THE SUPREME COURT OF APPEAL
OF SOUTH AFRICA
REPORTABLE
Case number: 554/03
In the matter between:
AMERICAN NATURAL SODA ASH CORPORATION First applicant
CHC GLOBAL (Pty) Ltd Second applicant
and
COMPETITION COMMISSION OF SA First respondent
BOTSWANA ASH (Pty) Ltd Second respondent
CHEMSERVE TECHNICAL PRODUCTS (Pty) Ltd Third respondent
MINISTER OF TRADE AND INDUSTRY Fourth respondent
BEFORE: MPATI DP, CAMERON, NUGENT,
CONRADIE JJA and COMRIE AJA
HEARD: 24 FEBRUARY 2005
DELIVERED: 13 MAY 2005
Constitution – appellate court structure – section 168(3) – appeal
lies from Competition Appeal Court to Supreme Court of Appeal –
section 173 – court’s inherent power to protect and regulate own
process – requirement that special leave to appeal be obtained
imposed – Competition Act 89 of 1998 – Section 3(1) – Act
applying to all economic activity having effect within Republic –
adverse effect not a precondition for jurisdiction of Competition
Commission – Standing before Competition Commission – Act’s
provisions to be interpreted widely – no need for complainant to
show particular damage – Section 4(1)(b) – admissibility of
2
evidence before Competition Commission – Commission first to
construe provisions of s 4(1)(b) to establish width of statutory
prohibition – ruling on evidence premature – matter remitted to
Commission to determine meaning of s 4(1)(b) and to determine
what evidence, if any, is admissible to establish whether
agreement at issue falls within prohibition in s 4(1)(b).
JUDGMENT
CAMERON AND NUGENT JJA:
[1] This is an application for leav e to appeal against an order of the
Competition Appeal Court (the CAC) in October 2002,
1 dismissing an
appeal from orders of the Competit ion Tribunal (the Tribunal) made
on 27 March 2001 and on 30 November 2001. The parties’ dispute
concerns the importation from th e United States of soda ash (an
ingredient essential to the manufacture inter al ia of glass). The
applicant (Ansac) is a non-stock, non-profit Delaware corporation
formed by five United States soda ash producers in the early 1980s
1 American Natural Soda Ash Corporation v Competition Commission 2003 (5) SA 633 (CAC) (Malan
AJA, Davis JP and Jali JA concurring).
3
to export their product ab road. (The second applicant is Ansac’s
local distributor: we refer to it with Ansac.) Within the United States,
the creation of Ansa c and its operations w ould have bee n illegal
under the 1890 Sher man Antitrust Act, 2 but in 1918 Congress
granted export-directed cartels exemption from the antitrust
legislation.
[2] The question the application rais es is to what extent Ansac’s
activities run afoul of the South African Competition Act 89 of 1998
(the Act). That question was raised formally in October 1999, when
the second respondent, a Botswana producer of soda ash (Botash),
and its South African distributor, the third re spondent (Chemserve),
launched an application for interim relief against Ansac before the
Tribunal. (We refer to those respondents together as Botash.)
2 Sherman Act, 15 USC § 1: ‘Every contract, combination in the form of trust or otherwise, or
conspiracy, in restraint of trade or commerce among the several States, or with foreign nations, is
declared to be illegal. Every person who shall make any contract or engage in any combination or
conspiracy hereby declared illegal shall be deemed guilty of a felony, and, on conviction thereof, shall
be punished by fine not exceeding $10 000 000 if a corporation, or, if any other person, $350 000, or
by imprisonment not exceeding three years, or by both said punishments, in the discretion of the court.’
§ 2 makes monopolizing trade a felony.
4
Botash charged that Ansac was contravening the Act’s prohibition on
restrictive horizontal practices. These are found in s 4:
(1) An agreement between, or a concerted practice by, firms, or a decision by an
association of firms, is prohibited if it is between parties in a horizontal
relationship and if 3 –
(a) it has the effect of substantially preventing, or lessening, competition in a
market, unless a party to the agreement, concerted practice, or decision can
prove that any technological, efficiency or other pro-competitive gain resulting
from it outweighs that effect; or
(b) it involves any of the following restrictive horizontal practices:
(i) directly or indirectly fixing a purchase or selling price or any other trading
condition;
(ii) dividing markets by allocating customers, suppliers, territories, or specific
types of goods or services; or
(iii) collusive tendering.’
The Act defines ‘horizontal relationshi p’ as ‘a relationship between
competitors’ (s 1).
[3] The parties soon found themselves caught in a procedural bog. The
details have alre ady been reported 4 and we mention only the
essential features. Two months after Botash’s opening salvo, Ansac
launched an application against Botash, charging predatory pricing in
3 Section 3 of Act 39 of 2000 amended the Act by moving the italicised words, which had been in sub-
para (a), to the end of the opening portion of the provision. When the proceedings commenced the Act
was in its unamended form, but nothing turns on this and we give the post-2000 wording.
4 American Natural Soda Ash Corporation v Competition Commission 2003 (5) SA 633 (CAC);
American Natural Soda Ash Corporation v Competition Commission 2003 (5) SA 655 (SCA).
