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[2012] ZACC 15
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Competition Commission v Loungefoam (Pty) Ltd and Others (CCT 90/11) [2012] ZACC 15; 2012 (9) BCLR 907 (CC) (26 June 2012)
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CONSTITUTIONAL COURT OF SOUTH AFRICA
Case CCT 90/11
[2012] ZACC 15
In the matter between:
COMPETITION COMMISSION
….....................................................................
Applicant
and
LOUNGEFOAM (PTY) LTD
…...............................................................
First
Respondent
GOMMAGOMMA (PTY) LTD
….......................................................
Second
Respondent
VITAFOAM (PTY) LTD
…....................................................................
Third
Respondent
STEINHOFF AFRICA HOLDINGS (PTY) LTD
….............................
Fourth
Respondent
STEINHOFF INTERNATIONAL HOLDINGS (PTY) LTD
…..............
Fifth
Respondent
FELTEX HOLDINGS (PTY) LTD
….....................................................
Sixth
Respondent
KAP INTERNATIONAL HOLDINGS (PTY) LTD
…......................
Seventh
Respondent
Heard on : 7 February 2012
Decided on : 26 June 2012
JUDGMENT
MAYA AJ (Mogoeng CJ, Froneman J, Jafta J, Khampepe J, Nkabinde J,
Skweyiya J, van der Westhuizen J and Zondo AJ concurring):
This
is an application for leave to appeal directly to this Court against
a judgment of the Competition Appeal Court (CAC). The
CAC overturned
a decision of the Competition Tribunal (Tribunal) granting the
application of the Competition Commission (Commission)
to amend its
complaint referral against the respondents and to join the fourth
respondent (Steinhoff Africa) to the complaint
as a consequence of
one of the amendments. The Commission also requests condonation for
its delay in launching this application.
Background
The
Commission is an independent regulatory authority established in
terms of the Competition Act 89 of 1998 (Act).
1
It is vested with wide-ranging powers aimed at furthering the Act’s
objective of promoting and maintaining competition
within the
economic realm.
2
Its various functions include the implementation of measures to
increase market transparency and develop public awareness of
the
provisions of the Act, the investigation and evaluation of practices
prohibited by the Act
3
and the referral of matters for adjudication to and appearance
before the Tribunal,
4
as required by the Act.
5
The
first respondent (Loungefoam), the second and third respondents
(Gommagomma and its wholly owned subsidiary, Vitafoam) and
the sixth
respondent (Feltex) are manufacturers and suppliers of flexible
polyurethane or block foam. Loungefoam and Vitafoam
currently
manufacture the foam for use in the furniture and bedding industry.
Feltex, a wholly owned subsidiary of the seventh
respondent (Kap),
previously conducted the same business through one of its divisions
until it sold the division to Loungefoam
in 1999. It now
manufactures the foam mainly for use in the automotive industry.
Steinhoff Africa is a wholly owned subsidiary
of the fifth
respondent (Steinhoff) which, in turn, also holds a controlling
interest in Loungefoam and, by virtue of its shareholding
in
Gommagomma, in Vitafoam as well.
On 25
May 2007, the Commission received a letter from a former employee of
Loungefoam, Mr Troy Carelse, who had commenced a foam
manufacturing
company in competition with Loungefoam and Vitafoam. Mr Carelse
complained of anti-competitive conduct by his “opposition”
(subsequently identified as Loungefoam and Vitafoam) within the foam
manufacturing industry in relation to the supply of the
imported
chemicals used to produce the foam. This letter prompted the
Commission, on 3 September 2007, to commence a formal complaint
initiation process under the Act
6
against Loungefoam and Vitafoam for –
“
[p]rice
fixing and dividing markets by allocating customers in contravention
of sections 4(1)(b)(i) and 4(1)(b)(ii) [of the Act
and]
[e]xclusionary acts, inducement, predatory pricing and buying up
scarce resources in contravention of sections 8(c), 8(d)(i),
8(d)(iv)
and 8(d)(v) [of the Act]”.
7
On 27
November 2007, the Commission initiated its own complaint alleging
the same conduct against four additional parties, which
included
Feltex, albeit inaccurately described. (But nothing turns on this
inaccuracy.) The purpose of this step was to expand
the scope of the
complaint process initiated in September 2007. According to the
initiating statement, the parties sought to
be added were implicated
in conduct that is prohibited by the Act in the documents obtained
from Loungefoam and Vitafoam during
the investigation process. The
Commissioner alleged that Feltex and Loungefoam had concluded a sale
of business agreement which
contained a reciprocal restraint of
trade clause barring them from competing against each other which
remained extant between
them despite its expiry in 2004. According
to the Commissioner, this resulted in Feltex, Loungefoam and
Vitafoam dividing the
market in contravention of section 4(1)(b)(ii)
of the Act. The other entities, Unimattress (Pty) Ltd, Strandfoam
(Pty) Ltd and
Feel-o-Foam (Pty) Ltd, were allegedly added to the
complaint on the basis of evidence which suggested that they might
have colluded
with Loungefoam and Vitafoam in illegal market
division and price fixing.
