Brief Summary

Competition Law — Excessive Pricing — Self-referral by Health Funders Association and medical schemes alleging excessive pricing by Pathologists for PCR tests during COVID-19 pandemic — Complainants sought declaratory order of contravention of section 8(1)(a) of the Competition Act — Pathologists had previously entered into consent agreements with the Competition Commission regarding similar conduct — Issue of whether self-referral was precluded by section 67(2) of the Act due to completed proceedings — Tribunal dismissed exceptions raised by Pathologists, affirming that the self-referral was valid and did not contravene the Act.

Comprehensive Summary

Summary of Judgment

1. Introduction

The proceedings were exception applications brought before the Competition Tribunal of South Africa in a set of consolidated matters. The exceptions were raised by three pathology groups, namely Drs Du Buisson, Kramer, Swart, Bouwer Inc t/a Ampath (Ampath), Drs Dietrich Voigt, Mia and Partners t/a Pathcare (Pathcare), and Dr Mauff AC and Partners t/a Lancet Laboratories (Lancet) (collectively referred to in the reasons as the Pathologists). The exceptions were directed at a self-referred complaint referral instituted by The Health Funders Association NPC (HFA) and 36 medical schemes listed in an annexure (collectively referred to as the Complainants). The Competition Commission was cited as a respondent in the complaint referral.

The procedural history, as relied upon by the Tribunal, began with a complaint lodged with the Competition Commission by the Council for Medical Schemes (CMS) in October 2021 regarding alleged excessive pricing for COVID-19 PCR tests. The Commission investigated and concluded, on a prima facie basis, that excessive pricing had occurred. This resulted in consent agreements between the Commission and the Pathologists, concluded without admissions of liability, and confirmed as orders of the Tribunal in December 2021.

In March 2023, the Complainants lodged a further complaint with the Commission under the Competition Act. The Commission issued a notice of non-referral in September 2023, reasoning that the Complainants’ complaint was materially similar to the CMS complaint and had effectively been settled through the earlier consent orders. The Complainants then proceeded by way of a self-referral to the Tribunal in October 2023, focusing on alleged excessive pricing for PCR tests during the period March 2020 to December 2021.

The general subject-matter of the dispute concerned whether the Complainants’ referral affidavit properly pleaded a cause of action for excessive pricing under section 8(1)(a) of the Competition Act, including whether it complied with the Tribunal’s pleading requirements. Although the Complainants initially sought relief relating to both section 8(1)(a) and section 4(1)(b), and also sought administrative penalties, those parts were abandoned and the matter before the Tribunal was confined to the sufficiency of the pleadings in respect of the excessive pricing claim and related allegations.

A further contextual feature, addressed by the Tribunal as a preliminary question, was that the Complainants sought a declaratory finding of a prohibited practice to enable civil damages litigation, because section 65(6)(b) requires certification by the Tribunal or the Competition Appeal Court that the conduct has been found to be a prohibited practice.

2. Material Facts

The Tribunal relied on the following material background facts relating to the COVID-19 pandemic and the PCR testing market conditions. COVID-19 emerged internationally in late 2019 and was declared a pandemic by the World Health Organisation on 11 March 2020. South Africa declared a National State of Disaster on 15 March 2020 and implemented a nationwide lockdown beginning 26 March 2020. The Tribunal accepted that these conditions materially disrupted market functioning and contributed to sudden demand spikes for goods and services relevant to healthcare.

The Tribunal accepted as material that PCR tests were regarded as the most accurate and reliable test available to detect COVID-19 during the relevant time, and that demand for PCR testing surged rapidly, contributing to supply constraints. The Tribunal also noted that government issued Consumer and Customer Protection and National Disaster Management Regulations and Directions on 19 March 2020, aimed at addressing exploitation of pandemic conditions, including forms of excessive pricing during the national disaster.