5
violation of s 8 of the Act. 5 The parties withdr ew their contesting
challenges when the Competition Commission ( the Commission)
(which chapter 4 of the Act gives extensive power to initiate anti-
competitive measures and in vestigate and evaluate alleged
contraventions),6 itself concluded that Ansac was engaging in
prohibited conduct and filed a complaint with the Tribunal, only to
withdraw it and file a fr esh referral two months later. It was these
proceedings that B otash joined when it secu red the Tribunal’s leave
to serve an intervening complaint on Ansac.
[4] But the bog only deepened, becaus e a year after the first application
was launched, the parties were un able to agree on a statement of
facts for the Tribunal, and in January 2001 Ansac applied for the
complaint to be dismissed on vari ous grounds that are not now
5 Section 8 of the Act prohibits ‘abuse of dominance’, making it unlawful for a dominant firm (defined
in s 7) to charge an excessive price to the detriment of customers, and related exclusionary acts.
6 In terms of s 21(1)(g) of the Act the Competition Commission may refer matters to the Competition
Tribunal and appear before the Tribunal.
6
relevant. In the reason s the Tribunal gave for its ruling made on 27
March 2001, it recorded that at a ‘pre-hearing’ it convened in relation
to those issues, it requested the part ies to prepare ar gument on the
question, ‘does s 4(1)(b) allow for an efficiency defence’ because
‘the conclusion would determine whether this evidence could be led
at the hearing’. (It seems that the evidence that the Tribunal had in
mind was evidence that Ansac wished to lead to establish that it was
a ‘legitimate cost-saving efficiency- producing joint venture’, whose
savings enabled it to market North American soda ash in Southern
Africa more cheaply tha n local competitors.) On 27 March 2001 the
Tribunal rejected Ansac’s objections to the comp laint, and also ruled
that ‘evidence concerning any technological, e fficiency, or other pro-
competitive gain that might be adm issible in terms of section 4(1)(a)
is inadmissible in terms of section 4(1)(b).’ We deal more fully below
with the meaning and effect of that ruling.
7
[5] Eight months later, in a second ruling delivered on 30 November
2001, the Tribunal dismissed tw o ‘exceptions’ that Ansac had taken
to the complaint. The two points concerned the scope of the Act’s
territorial application; and the question whet her Botash had legal
standing to become a complain ant when its complaint made no
allegation that it had suffe red particular harm from Ansac’s activities.
The Tribunal rejected all of Ansac’s contentions.
[6] These three rulings – on the in admissibility of certain evidence
regarding an alleged s 4(1)(b) c ontravention; on the scope of the
Act’s application; and on Botash’s standing – the CAC upheld in
dismissing Ansac’s appeal.7 An attempt by Ansac to appeal directly
to this court without obtaining the CA C’s leave foundered when this
court held that such leave was required. 8 (We refer to this court’s
judgment in the leave to appeal application as ‘Ansac (1)’). Leave
7 American Natural Soda Ash Corporation v Competition Commission 2003 (5) SA 633 (CAC).
8 American Natural Soda Ash Corporation v Competition Commission 2003 (5) SA 655 (SCA).
8
was then sought from, and refused by, the CAC, resulting in the
present petition for leave to appeal, which the judges who
considered it referr ed for oral argument with the direction that the
parties should be prepared , if called upon to do so, also to address
the merits of the proposed appeal.9
[7] Before we deal with the substance of the appl ication, it is necessary
to consider this court’s jurisdiction to hear the appeal.
This court’s jurisdiction to hear the appeal
[8] Section 62 of the Act deals with appeals fr om the CAC. It specifies
first matters in respect of wh ich the Tribunal and CAC ‘share
exclusive jurisdiction’ (s 62(1)). These include (subject to limited
exceptions) the interpreta tion and application of restrictive horizontal
practices (s 62(1)(a)). Section 62(2) then confers additional (non-
9 Supreme Court Act 59 of 1959 s 21(3)(c)(ii).
9
exclusive) jurisdiction on the CAC over the qu estion whether action
or proposed action by the Commission or Trib unal is within their
respective jurisdictions (s 62(2)(a)); any constitutional matter arising
in terms of the Act (s 62(2)(b)); and the question w hether a matter
falls within the Tribunal’s or the CAC’s exclusive jurisdiction (s
62(2)(c)).
[9] Section 62(3) is the crit ical provision. It provid es that the jurisdiction
of the CAC –
‘(a) is final over a matter within its exclusive jurisdiction in terms of subsection
(1); and
(b) is neither exclusive nor final in respect of a matter within its jurisdiction in
terms of subsection (2).’
Section 62(4) provides expressly that, subj ect to leave to appeal
being obtained (s 63), an appeal from the CAC lies to this court or
the Constitutional Cour t (the CC) ‘in respect of a matter within its
jurisdiction’ in terms of s 62(2) – in other words, in respect of matters
10
over which the CAC has non-excl usive jurisdiction, including
constitutional questions.
[10] As in the case of the relevant sections of the Labour Relations Act
66 of 1995, 10 these provisions undoubtedly consti tute a statutory
endeavour to vest partia l final appellate jurisdic tion in the CAC. The
effect of s 62(3) rega rding appeals to the CC is uncontroversial,
since it allows appeal s on ‘any constitutional matter’, and under the
Constitution the CC’s sole juri sdiction is in such matters. 11 No
impairment of constitutionally de rived appellate power is thus
apparent. More difficult is the Act’s seeming attempt to limit appeals
to this court.