Another
complaint initiation followed on 26 May 2008. It expanded the
investigation against Loungefoam, Vitafoam and Feltex to
include
Steinhoff and Kap consequent to the Commission’s suspicion
that the alleged collusion between the original respondents
might be
a product of collusion between Steinhoff and Kap. In September 2008,
the Commission referred a complaint to the Tribunal
8
against Loungefoam, Vitafoam, Feltex, Steinhoff and Kap alleging
that—
(a) Loungefoam and Vitafoam had
agreed to fix the purchase price of the chemicals necessary for the
manufacture of the foam and
the selling price of the foam that they
produced and sold to furniture manufacturers in breach of section
4(1)(b)(i) of the Act;
(b) Loungefoam and Vitafoam had
engaged in customer allocation by agreeing not to compete for certain
customers in contravention
of section 4(1)(b)(ii) of the Act by means
of the “Foam Forum” that they had established at which
they discussed pricing
and customer allocation; and
(c) Loungefoam and Feltex had
engaged in market division through the reciprocal restraint of trade
covenant in their sale of business
agreement, in contravention of
section 4(1)(b)(ii) of the Act.
All
three firms opposed the referral. Loungefoam and Vitafoam admitted
their participation in the “Foam Forum” and
that they
had agreed to the guidelines in relation to purchase prices to be
paid for chemicals and selling prices offered to
customers. However,
they contended that such conduct was lawful as they were constituent
entities within a single economic entity,
Steinhoff, as envisaged in
section 4(5) of the Act. They denied any wrongdoing. On 16 February
2010, the Commission applied to
the Tribunal, in terms of Tribunal
Rule 18(1),
9
to amend its complaint referral in various respects which included:
(a) a new allegation that Feltex was involved in price fixing
with
Loungefoam and Vitafoam with whom it jointly purchased chemicals in
contravention of section 4(1)(b)(i) of the Act (the
Feltex
amendment); (b) a refutation of the claim that Loungefoam and
Vitafoam were part of a single economic entity, alternatively
an
argument that if they were, that was a result of collusion between
Steinhoff and Kap (the collusion amendment); and (c) a
prayer that
if it was proved that Loungefoam and Vitafoam were constituent firms
of Steinhoff and had colluded with Feltex and
consequently had
administrative penalties imposed on them for the collusion, then
Steinhoff, Gommagomma and Steinhoff Africa
should similarly be held
liable (the penalty amendment). Steinhoff Africa was sought to be
joined to the referral contingent
upon the success of the latter
amendment.
10
Tribunal
proceedings
The
respondent firms objected to the amendments which they contended
were legally incompetent and would render the referral excipiable.
The main challenge against both the Feltex and collusion amendments
was that the Commission had failed to initiate a complaint
alleging
a contravention of section 4(1)(b)(i) as required by section 49B(1)
resulting in the absence of the jurisdictional fact
of initiation
for a referral. The joinder application was opposed on the same
basis. The penalty amendment was contested on the
reasoning that the
plain wording of the Act does not allow the imposition of a fine on
any entity other than the one found to
have transgressed the
provisions of the Act.
The
Tribunal granted all the amendments and the joinder application in a
judgment delivered on 8 June 2010. Regarding the Feltex
amendment,
it acknowledged that the Commission had not initiated a complaint
against Feltex but reasoned that the September 2007
complaint
initiation about a chemical purchasing cartel was sufficient to
found the jurisdictional requirement for a referral
against Feltex.
This was so, it said, because the Commission merely has to “provide
a rational link between the conduct
complained of and a relevant
section of the Act”
11
to establish the jurisdictional requirement for a referral, since
“[t]o require the Commission to go back and initiate
a fresh
complaint every time it uncovered a new, potential respondent . . .
would render the schema unworkable and would undermine
the very
purpose of th[e] Act”.
12
The Tribunal applied the same reasoning to the collusion amendment.
It found a rational link between the Commission’s initiation
statement of May 2008 that “the relationship between the
parties and Steinhoff appears to have orchestrated the collusive
conduct complained of” and section 4(b)(1)(i) and (ii).