As to the prior enforcement history, the Tribunal accepted that CMS complained to the Commission in October 2021 alleging excessive pricing for PCR tests, premised on laboratories (including the Pathologists) charging R850 (including VAT) per PCR test during the period March 2020 to December 2021. The Commission investigated and concluded, on a prima facie basis, that excessive pricing in contravention of the Act had occurred. On 8 December 2021 the Commission requested price reductions to no more than R500 (inclusive of VAT), failing which it would approach the Tribunal urgently. The Pathologists agreed to the reduction and entered into consent agreements, confirmed as Tribunal orders, without admissions of liability.

Regarding the present referral, the Tribunal accepted that in March 2023 the Complainants lodged a complaint with the Commission alleging contraventions of section 8(1)(a) (excessive pricing) and section 4(1)(b) (an agreement not to reduce prices). The Commission issued a non-referral in September 2023, explaining that the complaint was materially similar to the CMS complaint and had been settled through the earlier consent agreements.

The Tribunal accepted that the Complainants self-referred in October 2023, alleging that the Pathologists charged an excessive price for PCR tests during March 2020 to December 2021, and that the Complainants intended to pursue damages claims in the High Court. The Tribunal treated as material the Complainants’ explanation that they required a finding of prohibited conduct for purposes of section 65(6)(b).

In relation to the exceptions, the Tribunal treated as material the content of the Complainants’ pleaded case that the relevant product market was the market for the supply of SARS-CoV-2 PCR tests (understood by the Tribunal to be PCR testing services), and that the geographic market was pleaded as local due to pandemic conditions affecting movement and consumer choice. The Tribunal also treated as material that the Complainants’ dominance case was pleaded primarily as one of market power (rather than reliance on market share thresholds), and that the Complainants sought to rely on the fact that prices remained high while input costs allegedly decreased, as well as reliance on the reduction to R500 in the consent outcomes as part of their excessive pricing narrative.

The Tribunal distinguished one pleaded aspect as insufficiently particularised at the exception stage, namely the allegation that smaller comparator firms charged substantially lower prices than the Pathologists. The Tribunal considered that the Complainants did not identify the comparator firms, their prices, the relevant markets, or the relevant periods, and that this lack of particularity prevented the Pathologists from answering that part of the case.

3. Legal Issues

The central legal questions were concerned primarily with pleading sufficiency and procedural fairness in the context of exceptions, rather than the final merits of excessive pricing. The Tribunal was required to determine whether, on the pleadings as they stood, the Complainants’ referral affidavit was excipiable on the bases advanced by the Pathologists, including whether it was vague and embarrassing or failed to disclose a cause of action.

A significant preliminary legal question, raised by the Tribunal and addressed by the parties, was whether the Complainants’ self-referral was precluded by section 67(2) of the Competition Act, which bars referral against a firm that has been a respondent in completed proceedings relating substantially to the same conduct. This issue involved interpretation of statutory language (“completed proceedings”) and its interaction with consent orders concluded without admissions of liability, as well as the effect of section 49D(4) (providing that a consent order does not preclude certain declaratory or civil damages relief).

The exceptions required the Tribunal to decide issues that were predominantly questions of law and pleading adequacy, and the application of legal standards to pleaded facts, including whether material facts were sufficiently particularised under Tribunal Rule 15. The Tribunal repeatedly emphasised that the merits would require oral evidence and would not be decided on the papers at the exception stage.

4. Court’s Reasoning

The Tribunal began by setting out its approach to exceptions. Although the Tribunal Rules do not expressly provide for exceptions, the Tribunal relied on Rule 55(1)(b) to have regard to the Uniform Rules of the High Court in procedural gaps. It confirmed that it has previously entertained exceptions and that its approach broadly mirrors that of the High Court, while recognising that Tribunal complaint proceedings are sui generis, often involving complex intersections of law and economics, and that the Tribunal has inquisitorial powers.

In framing the exception test, the Tribunal emphasised fairness and the pleading requirements under Rule 15, namely that the referral must particularise the material facts and the basis for the legal conclusions contended for, so that a respondent can understand the case it must meet. At the same time, the Tribunal stressed that fairness does not compel complainants to provide more at pleadings stage than the Tribunal Rules require, and that exceptions should not become an over-technical scrutiny for minor imperfections.

