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[2013] ZACC 50
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Competition Commission of South Africa v Pioneer Hi-Bred International Inc and Others (CCT 58/13) [2013] ZACC 50; 2014 (3) BCLR 251 (CC); 2014 (2) SA 480 (CC); [2015] 1 CPLR 1 (CC) (18 December 2013)
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CONSTITUTIONAL
COURT OF SOUTH AFRICA
Case
CCT 58/13
[2013]
ZACC 50
DATE:
18 DECEMBER 2013
In
the matter between:
COMPETITION
COMMISSION OF SOUTH
AFRICA
.................................................................
Applicant
And
PIONEER
HI-BRED INTERNATIONAL
INC
................................................................
First
Respondent
PANNAR
SEED (PTY)
LTD
......................................................................................
Second
Respondent
AFRICAN
CENTRE FOR
BIOSAFETY
........................................................................
Third
Respondent
Heard
on : 4 November 2013
Decided
on : 18 December 2013
JUDGMENT
SKWEYIYA
ADCJ (Moseneke ACJ, Cameron J, Dambuza AJ, Jafta J, Froneman J,
Madlanga J, Mhlantla AJ, Nkabinde J, Van der Westhuizen
J and Zondo J
concurring):
Introduction
[1]
This is an application for leave to appeal against a costs order
granted by the Competition Appeal Court (CAC) against the Competition
Commission (Commission). The application raises the scope of the
CAC’s powers to award costs against the Commission when
it
litigates in the course of its duties in terms of the Competition
Act
1
(Act).
Background
[2]
Pioneer Hi-Bred International Inc (Pioneer) and Pannar Seed (Pty) Ltd
(Pannar) are companies involved in the hybrid maize seed
breeding
market. Pioneer and Pannar informed the Commission of their intention
to undertake an “intermediate merger”
2
in terms of the Act. In terms of sections 12A and 14 of the Act, the
Commission investigated the proposed merger and prohibited
it on the
grounds that it was likely to give rise to a substantial prevention
or lessening of competition in the South African
hybrid maize seed
market.
[3]
Pioneer and Pannar (merging parties) filed a request with the
Tribunal in terms of section 16(1)(b) of the Act to reconsider
the
Commission’s decision. The merging parties joined the
Commission as a respondent and the Commission defended its decision
before the Tribunal. No costs were sought by any of the parties.
[4]
The Tribunal also prohibited the merger on the same grounds as the
Commission had done.
3
It
made no order as to costs.
[5]
The merging parties appealed the Tribunal’s decision to the
CAC. In their notice of appeal, the merging parties prayed
only for
the costs of the appeal to be paid by the Commission. However, in
their heads of argument, the merging parties asked that
the
Commission be ordered to pay their costs in the appeal and in the
Tribunal proceedings. The Commission was once more joined
as a party
to the proceedings and it again defended its decision and that of the
Tribunal.
[6]
The CAC upheld the merging parties’ appeal (judgment on the
merits) and approved the merger subject to conditions.
4
The CAC further ordered the Commission to pay the costs of the
merging parties (1) in the CAC proceedings and (2) in the Tribunal
Proceedings. It gave no reasons for its costs order.
[7]
The Commission sought leave to appeal to the Supreme Court of Appeal
against the entire judgment and order. The application
was dismissed.
It then sought leave to appeal in the CAC to the Constitutional Court
against the costs order only. The merging
parties filed a notice of
intention to abide. The CAC granted the Commission leave to appeal to
this Court.
5
[8]
Before this Court, the Commission does not challenge the CAC’s
approval of the merger but only its costs order, which
it argues was
wrongly awarded. The Commission submits that (1) while the CAC may
have the power to award costs against the Commission
in its own
proceedings, that discretion was wrongly exercised in this case; and
(2) the CAC has no power to award costs against
the Commission in
relation to Tribunal proceedings.
[9]
None of the respondents opposed the Commission’s application to
this Court. The Court thus invited representatives of
the
Johannesburg Bar Council to make submissions as a friend of the court
(amicus curiae). On behalf of the amicus, Ms Kirsty McLean
and Ms
Berna Malan filed written submissions and Ms McLean made oral
submissions. The Court is grateful to them for their helpful
submissions.
[10]
The amicus chose to confine its submissions to the abstract point of
the scope of the Tribunal and CAC’s respective powers
to award
costs against the Commission, declining to make submissions on the
particular grant of costs in this case.
Issues
[11]
The issues before this Court are as follows:
(a)
Should this Court grant leave to appeal?
(b)
Does the CAC have the power to award costs against the Commission on
appeal?
(c)
Does the CAC have the power to award costs against the Commission in
relation to Tribunal proceedings?
(d)
Accordingly, did the CAC exercise its discretion to award costs
against the Commission in the present matter judicially?