13
The Tribunal concluded that “there was no need for the
Commission at that stage to identify exactly which, how many or
even
which subsidiaries or divisions of the respondents were involved in
collusive activities.”
14
It provided no reason for granting the penalty amendment.
The CAC appeal
Feltex
and the other respondents (the Steinhoff respondents) appealed to
the CAC against the whole judgment of the Tribunal and
further
applied to have the decision reviewed and set aside. The CAC (Wallis
JA; Davis JP and Ndita AJA concurring) upheld the
appeal in a
decision delivered on 6 May 2011. Regarding the Feltex amendment,
the nub of the CAC’s reasoning was that a
complaint must be
initiated before it can be referred. In its view, this was chiefly
because, first, section 49B(3) of the Act,
which requires the
Commission to direct an investigator to investigate a complaint,
allows the firm targeted by the investigation
to engage with the
Commission and demonstrate its innocence before the matter proceeds
to the referral stage, thus avoiding the
potential reputational
damage attendant on a public charge of being involved in
anti-competitive conduct.
Furthermore,
section 67(1) of the Act, which bars the initiation of a complaint
more than three years after the prohibited practice
has ceased,
renders the date of initiation of a complaint crucial for its
application. This is because the date for determining
the three-year
period is the complaint initiation date. Relying on a judgment of
the Supreme Court of Appeal and a later judgment
of the CAC applying
it,
15
the CAC held that the Commission’s investigative powers arose
from the initiation of a complaint which must be founded
on
information upon which a reasonable suspicion can be based. It
concluded that the complaint initiation did not implicate Feltex
in
the chemical cartel and that there was, therefore, no jurisdictional
basis for the referral against it.
The
CAC found that the Commission had in fact sought the collusion
amendment on the ground that it wanted to implicate Steinhoff
in the
collusive conduct, and not to counter the Steinhoff respondents’
defence that they were part of a single economic
entity. The CAC
reasoned that it had to consider the amendment as it was before the
Tribunal and that the Commission had tried
impermissibly to change
the amendment’s meaning, basis and content. The CAC further
found that the penalty amendment in
terms of section 4(5)(b),
16
and the joinder of Steinhoff Africa, should have been refused.
On 3
June 2011 the Commission applied to the CAC for leave to appeal to
the Supreme Court of Appeal only against the orders made
in respect
of the collusion and penalty amendments. That application was set
down for hearing on 9 December 2011. However, on
27 September 2011,
the Commission, without withdrawing the CAC application, changed
tack and launched the present proceedings
in which, as indicated, it
seeks leave to appeal directly to this Court against the whole
judgment of the CAC.
The application for leave to appeal
The
Commission has three main contentions. First, it argued that the
application raises critical constitutional issues which are
fundamental to the manner in which it discharges its function of
evaluating alleged prohibited practices and referring them to
the
Tribunal for adjudication. Second, it submitted that the CAC’s
finding, that there must be symmetry between the initiating
document
and the referral, is unduly restrictive and undermines the public’s
right to have anti-competitive conduct properly
determined. Last, it
contended that since delivery of the CAC’s judgment, it has
been inundated with objections to matters
that it has referred to
the Tribunal. And because it is unable to determine (i) the standard
it is required to apply in formulating
complaint initiations and
(ii) its power to amend a referral as a result of divergent
interpretations employed in the judgment
in this matter, in
Woodlands
and in
Yara
,
17
it continued, it is unable to investigate and refer pending matters
until the issues raised in this application, which have good
prospects of success and require expeditious resolution, have been
attended by this Court. The Commission is also not keen to
have the
matter adjudicated by the Supreme Court of Appeal. This is based on
an alleged apprehension that the latter court will
follow its
previous reasoning in
Woodlands
and on the contention that
the view of the Supreme Court of Appeal is not, in any event,
necessary as the matter does not involve
the development of the
common law.
The
respondents oppose the application on the grounds that the
Commission’s explanation for the delay in launching its
application is unsatisfactory and that the Commission was obliged to
first seek the CAC’s leave to appeal against its decision
in
terms of section 63(2) of the Act. Regarding the merits, the
Steinhoff respondents conceded that the appeal relating to the
Feltex amendment raises a constitutional issue. But they contend
that the Commission is perempted from pursuing it in this Court
as
it deliberately chose not to challenge it before the Supreme Court
of Appeal. Moreover, they refute that the appeal, in relation
to the
question whether the Tribunal may hold an entity liable for
prohibited practices committed by a subsidiary or associate
company
under its control, has any prospects of success.