Before addressing the pleaded grounds, the Tribunal dealt with whether the Complainants’ referral was barred by section 67(2) due to the earlier consent orders arising from the CMS complaint. The Tribunal considered competing submissions about whether consent orders bring “completed proceedings” and about the purpose of section 67(2) in preventing double jeopardy and repeat harassment. The Tribunal referred to authority addressing completion of proceedings and to Tribunal decisions and commentary suggesting that settlements without admissions of liability may terminate proceedings without necessarily precluding later processes aimed at obtaining a prohibited practice finding.

The Tribunal placed weight on section 49D(4), which expressly states that a consent order does not preclude a complainant from applying for a declaration under section 58(1)(a)(v) or (vi), or an award of civil damages under section 65 unless damages are awarded in the consent order. The Tribunal also reasoned that the consent orders appeared forward-looking, did not impose penalties, and did not compensate for past conduct. On that basis, enabling a damages claim for past harm was not treated as raising the double jeopardy concerns that section 67(2) is directed at. The Tribunal further considered the constitutional right of access to courts under section 34 of the Constitution, and concluded that the Complainants’ right to pursue damages (subject to statutory certification requirements) was not extinguished by consent orders without admissions of liability. Accordingly, the Tribunal concluded that the consent orders did not preclude the Complainants from seeking declaratory relief as a necessary step toward civil damages claims.

Turning to the exceptions themselves, the Tribunal grouped the grounds and addressed them in turn.

On market definition, the Tribunal held that the Complainants had pleaded the product market as PCR testing and that, on a favourable reading of the papers, there could be no genuine misunderstanding that the case concerned PCR testing services rather than merely the sale of test kits. The Tribunal noted that at least one Pathologist’s own submissions reflected an understanding of the pleaded market. Regarding the geographic market, the Tribunal accepted that in crisis conditions markets can be narrowly defined due to restrictions on movement, referring to its prior approach in Dis-Chem. It held that the Complainants had set out enough to allow the matter to proceed, with the correctness of market definition to be tested at trial.

On the alleged failure to plead market shares, the Tribunal treated dominance as capable of proof either through market share presumptions or through market power, and accepted that section 7(c) permits dominance to be shown even where market share is below 35% if market power exists. The Tribunal held that the Complainants explicitly relied on market power and pleaded facts said to support that inference, and that the Pathologists were adequately informed that no market share presumption was being invoked and that the onus would rest on the Complainants. Relying on its approach in Babelegi and Dis-Chem, the Tribunal held that market share analysis is not the only tool for assessing market power, particularly in crisis settings. This ground was dismissed.

On the alleged conflation between market power and excessive pricing, the Tribunal rejected the contention that relying on high prices as evidence of both market power and excessiveness was impermissibly circular. It accepted that the Tribunal itself had previously recognised an inferential approach in which the same facts (such as price increases) may support inferences relevant to both dominance/market power and the existence of excessive pricing, referencing its own reasoning in Dis-Chem and the approach endorsed in Babelegi. This ground was dismissed.

On the asserted vagueness as to collective dominance versus individual dominance, the Tribunal held that the referral was clear that the case pleaded was one of individual dominance, including explicit allegations that each Pathologist had market power. It accepted that multiple firms may simultaneously be dominant on pleaded facts, and rejected the suggestion that the referral necessarily relied on collective dominance. This ground was dismissed.

On the alleged lack of clarity regarding the complaint period, the Tribunal found the period was clearly pleaded as March 2020 to December 2021, consistent with the earlier CMS complaint and the consent outcomes. The Tribunal held that whether the evidence ultimately supports the period (or only part of it) was for trial. This ground was dismissed.

On reliance on the COVID-19 Regulations, the Tribunal considered the Pathologists’ argument that the Regulations addressed price increases not linked to costs, whereas the Complainants alleged failure to decrease prices despite cost decreases, and that PCR services did not have a pre-COVID baseline. The Tribunal held that it was arguable that the Regulations could be relevant either through a purposive interpretive approach or as reflecting policy considerations relevant under section 8(3). It held that the Complainants’ pleading sufficiently raised the relevance of the Regulations, and noted its earlier approach in Tsutsumani where the Regulations were applied even in circumstances where a firm had not previously supplied the product. This ground was dismissed.