10 See the judgment of this court in National Union of Metalworkers of South Africa v Fry’s Metals
(Pty) Ltd (case no 026/03, delivered on Tuesday 12 April 2005) paras 9-33.
11 Constitution s 167(3)(b): CC has jurisdiction ‘only’ in ‘constitutional matters, and issues connected
with decisions on constitutional matters’.
11
[11] In National Union of Metal workers v Fry’s Metals ,12 which was
argued before the same panel in the same week as the present
application, we held that –
11.1 Any legislative endeavour to vest final appellate jurisdiction in an
appeal court other than this court has to be judged in the light of the
appellate structures created by the Constitution;
11.2 The Constitution pr ovides not only that thi s court ‘may decide
appeals in any matter’, but that it ‘is the high est court of appeal
except in constitution al matters’ (s 168( 3)): this provision
superseded both the s tatutory and common law sources of this
court’s jurisdiction, and there can be no reason to give it less than
its full meaning in relation to both c onstitutional and non-
constitutional matters;
12 Judgment of this court dated Tuesday 12 April 2005, paras 5-33.
12
11.3 The Constitution’s typology of final appellate c ourts is exhaustive: it
does not envisage other final appeal courts with authority equivalent
to that of this court and of the CC;
11.4 This court’s appellate powers do not derive from any particular
statute, but from the Constitution itself;
11.5 The Constitution does not envisage that l egislation can assign the
jurisdiction of this court piecemea l or wholesale to other specialist
tribunals with final appellate jurisdiction;
11.6 The legislature may create rights that are not appeal able; but once
appellate jurisdiction falls to be exercised, this court is empowered
to exercise it finally (apart from the CC) , since final appellate
tribunals with authority similar to this court ar e not envisaged in the
Constitution.
[12] These conclusion s govern the present matter. They lead to a
similar outcome. The issue in NUMSA v Fry’s Metals was the
13
appellate structures created by th e Labour Relations Act 66 of 1995
(the LRA). The relevant provisio ns of the LRA are replete with
admonitions that they are ‘subject to the Constitution’. This particular
phraseology is not mani fest in the Act. But its absence is of no
significance. This is for two reas ons. First, s 1(2)(a) of the Act
provides expressly that the Act ‘must be interpreted –
‘in a manner that is consistent with the Constitution’.
That governs the entire Ac t and each of its provis ions. Second, it is
a principle of statutory interpreta tion – by now above debate or
citation of authority – no t only that all legislatio n must be interpreted
in the light of the Cons titution, but that ‘legitima te interpretive aids’
must, where possible, be empl oyed to avoid a finding of
unconstitutionality. Only if this is not possible should a statutory
provision be found unconstitutional.13
13 See National Coalition for Gay and Lesbian Equality v Minister of Home Affairs 2000 (2) SA 1
14
[13] In accordance with the Act’s own injunction, it must be interpreted
consistently with the Constitution. In accordance with sound
constitutional hermeneutics, its pr ovisions should if possible be
interpreted so as not to re nder them unconstitutional . This result is
attained if the appell ate structures the Act creates are read in
conjunction with and in confor mity with those the Constitution
establishes. Those structures must, it follows, be read as adjunct to,
and not exclusionary of, the Consti tution’s appellate structures. No
express provision in the Act prevents this, and constitutional principle
requires it.
[14] The apparent attempt to vest exclusive jurisd iction in the CAC in
respect of the interpretation and application of chapters 2, 3 and 5 of
the Act can and must thus be read so as to be consistent with the
Constitution, and the finality confe rred on the CAC by s 62(3)(c) is
(CC) paras 23-24 and particularly National Director of Public Prosecutions and another v Mohamed
NO 2002 (4) SA 843 (CC) para 33.
15
thus subordinate to the appellate powers the Cons titution confers on
this court. It follows that this court has jurisdiction to consider the
substance of the application for leave to appeal.
[15] This conclusion does not involve a finding of unconstitutionality,
but derives from an application of th e Constitution’s provisions to the
appellate structure creat ed by the Act, and fr om following the Act’s
own injunction as to its interpretation.
The test for leave to appeal
[16] The Act’s provisio n dealing with leave to appeal, s 63, covers only
the right to appeal from th e CAC in terms of s 62(4 ). In other words,
the statute’s leave to appeal mechanism deal s only with appeals
from matters where the CAC exerci ses its non-exclusive powers.
Section 63 does not deal with the right to ap peal to this court
16
conferred by the Constitution, in c onjunction with which, as we have
held, the Act’s own appellate structures must be interpreted.
[17] In Ansac (1) , the applicants claime d that the Act’s provisions
conferring exclusive final jurisdiction on the CAC were
unconstitutional, and thus that they were enti tled to no te an appeal
directly to this court without seekin g leave from the CAC. This court
refused the order. The basis for doing so was that ‘even if the
applicants’ attack on the cons titutionality of the attempted
jurisdictional ouster succeeds, the need for leave to appeal will
remain and will extend, on the excision of the wording complained of,
to all appeals from the Competition Appeal Court’.14
[18] It was not argued th at, nor did the court consider whether, the
Act’s appellate provisions should be interpreted consistently with the
Constitution in a manner that av oided the need for any excision on
14 2003 (5) SA 655 (SCA) para 16.