The
threshold requirements for leave to appeal in this Court are firmly
established. The issues to be determined in the appeal
must be
constitutional matters or issues connected with decisions on
constitutional matters.
18
The fact that a matter raises a constitutional issue is, however,
not decisive and leave may still be refused if it is not in
the
interests of justice to hear the appeal.
19
As to whether this application meets the first requirement presents
no controversy. Issues concerning the powers and functions
of an
organ of state, such as the question of the scope and proper
exercise of the statutory power of complaint initiation,
investigation and referral vested in the Commission raised here, are
indisputably constitutional matters.
20
The question, however, remains whether it is in the interests of
justice to grant leave to appeal.
In
addressing this question, it is necessary to deal first with the
preliminary issues raised by the respondents. Foremost is
their
contention that the provisions of section 63(2) of the Act
constitute a bar to the grant of the application as they relate
to
this Court’s jurisdiction to entertain the matter. Section 63
deals with a litigant’s right to appeal against
a decision of
the CAC. It reads, in relevant part:
“
(1)
The right to an appeal in terms of section 62(4)—
is subject to any law that—
(i) specifically limits the
right of appeal set out in that section; or
(ii) specifically grants, limits
or excludes any right of appeal;
. . .
(2) An appeal in terms of
section 62(4) may be brought to the Supreme Court of Appeal or, if it
concerns a constitutional matter,
to the Constitutional Court, only—
(a) with leave of the
Competition Appeal Court; or
(b) if the Competition Appeal
Court refuses leave, with leave of the Supreme Court of Appeal or the
Constitutional Court, as the
case may be.”
Section
62 of the Act bears relevance too as it governs the appellate
jurisdiction of the Tribunal and, more pertinently, the
CAC and its
place within the appellate hierarchy vis-à-vis the Supreme
Court of Appeal and this Court. The relevant provisions
of the
section read:
“
(1)
The Competition Tribunal and Competition Appeal Court share exclusive
jurisdiction in respect of the following matters:
(a) Interpretation and
application of Chapters 2, 3 and 5, other than—
(i) a question or matter
referred to in subsection (2); or
. . .
(2) In addition to any other
jurisdiction granted in this Act to the Competition Appeal Court, the
Court has jurisdiction over—
. . .
any constitutional matter
arising in terms of this Act; and
. . .
(3) The jurisdiction of the
Competition Appeal Court—
(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).
(4) An appeal from a decision of
the Competition Appeal Court in respect of a
matter within its jurisdiction
in terms of subsection (2) lies to the Supreme Court of Appeal or
Constitutional Court, subject to
section 63 and their respective
rules.”
The
Legislature’s object in conferring appellate jurisdiction on
both the Supreme Court of Appeal and this Court from the
CAC in
respect of constitutional and other matters listed in section 62(2)
of the Act is evident from the plain wording of sections
62 and 63.
Section 63(2) appears to provide that appeals from the CAC in
respect of those matters lie to this Court subject to
leave being
obtained from the CAC in terms of section 63, obviously in
recognition of its specialist status in respect of matters
falling
within the purview of the Act. Section 63(2)(a) reinforces the CAC’s
role in respect of the matters over which
it enjoys concurrent
jurisdiction by expressly permitting an appeal to this Court and the
Supreme Court of Appeal “only”
with the leave of the CAC
and allowing an approach for leave from this Court and the SCA
“only” if the CAC refuses
it.
Section
167(6) of the Constitution, on the other hand, obliges—
“
national
legislation or the rules of the Constitutional Court [to] allow a
person, when it is in the interests of justice and with
leave of the
Constitutional Court (a) to bring a matter directly to the
Constitutional Court; or (b) to appeal directly to the
Constitutional
Court from any other court.”
Furthermore,
section 16 of the Constitutional Court Complementary Act Amendment
Act
21
grants the Chief Justice, acting in consultation with the President
of the Supreme Court of Appeal, the power to make rules relating
to
the manner in which this Court may be engaged in any matter in
respect of which it has jurisdiction. These Rules allow a person,
when it is in the interests of justice and with leave of the Court,
to bring a matter directly to it or to appeal directly to it
from any
other court. Rule 19 of the Constitutional Court Rules
22
gives effect to these provisions.
The
question is what meaning to ascribe to section 63(2) of the Act in
light of section 167(6) of the Constitution. Central to
this enquiry
is the fact that the provisions of the Constitution cannot be
subordinate to statutory enactments. In addition,
section 1(2)(a) of
the Act itself requires that its provisions must be interpreted in a
manner that is consistent with the Constitution.