On whether the Complainants failed to plead facts showing the price was excessive, the Tribunal accepted that the Commission’s earlier conclusions were not binding and were provisional, but nevertheless treated the agreed reduction to R500 as a significant pleaded fact. While acknowledging the theoretical possibility that firms could agree to supply below cost, the Tribunal considered that this was, on its face, improbable, and sufficient at exception stage to support an arguable case that the earlier higher price (R850 or R710 as referenced) could be excessive if R500 was profitable. The Tribunal held that the pleadings were sufficient to proceed, with evidentiary disputes to be resolved at trial. This ground was dismissed.

In dealing with the section 8(3) factors, the Tribunal separated different aspects. It held that the allegation about comparator firms charging lower prices was pleaded in a conclusory manner without identification of the comparator firms, their prices, relevant markets, or time periods. The Tribunal held that the Pathologists could not reasonably be expected to answer that allegation without such particulars, and upheld the exception on that narrow ground, requiring supplementation.

By contrast, on the Complainants’ reliance on the Health Market Inquiry findings, the Tribunal regarded the objection as more akin to disputing the relevance and probative value of evidence rather than revealing a fatal pleading defect, and held that this could be addressed at trial. On the “lucky monopolist” characterisation and related market power theory in crisis conditions, the Tribunal held that the Complainants had pleaded sufficient material facts for the Pathologists to answer, and that the sustainability of the theory would be determined after oral evidence. These grounds were dismissed.

Finally, on detriment, the Tribunal accepted that the Complainants’ case was that excessive pricing of an essential service during a pandemic is inherently detrimental to those who received and paid for it, directly or indirectly. It relied on the approach in Babelegi regarding detriment in crisis circumstances. It held that the Complainants had sufficiently pleaded the factual basis for alleged detriment (including increased scheme claims costs and reserve impacts), and that the extent of harm and any claimed effects on testing volume and virus spread were matters for trial. This ground was dismissed.

5. Outcome and Relief

The Tribunal dismissed the exception applications in almost all respects, and upheld only the exception relating to the Complainants’ insufficiently particularised allegations concerning comparator firms charging lower prices.

The Tribunal ordered the Complainants to deliver a supplementary founding affidavit within 15 business days, identifying the comparator firms by name, their prices, the markets in which they allegedly charged lower prices, and the relevant period(s). The Tribunal then directed Lancet and Pathcare to file answering affidavits within 20 business days of receiving the supplementary affidavit, and directed Ampath to file a supplementary answering affidavit within the same time period. The Complainants were permitted to file a replying affidavit within 10 business days thereafter if they wished.

No costs order was made.

Cases Cited

Competition Commission v Beefcor Proprietary Limited and Another [2003] ZACAC 5; [2003] 2 CPLR 272 (CAC)

Competition Commission v Beefcor Proprietary Limited and Another 2021 (4) SA 408 (CC)

South African Airways v Nationwide and Comair 83/CR/Oct04

Competition Commission South Africa v Sasol Chemical Industries Ltd, In re: Competition Commission South Africa v Sasol Chemical Industries Ltd and Others 45/CR/May06, 31/CR/May05 [2010] ZACT 48; [2010] 2 CPLR 231 (CT) (20 July 2010)

SAPPI Fine Paper (Pty) Ltd v Competition Commission [2003] ZACAC 5; [2003] 2 CPLR 272 (CAC)

Invensys PLC and 2 others v Protea Automation Solutions (Pty) Ltd [1999-200] CPLR 299

Competition Commission of South Africa v Bank of America Merrill Lynch International Designated Activity Company and Others CR212Feb17 [2023] ZACT 26

Competition Commission et al v United South African Pharmacies et al (USAP) [2003] ZACT 4

National Association of Pharmaceutical Wholesalers and Others v Glaxo Wellcome and Other, Case No: 45/CRJul01

Rooibos Ltd v Competition Commission, Case No 129/CR/Dec08

Casalinga Investments CC t/a Waste Rite v The Competition Commission (CR133Sep15/EXC152Oct15)