17
the ground of unconsti tutionality. Our pres ent finding that the
provisions can be so re ad thus raises a question that was not before
the court in Ansac (1) , namely what procedure should govern an
appeal to this court on a matter that the Act’s express leave to
appeal provision does not cover.
[19] In NUMSA v Fry’s Metals15 we held that –
19.1 this court’s inherent constitutional power to protect and regulate its
own process16 empowers it to require app licants for leave to appeal
from a specialist appellate tribunal to demonstrate, in addition to a
reasonable prospe ct of success, that there are ‘special
circumstances’ indicating that a further appeal should lie;
15 Judgment of 12 April 2005, paras 34-44.
16 Constitution s 173: ‘The Constitutional Court, the Supreme Court of Appeal and the high courts
have the inherent power to protect and regulate their own process, and to develop the common law,
taking into account the interests of justice’.
18
19.2 the benefit of inst itutional expertise, an d the imperative of
expedition, strongly indicate that the path to this court from a
specialist tribunal should not be untrammelled;
19.3 leave to appeal is necessary to protect th e process of this court
against abuse by appeals that have no merit, and it is in the
interests of justic e that the requirement of special leave be
imposed, for if appeals were allowed without trammel, the
expeditious resolution of disp utes would be unconscionably
delayed, and the justified objects of the statute impeded.
[20] For the reasons set out in NUMSA, we come to the same
conclusions here. Leave to appeal from this court is required before
an appeal may be prosecuted from the CAC on the matters set out in
s 62(1), and special circums tances must exist before this court will
grant leave.
19
[21] As we observed in NUMSA (para 43), the proc edures for applying
for leave to appeal, an d the factors relevant to obtaining special
leave, are well-established. 17 The criterion for the grant of special
leave to appeal is not merely that the re is a reasonable prospect that
the decision of the CAC will be reversed – but that the applicants can
establish ‘some addition al factor or criterion’. One is where the
matter, though depending mainly on factual iss ues, is of very great
importance to the parties or of great public im portance. In applying
this criterion, this court must be satisfied, notwi thstanding that there
has already been an a ppeal to a specialist tr ibunal, and that the
public interest demands that disp utes about competi tion issues be
resolved speedily, that the matter is objectively of such importance to
the parties or the public that special leave should be granted.
17 They are set out in the Supreme Court Act 59 of 1959 and in the decisions of this court, including
Westinghouse Brake & Equipment (Pty) Ltd v Bilger Engineering (Pty) Ltd 1986 (2) SA 555 (A) 564H-
565E.
20
[22] We emphasise once more that the fact that ap plicants have
already had a full appeal before the CAC will normally weigh heavily
against the grant of leave. An d the demands of expedition add
further weight to that.
[23] We now deal with the me rits of the application.
The territorial application of the Act
[24] Section 3(1) of th e Act provides that it applies (subject only to
collective bargaining-re lated exceptions) ‘to all economic activity
within, or having an effect within, the Republic’. Ansac’s argument
was, and is, that the ‘effect’ the statute contemplates must be an
adverse effect, whose na ture must be established before it can be
said that the Act app lies. Because neither the Commission nor
Botash in its intervention alle ged that the Ansa c agreement has
negative or deleterious effects within the Republic, Ansac urged that
21
the complaint be dismissed. The Tribunal rejected this contention.
The CAC gave it comprehensive consideration, but also rejected it.18
[25] Before us, Ansac did not di spute that the statu tory phrase ‘an
effect’ was wide and unqualif ied. But it persiste d in the contention
that s 3(1), when placed in its proper context and purposively
interpreted, had to be read as bringing only anti-competitive activity
within its purview. If, therefore, Ansac urged, th e Tribunal examined
the Ansac membership agreement in the context of evidence relating
to its competitive gains and found that its effect was pro-competitive,
it should decline entirely to a ssume statutory jurisdiction over
Ansac’s activities since this would best promote the Act’s objectives.
[26] The argument flies in the face of the plain m eaning of the statute’s
wording. ‘Effect’ is not only neu tral, but extremely wide. Standing
without qualification, it necessarily embraces both the benign and the
18 2003 (5) SA 633 (CAC) paras 7-21.
22
malign. It is hard to avoid the c onclusion that this is deliberate. The
Act’s language elsewhere is pregnant with words and concepts that
convey the negative effects of w hat it sets out to prohibit. The
absence of any such terminology in the application provision must be
accorded its proper significance.
[27] Ansac’s argument moreover r equires that words be added to s
3(1) when there is no di scernible justification for doing so. Well-
known canons of statutory interpretati on inhibit the court’s power to
do this. Words cannot by implic ation be read into a statute unless
the implication is necessary in t he sense that without it effect cannot
be given to the enactment as it stands.19 Not only is there no evident
justification for the super-addition Ansac’s argument requires, but the
statute can be given fully coherent effect without it.
19 Rennie NO v Gordon NO 1988 (1) SA 1 (A) 22F, per Corbett CJ, adopted in Bernstein v Bester
1996 (2) SA 751 (CC) para 105, per Ackermann J.
