the Commission conducted reviews of Foskor’s pricing and concluded (as recorded in the judgment) that Foskor’s phosphoric acid pricing during investigated periods was below cost, indicating the excessive pricing concern had fallen away. The Commission and Foskor then concluded a new consent agreement whose purpose was to remove the obligation in clause 5.4 requiring pricing based on FOB Richards Bay, leaving only an undertaking not to revert to the prior import-parity policy including notional freight to India. The Commission asked the Tribunal to confirm this new consent agreement as a consent order under section 49D. Omnia opposed, arguing the Tribunal could not amend the 2011 Consent Order on grounds other than those in section 66(b).

The Tribunal issued a direction separating jurisdictional questions from the merits of the amendment. By the time of decision, the Tribunal treated earlier issues (including Foskor’s section 66(b) case) as overtaken by events, because the live question had crystallised into whether the Tribunal may, as a matter of law, amend or vary the 2011 Consent Order based on changed circumstances/hardship and on terms agreed between the Commission and Foskor.

3. Legal Issues

The central legal questions were jurisdictional and concerned the scope of the Tribunal’s statutory powers, rather than the substantive merits of what the amended pricing condition should be.

The Tribunal was required to determine whether, as a matter of law, it had the power to vary or amend a previously granted consent order (confirmed in terms of section 49D) on the basis of changed circumstances and/or hardship, where the Commission and the respondent had subsequently reached agreed amended terms, and where an interested third party opposed confirmation.

A further related question (driven by Omnia’s opposition) was whether the Tribunal’s power to vary its own orders was confined to the limited grounds listed in section 66(b) (ambiguity, obvious error or omission) or whether the Tribunal could rely on its general powers in section 27(1)(d) to make rulings or orders necessary or incidental to the performance of its functions under the Act.

The dispute was primarily a question of law (statutory interpretation and institutional competence), informed by the statutory context and constitutional considerations (notably access to justice and the interpretive injunction that the Act be read consistently with the Constitution). To the extent that “changed circumstances” and “hardship” were referenced, they served mainly as the context for the legal question, because the Tribunal did not reach the merits of whether the variation should ultimately be granted.

4. Court’s Reasoning

The Tribunal began by locating the dispute within the statutory framework governing consent orders under section 49D. It emphasised that section 49D creates a mechanism enabling the Commission to regulate firm conduct expeditiously, but with transparency and accountability. While a consent order depends on agreement between the Commission and a respondent, it is not legally enforceable until confirmed by the Tribunal. The Tribunal’s role is not to hear evidence in confirming a consent order, but it must nevertheless be satisfied (drawing from Competition Appeal Court authority) that the agreement is rational, promotes the objectives of the Competition Act, serves the public interest, and is not so inappropriate as to bring the competition authorities into disrepute.

The Tribunal distinguished the character of consent agreements in competition enforcement from ordinary private settlements. It explained that consent agreements relate to public rather than private interests, given the Commission’s regulatory mandate to promote competition and prevent abuse of dominance. The Tribunal further reasoned that behavioural remedies in consent orders may require ongoing compliance and monitoring, and thus do not necessarily have the same finality as a private settlement where res judicata typically follows.

Against that background, the Tribunal addressed Omnia’s core contention: that a consent order, like any other Tribunal order, could only be varied under section 66(b). The Tribunal considered this approach overly narrow because it would require the Tribunal to ignore other provisions of the Act and the broader regulatory mandate assigned to the competition authorities. It reasoned that pricing remedies in abuse of dominance matters operate in dynamic markets, and that it is not possible at the time of imposing a pricing remedy to foresee all future market changes that might make continued enforcement inappropriate or harmful.

The Tribunal accepted, at the level of principle, that a respondent should not be denied relief in cases of changed circumstances or hardship, because such denial would not align with the Tribunal’s mandate. The key question then became whether the Act empowered the Tribunal to grant such relief.

The Tribunal held that section 27(1)(d)—which empowers the Tribunal to make “any ruling or order necessary or incidental to the performance of its functions in terms of this Act”—is sufficiently broad, when interpreted in context and consistently with the Constitution, to include the power to amend or vary a consent order on the grounds of changed circumstances or hardship. In reaching that conclusion, the Tribunal relied significantly on constitutional and appellate guidance concerning the breadth of the Tribunal’s discretionary powers. It referred to the Constitutional Court’s endorsement in Competition Commission of South Africa v Hosken Consolidated Investments Limited and Another (CCT296/17) [2019] ZACC 2; 2019 (4) BCLR 470 (CC); 2019 (3) SA 1 (CC) of the wide formulation of section 27(1)(d), and the policy concern that overly technical readings of the Tribunal’s powers can become barriers to justice where the dispute falls within the Tribunal’s mandate.

The Tribunal also addressed Omnia’s reliance on Mike's Chicken & Two Others and Astral Foods Limited & The Competition Commission 32/CAC/SepU03. It read that decision as establishing that section 27(1)(d) was not intended to cover an eventuality specifically dealt with by section 66(b), but not as a general prohibition on relying on section 27(1)(d) in contexts not captured by section 66(b). It distinguished Mike’s Chicken on the basis that it concerned interpretation of an order and whether it was ambiguous, whereas the present matter concerned the ability to seek relief from an ongoing pricing remedy in changed circumstances within a regulatory context.