Leave
to appeal
[12]
Leave to appeal should be granted. Whether the CAC has the power to
award costs against the Commission in relation to Tribunal
proceedings and the extent of its power in relation to its own
proceedings are questions that concern the scope and proper exercise
of statutory powers raising a constitutional issue in the principle
of legality.
6
This is an issue of importance because it concerns the independence
and operation of state institutions charged with functions
under the
Act that are important to the economy and the general public.
7
[13]
While it is not generally in the interests of justice to grant leave
to appeal on questions of costs only,
8
the issues in this case fall within established exceptions. The
issues are matters of principle requiring legal interpretation
that
are neither trivial nor insubstantial
9
– the legal determination of which may impact on the fulfilment
of the purposes of the Act. The Commission has reasonable
prospects
of success. The interests of justice thus favour the grant of leave
to appeal.
The
nature of the Commission
[14]
It is important to consider the nature of the Commission under the
Act, and its capacities, functions and powers in relation
to those of
the Tribunal and CAC. This may shed light on any possible impact that
costs awards could have on their respective abilities
to fulfil the
purpose of the Act.
[15]
The purpose of the Act is to promote and maintain competition in
South Africa 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.”
10
[16]
Section 21 of the Act makes the Commission responsible for a broad
range of functions.
11
It is “an independent regulatory authority . . . vested with
wide-ranging powers”
12
.
Its responsibilities include the implementation of measures to
increase market transparency and to develop public awareness of
the
Act; the review of legislation and public regulations; the
authorisation or prohibition of mergers; and the investigation of
alleged contraventions of the Act. Its roles are prosecutorial,
adjudicative, educative and advisory. In order to execute these
responsibilities, the Act emphasises the Commission’s
independence and impartiality, providing that it must perform its
functions “without fear, favour, or prejudice”
13
.
A degree of autonomy and institutional independence is consonant with
its responsibilities.
[17]
The Commission takes on a particular role in merger regulation. It is
required to consider whether proposed mergers are “likely
to
substantially prevent or lessen competition”, having regard to
a range of factors including public-interest and macro
economic
grounds.
14
In merger proceedings, there is seldom an opposing party or amicus.
It is for the Commission to consider and investigate the merits
of
the proposed merger.
[18]
The Commission is obliged to consider a range of factors when
investigating a merger, most of which will be speculative (for
example, the potential impact of a proposed merger) and many of which
may be value-laden (for example, whether the merger will
be in the
public interest). Given this, the likelihood of it reaching a
different view to the merging parties, Tribunal or CAC
is a risk
inherent in the Act. Given the Commission’s role in the scheme
of the Act, it is important that the interpretation
advanced here
must allow the Commission sufficient institutional autonomy to reach
and defend honest and independent decisions.
The
power of the CAC to award costs in its own proceedings
[19]
Section 61 of the Act governs the power of the CAC when hearing
appeals. It provides:
“
(1)
A person affected by a decision of the Competition Tribunal may
appeal against, or apply to the Competition Appeal Court to
review,
that decision in accordance with the Rules of the Competition Appeal
Court if, in terms of section 37, the Court has jurisdiction
to
consider that appeal or review that matter.
(2)
The Competition Appeal Court may make an order for the payment of
costs against any party in the hearing, or against any person
who
represented a party in the hearing, according to the requirements of
the law and fairness.”
[20]
Section 61(2) makes clear that the CAC does have the power to award
costs. It may do this “against any party in the hearing”.
The Commission does not deny that the CAC may grant costs, nor that
the Commission is conceivably a “party” as intended
by
section 61(2). Its complaint lies against the CAC’s exercise of
that power in giving content to the qualifier in section
61(2):
“according to the requirements of the law and fairness.”
The amicus shares this approach but the Commission
and amicus
articulate the content of the “requirements of the law and
fairness” in subtly different ways.
[21]
It is correct that section 61(2) in plain language empowers the CAC
to make an order of costs against the Commission where
it is a party
before it. I can see no reason to exclude the Commission from the
meaning of “party”
15
.
This power is, however, qualified by the “requirements of the
law and fairness”. The central inquiry in each case
must be
whether, when all the factors have been taken into account, it is in
accordance with the requirements of the law and fairness
to award
costs.
[22]
It is important to interpret the meaning of the provision in the
context of the Act and the specific functions of the competition
authorities. The CAC is given a status similar to that of a High
Court
16
and is tasked with the role of reviewing any decision or considering
any appeal from the Tribunal on any of its interim, interlocutory
or
final decisions.
17
[23]
The ordinary course is for costs to follow the result. But the
Commission is not an ordinary civil litigant. While the Commission
is
not obliged to participate in CAC proceedings when a private party
initiates the appeal, its participation will often be central
to the
fulfilment of the aims of the Act as there will frequently be no
opposing party or amicus in appeal proceedings. The Commission’s
participation will in these cases be important not only to the
defence of the public-interest aims under the Act, but will also
be
of service to the CAC in assisting it to gain a balanced perspective.