23
[28] Ansac’s contention moreover has the anomalous consequence
that, if it were adopted, the Tribunal and the Commission would have
no jurisdiction to conduct any of their activities until they had
established that the ec onomic activity at is sue had a ne gative or
deleterious effect within the Repub lic. A long contestation about the
statute’s applicability would ensue before the Act’s institutions could
assume jurisdiction. That, manifestl y, is to approa ch the structure
and operation of the Act, a nd the functioning of it s institutions, from
the wrong end.
[29] The correct approach – whic h the wide and unqualified wording of
s 3(1) requires – is that all effects are captu red, but that the statute
enjoins only those that are adverse. We agre e with the CAC, for the
reasons fully set out in its judgment, that the ‘effect’ the Act
contemplates must be such that it falls within the regulatory
24
framework created by the statute, whether anti-c ompetitive or not.
This inquiry, as Malan AJA pointed out –
‘does not involve a consideration of the positive or negative effects on
competition in the regulating country, but merely whether there are sufficient
jurisdictional links between the conduct and the consequences. … The question
is … one relating to the ambit of the legislation: the Act in the matter under
consideration, its regulatory “net”, concerns not only anti-competitive conduct but
also conduct the import of which still has to be determined.’
20
Ansac’s contention must for these reasons be rejected.
The intervenor’s legal standing
[30] The CAC found that even though Bo tash did not allege that it had
suffered individual harm becaus e of the performance of the Ansac
agreement, it had the s tanding necessary to s eek an order against
Botash interdicting the continued performance of that agreement.
The CAC’s conclusion was based on a careful analysis of the Act’s
provisions.21 The CAC gave particular we ight to the Act’s complaint
20 2003 (5) SA 633 (CAC) para 18.
21 2003 (5) SA 633 (CAC) paras 2-5.
25
procedure,22 which provides tha t, in addition to the Competition
Commissioner, ‘any pe rson’ may submit a co mplaint against an
alleged prohibited practice to the Commission (s 49B(2)(b)),
whereupon the Commissioner ‘must direct an inspector to investigate
the complaint as quickly as practi cable’ (s 49B(3)). The CAC also
gave weight to the fact that a complainant may apply to the Tribunal
for interim relief (s 49C).
[31] The CAC took further into account in de ciding that Botash had
standing that the statute cast s the right to partici pate in hearings of
the Tribunal widely. The compla inant has this right not only if it
referred ‘the complaint’ to the Tribunal (s 53(a)(ii)(aa)), but also if in
the opinion of the presiding member of the Tribunal the
complainant’s interest is not adequ ately represented by another
participant (s 53(a)(ii)(bb)).
22 We refer, since it makes no material difference, to the provisions of the Act as amended by Act 39
of 2000.
26
[32] It is true, as Ansac pointed ou t on appeal, that s 53 specifically
sets out the participatio n rights of the complain ant, and that one of
the factors the statute requir es the Tribunal to co nsider in granting
interim relief is ‘the need to prevent serious or irreparable harm’.
[33] It does not follow from these facets of the statute, however, that an
intervening party must (as Ansac urged us to find) show the ordinary
common law prerequisites for obtaini ng relief. As the CAC rightly
pointed out, the orders the Tribunal can make in response to the
referral of a complainant are ‘of a limited kind to be made in the
public interest’. From this the CAC inferred that a complainant need
not show that it has suffered particular damage.23
[34] We agree with the CAC’s conclu sion. Ansac’s argument seeks to
conclude from the limited expr ess rights the Act confers on a
participant in a hearing that the Act requires an intervenor to comply
23 2003 (5) SA 633 (CAC) para 4.
27
with the strict common la w requisites for interdic tory relief; but this is
to overlook the significance of the fact that a broad ambit of
participatory rights is created in the first plac e. Ansac likewise
underscores that an appli cant, to obtain interdictory relief under the
Act, must place on the sca le the risk to it of ‘serious or irreparable
damage’; but ignores the fact that obtaining such relief may not be
an intervenor’s sole interest in the proceedings.
[35] We see no reason to circumscr ibe narrowly the rig ht to intervene
in proceedings under the Act. We therefore conclude that the
absence of a claim of particular da mage on the part of Botash is no
bar to its title to claim relief as an intervenor.
Admissibility of evidence about th e nature and effect of the
agreement
28
[36] The greatest part of the parties’ di spute, and of the argument
before this and the other forums, re lated to the ru ling concerning the
admissibility of evidence. What complicates the matter is the lack of
consensus about the effect of the Tribunal’s ruling.
[37] It is clear from its juxtaposition with s 4(1)(a) that s 4(1)(b) is aimed
at imposing a ‘per se’ prohibition: one, in other words, in which the
efficiency defence expressly contemplated by sub-para (a) cannot be
raised. The reason for the blunt terms of sub- para (b) is plain.
Price-fixing is inimical to econom ic competition, and has no place in
a sound economy. Adopti ng the language of United States anti-trust
law, price-fixing is anti-competitive per se . All countrie s with laws
protecting economic com petition prohibit the practice without more.
The fact that price-fixing has occurred is by itself sufficient to brand it
incapable of redemption. The Tribunal ha s found that once the
conduct complained of is found to fall within the scope of the
29
prohibition, that is the end of the enquiry. There is no potential for a
further enquiry as to whet her the conduct is ju stified (an enquiry of
the kind that is envisaged by s 4(1) (a)), and evidence to that end is
not relevant and thus inadmissible. It is this fi nding that the
Competition Appeal Cour t upheld; and it is clea rly correct. Indeed,
none of the parties to the appeal suggests otherwise.