The Tribunal further reasoned that interpreting section 27(1)(d) to include relief for hardship or changed circumstances could have the effect of extending the variation grounds beyond section 66(b), but considered such an extension necessary to ensure the Tribunal can perform its functions consistently with constitutional requirements. It invoked the Competition Act’s interpretive directive in section 1(2) (interpretation consistent with the Constitution and the Act’s purposes) and acknowledged section 1(3) (permitting consideration of foreign and international law). In this connection, it referred to foreign jurisprudence cited by the Commission, particularly United States case law recognising that injunction-like consent decrees may require adaptation to changed conditions, and used this material as supportive context rather than as a direct source of authority.

The Tribunal nevertheless cautioned that recognising jurisdiction to vary for hardship or changed circumstances does not mean such relief must be granted in every case. The discretion under section 27(1)(d) should be exercised only when warranted, and any intervention must comply with legality, transparency, and fairness. In consent order contexts under section 49D, the Tribunal indicated that the jurisdictional threshold for amendment includes investigation by and agreement from the Commission, and that transparency and fairness would be served by a public hearing on the merits of the amendment with interested parties afforded the opportunity to make submissions.

Applying these principles to the live controversy, the Tribunal concluded that it was legally competent for the Tribunal to consider the Commission’s application to confirm the new consent agreement as a variation of the 2011 consent order under section 27(1)(d), read with sections 1(2) and 1(3). The decision did not finally determine whether the new consent agreement should be confirmed on its merits; it determined that the Tribunal had the power to consider it and directed that the application be set down for that merits hearing.

5. Outcome and Relief

The Tribunal granted an order holding that the Commission’s application for confirmation of the new consent agreement (which sought to vary the 2011 consent order) can be considered by the Tribunal in terms of section 27(1)(d) read with sections 1(2) and 1(3) of the Competition Act.

The Tribunal authorised the Commission to proceed to set its application down for a hearing on the merits by arrangement with the Registrar.

No order as to costs was made.

Cases Cited

Omnia v Foskor and Others Case number: 14554/2015 (delivered on 16 October 2015).

Foskor (Pty) Ltd v Omnia Group (Pty) Ltd Case number: A203/2016 (delivered on 06 November 2017).

GlaxoSmithKline South Africa (Pty) Ltd and Another v David Lewis N.O. and Others Case number: 62/CAC/Apr06.

Netcare Hospital Group (Pty) Ltd & Another v Norman Manoim N.O. & Others Case Number: 75/CAC/Apr08.

Mike's Chicken & Two Others and Astral Foods Limited & The Competition Commission 32/CAC/SepU03.

Competition Commission of South Africa v Hosken Consolidated Investments Limited and Another (CCT296/17) [2019] ZACC 2; 2019 (4) BCLR 470 (CC); 2019 (3) SA 1 (CC).

Hosken Consolidated Investments Limited and Tsogo Sun Holdings Limited v CC Case Number: 154/CAC/Sep17.

Competition Commission and South Africa Airways (Pty) Ltd 18/CR/Mar01.

Industrial Development Corporation of South Africa Ltd and Anglo-American Holdings Ltd 45/LM/Jun02 and 46/LM/Jun02.

Zondi v Member of the Executive Council for Traditional and Local Government Affairs and Others (CCT73/03) [2005] ZACC 18.

United States v Swift Co. [1932] USSC 87; 286 U.S. 106 (1932).

Rufo v Inmates of Suffolk County Jail [1992] USSC 8; 502 U.S. 367 (1992).

Lorraine NAACP v Lorain Bd. Of Educ. [1992] USCA10 1211; 979 F.2d 1141 (6th Cir. 1992).

Legislation Cited

Competition Act 89 of 1998, including sections 1(2), 1(3), 2, 8(a), 27(1)(d), 49, 49B, 49D, 50, 55(1), 58(1)(b), 66(b), and 66(c).

Rules of Court Cited

Uniform Rule 42(1).

Held

The Tribunal held that, properly interpreted in context and consistently with the Constitution, section 27(1)(d) of the Competition Act empowers the Tribunal to consider the amendment or variation of a consent order on the basis of changed circumstances or hardship, including where amended terms are agreed between the Commission and the respondent and presented for confirmation under the consent order mechanism.

The Tribunal further held that Omnia’s contention that variation is confined to the limited grounds in section 66(b) did not preclude reliance on section 27(1)(d) in this regulatory context. Accordingly, the Commission’s application to confirm the new consent agreement varying the 2011 consent order was legally competent to be entertained, and it could be set down for a merits hearing. No costs order was made.

LEGAL PRINCIPLES

A consent agreement concluded under section 49D is not enforceable until confirmed by the Tribunal as a consent order, and the Tribunal’s confirmation function requires satisfaction that the agreement is rational, advances the objectives of the Competition Act, serves the public interest, and is not so inappropriate as to undermine confidence in competition enforcement.

Consent orders in competition matters, particularly those imposing behavioural remedies, may require ongoing regulatory oversight and do not necessarily have the same finality as private civil settlements, because they address public-interest regulation of market conduct and may operate in dynamic market conditions.

The Tribunal’s power under section 27(1)(d) to make rulings or orders necessary or incidental to the performance of its statutory functions is broad, and—when interpreted in accordance with section 1(2) (constitutional consistency) and with regard to section 1(3) (foreign and international law)—includes the power to entertain variation or amendment of a consent order on grounds of changed circumstances or hardship, where such intervention is necessary to the Tribunal’s regulatory mandate and consistent with legality, transparency, and fairness.

Section 66(b) does not, in this context, exhaustively confine the Tribunal’s capacity to address post-order developments where the subject-matter remains within the Tribunal’s statutory mandate and where an acontextual reading would risk functioning as a barrier to justice.

Foskor (Pty) Ltd v Competition Commission and Others (CO037Aug10/VAR240Feb16) [2019] ZACT 85 (18 December 2019)