Competition Commission of South Africa v Dis-Chem Pharmacies Ltd, CR008Apr20

Competition Commission of South Africa v Babelegi Workwear and Industrial Supplies CC [2020] 1 CPLR 152 (CT)

Babelegi Workwear and Industrial Supplies CC v Competition Commission of South Africa 2021 (6) SA 446

Competition Commission v Tsutsumani Business Enterprise CC COVCR113Sep20

Mittal Steel South Africa Limited and Others v Harmony Gold Mining Company Limited and Another [2009] ZACAC 1

Sasol Chemical Industries Limited v Competition Commission (131/CAC/Jun14) [2015]

FFS Refiners (Pty) Ltd v Eskom & Others, Case no 64/CR/Sep02 (decision of 21 February 2003)

Legislation Cited

Competition Act 89 of 1998, sections 4(1)(b), 7, 8(1)(a), 8(3), 49B(2)(b), 49D(4), 51(1), 58(1)(a)(v), 65(6)(b), 67(2), 78

Constitution of the Republic of South Africa, 1996, section 34

Rules of Court Cited

Competition Tribunal Rules, Rule 15 and Rule 15(2)

Competition Tribunal Rules, Rule 55(1)(b)

Uniform Rules of the High Court (referred to as a comparative source under Rule 55(1)(b))

Held

The Tribunal held that the Complainants’ self-referral was not precluded by the prior consent orders concluded between the Commission and the Pathologists, where those consent orders were concluded without admissions of liability and were not treated as extinguishing the Complainants’ ability to seek declaratory relief necessary for later damages litigation. The Tribunal held that the referral affidavit, read favourably and with due regard to the Tribunal’s pleading standards, sufficiently pleaded the material facts necessary for the Pathologists to understand and answer most aspects of the excessive pricing case, with disputed economic and factual issues to be determined at trial after oral evidence.

The Tribunal held, however, that the Complainants’ reliance on comparator firms allegedly charging lower prices was pleaded in a conclusory manner lacking necessary particulars. The Tribunal upheld the exception on that narrow issue and directed the filing of a supplementary affidavit identifying the comparator firms, their prices, the relevant markets, and time periods.

LEGAL PRINCIPLES

The Tribunal applied the principle that, although its Rules do not expressly provide for exceptions, it may entertain exceptions by having regard to High Court procedure under Rule 55(1)(b), while recognising that Tribunal complaint proceedings are sui generis, often involving complex economic analysis, and are conducted with an emphasis on fairness and informality.

In assessing exceptions, the Tribunal applied the principle that the test is whether, on all possible readings of the pleading (interpreted in the manner most favourable to the non-excipient), no cause of action can be made out. The Tribunal emphasised that it must accept pleaded factual allegations as true for purposes of exception, avoid over-technical approaches, and uphold vagueness-and-embarrassment objections only where they go to the root of the cause of action.

The Tribunal applied the pleading standard in Tribunal Rule 15 that the initiating affidavit must particularise the material facts and grounds relied upon so that the respondent can understand the case to meet. The Tribunal emphasised that this fairness requirement does not require a complainant to plead evidentiary detail beyond what the Tribunal Rules demand at the referral stage.

On dominance, the Tribunal applied the principle that dominance may be established either through market share thresholds or by proof of market power, and that market share is not necessarily a jurisdictional pleading requirement where the complainant relies on section 7(c) and pleads market power.

In the context of crisis conditions, the Tribunal applied the approach that market power may be inferred from pricing conduct and surrounding conditions, and that traditional market share and market definition tools, while commonly used, are not the only means of assessing market power in exceptional market circumstances.

On the interaction between consent orders and subsequent relief, the Tribunal applied section 49D(4) as recognising that a consent order does not preclude an application for declaratory relief for purposes of section 65, and reasoned that consent orders concluded without admissions of liability and without penalties or compensation for past conduct do not necessarily preclude later steps aimed at obtaining a prohibited practice finding to enable civil damages claims.

Du Buisson, Kramer, Swart, Bouwer Inc ta Ampath and Others v Health Funders Association Npc and Others (CRP102Oct23/EXC187Dec23) [2025] ZACT 24 (19 February 2025)