[38] Yet there is no consensus b etween the parties as to whether the
Tribunal’s ruling was limited to th at. While the res pondents contend
that the Tribunal’s ruling upheld by the CA C only excludes evidence
that is tendered to establish an ‘efficien cy defence’ of the nature
contemplated by s 4(1)(a ) (an outcome not contro versial before us),
Ansac submits that the ruling goes much further. It contends that the
Tribunal has also precluded evidence that is relevant to
‘characterising’ its conduct and thus to determi ning whether or not it
30
falls within the scope of the legislativ e prohibition in sub-para (b) at
all.
[39] That lack of consensus is not altogether surp rising because
Ansac’s argument before the Tribunal , as recorded in its heads of
argument (and repe ated before us) was not directed to the question
whether conduct prohib ited by s 4(1)(b) could be justified by
evidence. It was directed rather to the question whether evidence
was admissible to dete rmine whether Ansac’s conduct is prohibited
at all: in other words, whe ther the Ansac agreement constitutes
price-fixing as prohibi ted by the Act. Only in the alternative did
Ansac submit that, if its conduct did not fall foul of s 4(1)(b), but was
sought to be brought wi thin the separate proh ibition in s 4(1)(a)
(which the Commission has not yet tri ed to do), evidence would be
admissible to justify its conduct as envisaged by that sub-paragraph.
31
[40] The Tribunal appear s to us to have elided these two separate
submissions and thereby misdirecte d its enquiry. It seems to have
been of the view that Ansac sought to advance the evidence in order
to establish that its conduct, though falling within s 4(1)(b), is
nevertheless justifiable by criteria of the ki nd contemplated by s
4(1)(a) when that wa s not Ansac’s contention. That the Tribunal’s
ruling posits tha t no evidence except the terms of the agreement in
question is relevant (and thus admissi ble) to the question whether s
4(1)(b) has been contravened is evident fr om the following passage
from its reasons:
‘[T]hose who set themselves the task of impugning agreements thus described
in Section 4(1)(b) do not have to establish any deleterious impact on
competition. All that has to be established is the existence of an agreement
embodying the features detailed in Section 4(1)(b)(i)-(iii).’ (Emphasis added.)
Moreover, the terms of its ruling ar e sufficiently expansive to exclude
all evidence relating to the purpose and effect of the agreement. Its
ruling (which we repeat for convenience) was that:
32
‘On the argument we requested on section 4(1)(b) we find that evidence
concerning any technological, efficiency, or other pro-competitive gain
that might be admissible in terms of section 4(1)(a) is inadmissible in
terms of section 4(1)(b).
In the reasons it gave for its later ruling of 30 No vember 2001, the
Tribunal explained its earlier ruling as follows:
‘The panel held that Section 4(1)(b) required no showing of anti-
competitive effect and that it permitted of no efficiency defence [the
defence allowed for by s 4(1)(a) – the mere fact of the agreement was
sufficient to condemn it.’
This lends support to Ansac’s contention that the ruling was
intended to exclude all evid ence except the terms of the
agreement.
[41] The Tribunal’s ruling, partic ularly in the context of the reasons it
gave, is open to th e construction that (perhaps inadvertently) it has
precluded evidence even if the object of advancing it is to
demonstrate that Ansac’s conduct does not fall within the prohibition
in s 4(1)(b) at all. To that extent it s ruling was in our view premature
33
and therefore incorrect. This ruling the CAC endorsed. In this in our
view it fell into the same error.
[42] But even if the ru ling is no more tha n ambiguous, and was not
intended to have that effect, it is cl early desirable that there should
be clarity on the issue, bearing in mind the uncer tainty that clearly
exists, and the enormous expense this uncertainty has already
entailed.
[43] We pointed out earlie r that an agr eement that invo lves, amongst
other things, price-fixing , is prohibited by s 4(1)(b), and nothing can
be advanced to justify it. But when has prohibited price-fixing
occurred? This is no t always simple to determine. In the United
States the condemnation of price- fixing arises from judicial
34
interpretation of s 1 of the Sherman Act. 24 In the European Union, in
Australia, and in this country it is decreed by legislation.
[44] In the United States the enquiry is approached by ‘characterising’
the conduct complained of to determine whether it constitutes that
form of conduct that the courts have through case precedents
labelled ‘price-fixing’ but have not comprehensively defined. In this
country, where the prohibition is decreed by legislation rather than by
judicial intervention, the proh ibited form of conduct must be
established by construing s 4(1)(b).
[45] Once the ambit of su b-para (b)’s prohibition has been established
the enquiry can move to whether or not the conduct in issue falls
within the terms of the pr ohibition. That is a factual question that
must be answered by recourse to relevant evidence.
24 Quoted in note 2 above.
35
[46] There is in prin ciple no reason why the enquiry should not be
conducted in reverse. The enquirer might choose first to identify the
true character of the conduct that is the subject of the complaint, and
only then turn to whether the conduct (s o characterised) constitutes
price-fixing as contemplated by s 4(1)(b). (Thi s is how the enquiry is
conducted in the United States, though there the two elements tend
to be elided, because the sc ope of the prohibition is itself a matter of
judicial rather than legislative determination.)