23
But the wording of section 63(2) may be read to suggest more than
one constitutionally compliant construction, because section
63(1)(a)(ii) appears to subordinate the right of appeal couched in
section 62(4) to “any law that specifically grants”
any
right of appeal.
One
interpretation of section 63 is that it creates a bar, as the
respondents contended. The words “any law” in section
63(1)(a), on this approach, refer only to national legislation as
contemplated in section 167(6) and exclude the Constitution
itself.
This is inferred from the fact that the Act defines it and makes
specific reference to “the Constitution”
in some of its
provisions. Furthermore, section 167(6) of the Constitution does not
grant, limit or exclude a right of appeal
as envisaged in section
62(4). The use of the word “only” before the two
pre-conditions for an application for leave
to appeal to the Supreme
Court of Appeal and this Court, as set out in section 63(2),
indicates a bar as it plainly means that
an appeal to either the
Supreme Court of Appeal or this Court lies solely when the CAC has
granted or refused leave. Therefore,
a litigant may not, under any
circumstances, approach either court directly without first applying
to the CAC for leave.
An
alternative interpretation of section 63(2) is that the
Constitution, being law and indeed the supreme law, comfortably fits
under the class of “any law” envisaged in section
63(1)(a), as there is no specific contrary indication either in
the
provisions of the Constitution or those of the Act. When interpreted
in the light of the Constitution, as it must be,
24
and “as adjunct to, and not exclusionary of, the
Constitution’s appellate structures”,
25
the provisions of section 63(2) dovetail seamlessly with section
167(6). The resultant meaning which strains neither of the
provisions is simple: A litigant who wishes to appeal to this Court
against a decision of the CAC must first seek the CAC’s
leave
unless the interests of justice permit a direct approach to this
Court. In other words, the views of the CAC and the Supreme
Court of
Appeal remain obligatory except where the interests of justice under
section 167(6) of the Constitution require that
direct access be
granted without the CAC’s leave. This construction accords
with the non-exclusive nature of appellate
jurisdiction that the CAC
enjoys. It permits the conclusion that section 63(2), therefore,
creates no absolute bar to seeking
leave for direct access to this
Court.
The
conflicting constructions cannot both be correct. But that is not a
problem that need be resolved in these proceedings for
the
compelling reason that the facts on record do not show compliance
with either of the interpretations. The applicant has bypassed
the
CAC and seeks to make a direct appeal to this Court. Therefore, the
requirement of the “bar” interpretation to
seek the
CAC’s leave to appeal first before approaching the Supreme
Court of Appeal or this Court has not been met. And,
on the
alternative interpretation, I am not persuaded that the interests of
justice permit the Commission to avoid the requirements
of section
63(2) in the manner contemplated in section 167(6) of the
Constitution, for the reasons that follow.
The
mainstay of the Commission’s argument, as mentioned earlier,
was that the matter is urgent and that it will be protracted
unduly
if required first to pass through the Supreme Court of Appeal whose
view is irrelevant in any event, because the matter
will ultimately
end up in this Court. Accepting that the matter raises issues of
public importance and assuming that there may
well be good prospects
of success in the appeal, these factors are nonetheless not
decisive.
Other
factors must still be considered, particularly that the Commission
has failed to show that the Supreme Court of Appeal will
not deal
with the matter expeditiously, or indeed give finality to some or
even all of the issues between the parties. In the
absence of a
challenge to its constitutionality in either these proceedings or
before the CAC, section 63(2) remains valid law
in the absence of a
declaration of invalidity. On this interpretation, it serves the
critical purpose of ensuring that the decision-making
of the higher
appellate courts is informed by the expert views of the specialist
CAC. Further, until the Legislature decides
otherwise, the Supreme
Court of Appeal also serves as a further filter in the appellate
hierarchy, even in matters that do not
explicitly involve the
development of the common law.
To
that end, the Commission’s steadfast assumption that it will
not succeed before the Supreme Court of Appeal, based on
the
perceived difference between that Court’s decision in
Woodlands
and the CAC’s judgment in this matter,
deserves no credence.
Conclusion
To
summarise, the two possible approaches to section 63(2) yield the
following result: (i) the Commission does not meet the “bar”
test because of its failure first to seek leave from the CAC before
approaching this Court; and (ii) the Commission has not shown
any
compelling circumstances that would justify a direct appeal, in the
interests of justice, to avoid substantial injustice
as envisaged in
section 167(6). The matter falls to be dismissed on this basis alone
and this finding renders it unnecessary
to decide condonation of the
Commission’s seemingly excessive delay and further issues.