[47] Whichever approach is adopted, the essenti al enquiry remains the
same. It is to establish whethe r the character of the conduct
complained of coincides with the character of the prohibited conduct:
and this process necessarily emb odies two elements. One is the
scope of the prohibition: a matter of statutory construction. The other
is the nature of the conduct complained of: this is a factual enquiry.
36
In ordinary language this can be te rmed ‘characterising’ the conduct
– the term used in the United States, which Ansac has adopted.
[48] Price-fixing nece ssarily contemplates coll usion in some form
between competitors for the supply into the market of their respective
goods with the design of e liminating competition in regard to price.
That is achieved by the competitor s collusively ‘fixing’ their
respective prices in some form. (By setting uniform prices, or by
establishing formulae or ratios for the calcul ation of prices, or by
other means designed to avoid the effect of market competition on
their prices.)
[49] But while price fixing inevitably involves collusive or consensual
price determination by competitors, it does not follow that price fixing
has necessarily occurred w henever there is an arrangement
between competitors that results in their goods reaching the market
at a uniform price. The concept of ‘price fixing’, both in lay language
37
and in the language that the Act uses, may, for example, be limited
to collusive conduct by competito rs that is designed to avoid
competition, as opposed to conduct that merely has that incidental
effect.
[50] As the majority of the United States Suprem e Court pointed out in
Broadcast Music, Inc v Columbia Broadcasting System, Inc 441 US
1 (1978) at 9:
‘Literalness [when interpreting the phrase ‘price-fixing’] is overly simplistic
and often overbroad. When two partners set the price of their goods or
services they are literally “price fixing,” but they are not per se in violation
of the Sherman Act…Thus, it is necessary to characterise the challenged
conduct as falling within or without that category of behaviour to which we
apply the label “per se price fixing.” That will often, but not always, be a
simple matter.’
[51] What is important for the present proceeding s is that the nature of
the prohibiting source in this coun try – a legislative injunction against
a certain form of conduct – ma kes it impossibl e to conclude the
enquiry into whether pa rticular conduct is pr ohibited without at some
stage determining the scope of the legislative prohibition. And
38
unless that determination is made, it is not po ssible to predict what
evidence will be rele vant or irrelevant to the factual part of the
enquiry.
[52] There can be litt le doubt that an agreeme nt by competitors that
has as its specific des ign the elimination of price competition (the
essential characteristic of a cartel) 25 constitutes direct price-fixing as
contemplated by the statute. Where competitors have reached an
agreement to set uniform prices , without more, all that might be
required in order to establish a tr ansgression of s 4(1)(b) is to
produce their agreement, because it s very terms ma y admit of no
conclusion but that it was designed to eliminate price-competition.
[53] But indirect price-fixing pres ents greater complexity. It is not
difficult to envisage conduct by competitors that is designed to
eliminate price-competition indire ctly, by shifting the supply of
25 Concise Oxford English Dictionary: ‘an association of manufacturers or suppliers formed to
maintain high prices and restrict competition’.
39
competitors’ goods to a separate enti ty that is under their control,
and which purports to set the pric e for the goods. If that separate
entity is no more than the alter ego of the individual competitors in
association, who are in truth consensually fixi ng their prices through
the medium of that alter ego, then no doubt the fa çade behind which
they are acting can be stripped away to reveal the reality of the
arrangement (collusion by two or more competitors designed to
ensure that their respective goods reach the market at non-
competing prices). 26
[54] But not every arrangement between competitors entailing the
ultimate supply of goods necessarily falls into that category. It is, for
instance, not difficult to envisage a bona fide joint venture that is
embarked upon by competitors for a legitimate purpose, through the
vehicle of a separate entity, whic h must necessarily set a price for
26 Compare 91/301/EEC: Commission Decision of 19 December 1990, relating to a proceeding under
Art 85(1) of the EEC Treaty (IV/33.016 – Ansac), Official Journal L 152, 15/06/1001 p 0054 – 0060.
40
goods that it supplies (emanating from the competitors) merely as an
incident to the pursuit of the joint venture.
[55] There is in our view no a priori reason to assume that such an
arrangement constitutes prohibited price-fixing as contemplated by s
4(1)(b) of the statute. (We emphasise that we make no finding as to
whether or not it is.) If, on a proper construction of s 4(1)(b), such an
arrangement does not constitute prohibited price-fixing, then it might
well be necessary to enquire beyond the mere terms of the
competitors’ agreement in order to establish whether it is or is not
merely a sham: to estab lish, in other words, whether the vehicle for
the joint venture is in truth a single entity supplying its own goods to
the market (albeit that the source of the goods is the competitors) for
which a price must necessarily be s et by the joint vent ure vehicle; or
whether the vehicle for the joint venture is merely a cloak for what is
41
in truth collusive action design ed to ensure tha t the goods of
competitors are supplied to the market at non-competitive prices.
[56] What is critical to the present applicatio n is that the determination
of what evidence is admissible depends on the scope of the
legislative prohibition. Until there is clarity on what the legislation
prohibits (and on what is not proh ibited) it is premature to rule on
what evidence might or might n ot be relevant and admissible to
determine whether the prohibited conduct has occurred.
[57] The parties are ag reed that the Tribunal has yet to determine that
issue. The Tribunal has not yet in express ter ms construed s 4(1)(b)
and established its scope (nor what falls outsi de its scope). Nor is
the scope of the prohi bition in our view self-evident. The
Competition Commission, in it s submissions before us, has
recognised some of the absurdities that would follow from a
construction of s 4(1)(b) that prohi bits all consensual conduct by
42
competitors that ultimately prod uces a uniform price for goods
emanating from them. The Commission has for this reason been
constrained to read words into the statute to avoid the absurdities.
[58] If the statute prohibits all co nsensual conduct amongst competitors
that has the effect of cr eating uniform prices for their goods in the
market, then the only evidence relevant to t he enquiry is no doubt
evidence that establishes the exis tence of a cons ensus having that
effect. But if the prohib ition is more restricted, then plainly the terms
of the agreement alone might not be decisive.
[59] We are not called up on in this application to give meaning to the
prohibition and indeed it is not permissibl e for us to do so. The
jurisdiction of this court, as we have pointed out, is confined to
considering appeals, which contem plates the existe nce of an order
or ruling by another court on the issue under appeal.
43
[60] We do not suggest that the ev idence Ansac seeks to lead is
necessarily admissible. We hold only that it is premature at this
stage to make a finding as to what evidence is or is not admissible,
so long as the characteristics of the prohibited conduct have not
been established by construing the statute. It is for the Tribunal to
consider, in the manner and in accordance with such procedure as it
may decide, to what extent evidenc e may be admissible to establish
whether the Ansac agreement falls within the prohibition contained in
s 4(1)(b).
[61] To the ext ent that the Tribuna l’s ruling is c onfined to precluding
evidence purporting to justify conduct proh ibited by s 4(1)(b) its
finding is correct, and the CAC correctly dismissed the appeal
against it. But to the extent that its ruling precludes evidence to
‘characterise’ the conduct in issue in order to determine whether or
44
not the s 4(1)(b) prohibition covers th at conduct at all, its ruling was
premature and thus incorrect and is liable to be set aside.
[62] Our findings that the CAC’s conclusi ons relating to jurisdiction and
standing are unassailable clearly constitute a sufficient basis on
which to refuse leave to appeal on those issues. Our finding relating
to the remaining issue (the ruling on the admissibility of evidence),
however, is of sufficient im portance, both for the proper
determination of the pres ent dispute and for the future application of
s 4(1)(b), to justify our interve ntion to correct the Tribunal’s findings
insofar as it is necessary to do so.
[63] As for the costs of the applic ation, Ansac has failed in its
contentions regarding the territo rial application of the Act, and
Botash’s legal standing. But it has had some success regarding
what may be seen as the parties’ principal dispute – the admissibility
of evidence to characterise t he Ansac agreement and Ansac’s
45
projected activities within South Africa. The part ies are therefore
invited to submit written argument as to what costs order would be
most appropriate in this court and in the forums below.
[64] There is a remaining obse rvation. The present proceedings
underline the ne ed for care to be taken when isolating issues and
dealing with them sepa rately from the remain ing issues. We repeat
what was said by this court in Denel (Pty) Ltd v Vorster27 in a related
context:
‘[I]t is appropriate to make a few remarks about separating issues. Rule
33(4) of the Uniform Rules – which entitles a court to try issues separately
in appropriate circumstances – is aime d at facilitating the convenient and
expeditious disposal of litigation. It should not be assumed that that result
is always achieved by separating the issues. In many cases, once
properly considered, the issues will be found to be inextricably linked even
though at first sight they might appear to be discrete. And even where the
issues are discrete the expeditious disposal of the litigation is often best
served by ventilating all the issues at one hearing, particularly where there
is more than one issue that might be readily dispositive of the matter. It is
only after careful thought has been given to the anticipated course of the
litigation as a whole that it will be possible properly to determine whether it
is convenient to try an issue separately. But where the trial court is
satisfied that it is proper to make such an order – and in all cases it must
be so satisfied before it does so – it is the duty of that court to ensure that
the issues to be tried are clearly circumscribed in its order so as to avoid
confusion… [A]nd when issuing its orders a trial court should ensure that
the issues are circumscribed with clarity and precision.’
27 2004 (4) SA 481 (SCA) para 3, per Nugent JA.
46
[65] We make the fo llowing order:
1. The application for special leave to appeal against the order of the
Competition Appeal Court insofar as it dismissed the appeal
against the findings of the Tribunal relati ng to jurisdiction and
standing is refused.
2. The application for special leave to appeal against the order of the
Competition Appeal Court insofar as it dismissed the appeal
against the ruling of the Tribunal relating to the admissibility of
evidence is granted.
3. The appeal succeeds to that extent and the order of the
Competition Appeal Court is set aside. In its place there is
substituted:
‘(a) The Tribunal’s ruling tha t evidence is not admissible to
justify conduct falling within the prohibition contained in s
4(1)(b) stands.
47
(b) The Tribunal’s ruling, to the extent that it excludes all
evidence relating to the natu re, purpose, and effect of the
Ansac agreement, is set aside.’
4. The parties are invit ed to submit written argument as to the
appropriate costs order, in this court and in the courts below.
E CAMERON & RW NUGENT
JUDGES OF APPEAL
CONCUR:
MPATI DP
CONRADIE JA
COMRIE AJA