The
parties asked for costs in the event of their respective success. I
see no reason why costs should not follow the result
in the
ordinary course in the circumstances.
Order
Accordingly, the following order is made:
The application for leave to appeal is dismissed with costs,
including the costs of two counsel.
YACOOB ADCJ and CAMERON J:
We
have had the benefit of reading the judgment of Maya AJ (the main
judgment), in which she concludes, without making a finding
on
condonation, that leave to appeal should be refused on grounds
relating to
section 63(2)
of the
Competition Act
26
(Act
). She reaches this conclusion without deciding whether that
provision constitutes a bar to an applicant for leave to appeal to
this Court, or whether compliance with it is merely pertinent to
this Court’s determination of the interests of justice
in
considering leave to appeal. This is because, if the provision is a
bar, the Commission has failed to seek the leave of
the Competition
Appeal Court, while, if it is relevant to the interests of justice,
as envisaged in section 167(6) of the Constitution,
the Commission
has failed to show any compelling circumstances that would justify
direct access to avoid substantial injustice.
We
differ from that conclusion. For the reasons we have set out in our
judgment in
Competition Commission v Yara
,
27
we consider that there is no statutory bar preventing the
Commission from seeking leave directly from this Court. For
substantially
similar reasons to those in
Yara
, we consider
that the Commission has, in this matter, made out a case for
condonation and for the grant of leave to appeal.
In
both cases, the Commission delayed its application to this Court by
several months; in
Yara
just shy of five, in this matter by
marginally less than four. The Competition Appeal Court delivered
the judgment the Commission
seeks to challenge in these proceedings
on 6 May 2011. On 3 June 2011, the Commission applied to the
Competition Appeal Court
for leave to appeal to the Supreme Court
of Appeal. That application was set down in the Competition Appeal
Court for 9 December
2011. On 27 September 2011, the Commission
lodged its application in this Court.
In
it, the Commission pointed out that it had “already applied
to the Competition Appeal Court for leave to appeal to
the Supreme
Court of Appeal”. What it failed to disclose was that this
application traversed only some of the grounds
on which it now
objects to the Competition Appeal Court judgment.
The
Commission should have been more specific about the ambit of its
pending application for leave to appeal. In this Court
the
Commission states in its founding papers that it will persist with
that application only if this Court refuses it leave
to appeal. It
should rather have made one of these applications conditional, as
is practice.
28
However,
we find that in this instance these considerations do not justify
barring the Commission access to this Court. For
the reasons we set
out in
Yara
, and in particular: (a) the importance of the
Commission’s public role; (b) the significance of the issues
it seeks to
have determined in the appeal; (c) the fact that there
are prospects of success in the appeal; and (d) that this is not a
matter
at the complex intersection of law and economics, but
somewhat removed from it, combine to warrant the grant of leave.
We
except from our conclusion the sixth respondent, Feltex Holdings
(Pty) Ltd, in respect of whom we consider that the Commission’s
appeal became perempted. Since this is a minority judgment, it will
serve no purpose to set out our reasons at length. In short,
the
Commission’s appeal against Feltex became perempted because,
when the Commission applied to the Competition Appeal
Court for
leave to appeal to the Supreme Court of Appeal, it sought leave
against only two groups of amendments. Neither of
these involved
Feltex. What is more the Commission in this Court recorded that it
had “decided” not to pursue the
Feltex appeal, but that
after later advice it changed this decision. A “decision”
not to appeal can only entail
an abandonment of the right to
appeal, in which case the appeal is perempted. As counsel for
Feltex argued, it is hard to conceive
of a clearer case.
For the Applicants: Advocate NH Maenetje SC and
Advocate I Goodman instructed by Cheadle Thompson & Haysom Inc.
For
the First, Second, Fourth,and
Fifth
Respondents: Advocate D Unterhalter SC and Advocate MA Wesley
instructed by Norton Rose South Africa.
For
the Sixth Respondent: Advocate A Cockrell SC and Advocate K Hofmeyr
instructed by Shepstone & Wylie Attorneys.
1
Section
19 provides:
“
(1) There is hereby
established a body to be known as the Competition Commission, which—
has jurisdiction throughout the Republic;
is a juristic person; and
must exercise its functions in accordance with this
Act.
(2) The Competition Commission consists of the
Commissioner and one or more Deputy Commissioners as may be
necessary, appointed
by the Minister in terms of this Act.”
2
The
purpose of the Act is set out in section
2, which
reads:
“
The purpose of this Act is to
promote and maintain competition in the Republic in order—
(a) to promote the efficiency, adaptability and
development of the economy;
(b) to provide consumers with competitive prices and
product choices;
(c) to promote employment and advance the social and
economic welfare of South Africans;
(d) to expand opportunities for South African
participation in world markets and recognise the role of foreign
competition in
the Republic;
(e) to ensure that small and medium-sized enterprises
have an equitable opportunity to participate in the economy; and
(f) to promote a greater spread of ownership, in
particular to increase the ownership stakes of historically
disadvantaged persons.”
3
Prohibited
practices, categorised as horizontal or vertical, are set out in
Part A of C
hapter 2 of the Act.
4
The
Tribunal is a body of record established under section 26 of the Act
which has jurisdiction throughout the Republic and functions
in
accordance with the Act. Its members are appointed by the President
on the recommendation of the Minister. Its functions are
set out in
section 27 of the Act and include the adjudication “in
relation to any conduct prohibited in terms of Chapter
2 or 3, by
determining whether prohibited conduct has occurred, and if so,
impose a remedy provided for in Chapter 6” of
the Act.
5
Sections
50 and 53 of the Act. Section 50 provides, in relevant part:
“
(1) At any time after
initiating a complaint, the Competition Commission may refer the
complaint to the Competition Tribunal.
(2) Within one year after a complaint was submitted to
it, the Commissioner must—
(a)
subject to subsection
(3), refer the complaint to the Competition Tribunal, if it
determines that a prohibited practice has been
established; or
(b) in any other case, issue a notice of non-referral
to the complainant in the prescribed form.
(3) When the Competition Commission refers a complaint
to the Competition Tribunal in terms of subsection (2)(a), it—
(a) may—
(i) refer all the particulars of the complaint as
submitted by the complainant;
(ii) refer only some of the particulars of the
complaint as submitted by the complainant; or
(iii) add particulars to the complaint as submitted by
the complainant; and
(b) must issue a notice of non-referral as contemplated
in subsection (2)(b) in respect of any particulars of the complaint
not
referred to the Competition Tribunal.
. . .
(5) If the Competition Commission has not referred a
complaint to the Competition Tribunal, or issued a notice of
non-referral,
within the time contemplated in subsection (2), or the
extended period contemplated in subsection (4), the Commission must
be
regarded as having issued a notice of non-referral on the expiry
of the relevant period.”
Section 51 reads, in relevant part:
“
(1) If the Competition
Commission issues a notice of non-referral in response to a
complaint, the complainant may refer the complaint
directly to the
Competition Tribunal, subject to its rules of procedure.
(2) A referral to the Competition Tribunal, whether by
the Competition Commission in terms of section 50(1), or by a
complainant
in terms of subsection (1), must be in the prescribed
form.”
In terms of section 53, the Commissioner, or any person
appointed by the Commissioner, is among the persons who may
participate
in a hearing, in person or through a representative, and
may put questions to witnesses and inspect any books, documents or
items
presented at the hearing.
6
Section
49B of the Act provides, in relevant part:
“
(1) The Commissioner may
initiate a complaint against an alleged prohibited practice.
(2) Any person may—
(a) submit information concerning an alleged prohibited
practice to the Competition Commission, in any manner or form; or
(b) submit a complaint against an alleged prohibited
practice to the Competition Commission, in the prescribed form.
(3) Upon initiating or receiving a complaint in terms
of this section, the Commissioner must direct an inspector to
investigate
the complaint as quickly as practicable.”
7
Section
4 provides, in relevant part;
“
(1) An agreement between, or
concerted practice by, firms, or a decision by an association of
firms, is prohibited if—
. . .
(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”.
The
relevant parts of section 8 provide:
“
It is prohibited for a
dominant firm to—
. . .
(c) engage in an exclusionary act, other than an act
listed in paragraph (d), if the anti-competitive effect of that act
outweighs
its technological, efficiency or other pro-competitive
gain; or
(d) engage in any of the following exclusionary acts,
unless the firm concerned can show technological, efficiency or
other pro-competitive,
gains which outweigh the anti-competitive
effect of its act:
requiring or inducing a supplier or customer to not
deal with a competitor;
. . .
(iv) selling goods or services below their marginal or
average variable cost; or
(v) buying-up a scarce supply of intermediate goods or
resources required by a competitor”.
8
Section
51 of the Act.
9
Rule
18(1) of the Tribunal Rules reads:
“
The person who filed a
Complaint Referral may apply to the Tribunal by Notice of Motion in
Form CT 6 at any time prior to the
end of the hearing of that
complaint for an order authorising them to amend their Form CT 1(1),
CT 1(2) or CT 1(3), as the case
may be, as filed.”
10
The
Commission initially sought the joinder of Steinhoff Africa, Feltex,
Daun et Cie AG, Courthiel Holdings (Pty) Ltd, Phaello
Mattress and
Bedding Corporation (Pty) Ltd, and Restonic SA (Pty) Ltd.
11
Competition
Commission v Loungefoam (Pty) Ltd and Others, In re: Competiti1on
Commission v Loungefoam (Pty) Ltd and Others (103/CR/Sep08)
[2010]
ZACT 39
(8 June 2010) at para 62.
12
Id
at para 50.
13
Id
at para 62.
14
Id
at para 65.
15
Woodlands
Dairy (Pty) Ltd and Another v Competition Commission
2010
(6) SA 108
(SCA) (
Woodlands
)
and
Netstar (Pty) Ltd and Others v
Competition Commission South Africa and Another
2011
(3) SA 171
(CAC), against which the Commission has lodged an appeal
before the SCA.
16
Section
4(5)(b) excludes the application of section 4(1) to an agreement
between, or concerted practice engaged in by constituent
firms
within a single economic entity similar in structure to those
referred to in section 4(5)(a) namely, a company, its wholly
owned
subsidiary, a wholly owned subsidiary of that subsidiary or any
combination of them.
17
A
related CAC decision
sub nom
The
Competition Commission v Yara South Africa (Pty) Ltd and Others
(
93/CAC/Mar10,
94/CAC/Mar10)
[2011] ZACAC 2
(14 March 2011
).
A judgment against this decision has been handed down simultaneously
with this judgment under CCT 81.
18
Section
167(3)(b) of the Constitution.
19
Section
167(6) of the Constitution;
Everfresh Market
Virginia (Pty) Ltd v Shoprite Checkers (Pty) Ltd
[2011]
ZACC 30
;
2012 (1) SA 256
(CC);
2012 (3) BCLR 219
(CC) at para 48;
Prophet v National Director of Public
Prosecutions
[2006] ZACC 17
;
2007 (6) SA 169
(CC);
2007
(2) BCLR 140
(CC)
at para 45; and
S
v Boesak
[2000] ZACC 25
;
2001
(1) SA 912
(CC);
2001 (1) BCLR 36
(CC) (
Boesak
)
at para 12.
20
Competition
Commission of South Africa v Senwes Ltd
[2012]
ZACC 6
at Para 16 and 18;
Boesak
above n 19
at
para
14; and
Pharmaceutical
Manufacturers Association of SA and Another: In re Ex parte
President of the Republic of South Africa and Others
[2000]
ZACC 1
;
2000 (2) SA 674
(CC);
2000 (3) BCLR 241
(CC) at para 33.
21
Act
79 of 1997.
22
Rule
19(2) provides—
“
A litigant who is aggrieved
by the decision of a court and who wishes to appeal against it
directly to the Court on a constitutional
matter shall, within 15
days of the order against which the appeal is sought to be brought
and after giving notice to the other
party or parties concerned,
lodge with the Registrar an application for leave to appeal:
Provided that where the President has
refused leave to appeal the
period prescribed in this rule shall run from the date of the order
refusing leave.”
23
Section
39(2) of the Constitution enjoins every court, tribunal or forum,
when interpreting legislation, to promote the spirit,
purport and
objects of the Bill of Rights.
24
See
section 1(2) of the Act and
Investigating Directorate: Serious
Economic Offences and Others v Hyundai Motor Distributors (Pty) Ltd
and Others: In re Hyundai
Motor Distributors (Pty) Ltd and Others v
Smit NO and Others
[2000] ZACC 12
;
2001 (1) SA 545
(CC);
2000
(10) BCLR 1079
(CC) at para 21.
25
American
Natural Soda Ash Corporation and Another v Competition Commission
and Others
2005 (6) SA 158
(SCA) at para 13.
26
Act
89 of 1998.
27
[2012]
ZACC 14
(
Yara
). The judgment in
Yara
is handed down
simultaneously with this judgment.
28
University
of Witwatersrand Law Clinic v Minister of Home Affairs and
Another
[2007] ZACC 8
;
2008 (1) SA 447
(CC);
2007 (7) BCLR 821
(CC) at para 7;
Dudley v City of Cape Town and Another
[2004]
ZACC 4
;
2005 (5) SA 429
(CC);
2004 (8) BCLR 805
(CC) at para 4 and
Mkangeli and Others
v Joubert and Others
[2001] ZACC
15
;
2001 (2) SA 1191
(CC);
2001 (4) BCLR 316
(CC) at para 3. See
also, Constitutional Court Rule 19(3)(d)(ii).