In the context of similar institutional roles, such as
that of a
prosecutor, an important principle has emerged that the usual rule
that costs follow the result does not ordinarily apply
to these state
actors.
[24]
The principle that should inform the CAC’s exercise of
discretion is that, when the Commission is litigating in the course
of fulfilling its statutory duties, it is undesirable for it to be
inhibited in the bona fide fulfilment of its mandate by the
threat of
an adverse costs award.
18
This flows from the need to encourage organs of state to make and to
stand by honest and reasonable decisions, made in the public
interest, without the threat of undue financial prejudice if the
decision is challenged successfully. This principle would fittingly
fall within the requirements of law guiding the exercise of the CAC’s
discretion, as it is well established in precedent.
19
[25]
The Act’s explicit reference to the notion of “fairness”
invites the CAC to consider factors not limited
to instances of mala
fides or irregularity on the part of the Commission. The ordinary
meaning of “fairness” goes to
the idea of treating
parties equitably and in an evenhanded way.
[26]
The CAC should be alive to any undue financial prejudice that may
result from its order, taking into account the inherently
limited
means of the Commission as a statutory body acting in the public
interest, the particularities of the parties before it,
and the
nature of the proceedings.
[27]
In addition, fairness in the light of the Commission’s role and
in giving effect to the aims of the Act ought to mean
that even when
the CAC disagrees with the Commission’s position or finds its
actions to be mistaken, this is not necessarily
sufficient to justify
an adverse costs order. Considering that the application of the Act
is not necessarily static or to be formulaically
understood, fairness
may require the CAC to be sensitive to creating sufficient space for
the Commission to be independent in its
decision-making, without the
threat of an adverse costs order when the CAC reaches a different
opinion to it. This consideration
must be viewed in the context of
the requirement under section 20(3) of the Act that each “organ
of state must assist the
Commission to maintain its independence and
impartiality, and to effectively carry out its powers and duties.”
[28]
In the CAC’s judgment granting leave to appeal to this Court,
the CAC emphasised that the Commission’s conduct
was much like
that of an opposing party, rather than an amicus. The CAC noted that
it would be difficult to conclude that it would
never have the
discretion to grant costs against the Commission in its own
proceedings, particularly when, as in this case, the
Commission
“vigorously opposed the appeal, fought tooth and nail to ensure
that the merger should be prevented.” While
it is correct that
the CAC does have the requisite discretion to award costs against the
Commission, it is contrary to the principles
enunciated above that
the mere zealous defence of its position should expose the Commission
to an adverse costs order. To emphasise
the point, the Commission is
not acting as a mere opposing party in civil litigation and indeed we
require of it, as a public functionary,
earnestly and with vigour to
pursue its mandate when litigating in the course of its functions.
The CAC lost sight of this important
factor. Unreasonable, frivolous
or vexatious pursuit of a particular stance may, however, justify an
order of costs against the
Commission.
20
This will depend on the facts of each case.
The
power of the Tribunal to award costs
[29]
The Commission argues that the Tribunal has no power to award costs
against it. The amicus, however, is of the view that the
Act and
Rules of Procedure of the Tribunal
21
must be read together to permit the Tribunal to award costs against
the Commission in appropriate circumstances. The costs power,
it
argued, is an important tool for the Tribunal to regulate its own
proceedings.
[30]
Section 57 of the Act provides for the Tribunal’s powers to
award costs:
“
(1)
Subject to subsection (2) and the Competition Tribunal’s rules
of procedure, each party participating in a hearing must
bear its own
costs.
(2)
If the Competition Tribunal—
(a)
has not made a finding against a respondent, the Tribunal member
presiding at a hearing may award costs to the respondent, and
against
a complainant who referred the complaint in terms of section 51(1);
or
(b)
has made a finding against a respondent, the Tribunal member
presiding at a hearing may award costs against the respondent,
and to
a complainant who referred the complaint in terms of section 51(1).”
[31]
The Act prescribes that, as a general rule, each party in proceedings
before the Tribunal must pay its own costs. In my view
the Commission
is a “party” before the Tribunal when it appears before
it and makes submissions. It would be an unduly
narrow use of the
term “party” to exclude the Commission when in many
instances the Commission will be alone in opposition
to merging
parties or firms suspected of non compliance with the Act. This is in
harmony with the distinction drawn between a “party”
in
section 57(1) as compared to a “complainant” in section
57(2),
22
where
an exception to the general rule is made.
[32]
The reference to section 51(1) in section 57(2) relates to an
instance where the Commission elects not to refer a complaint
to the
Tribunal, in which case a private complainant may refer the complaint
directly, without the Commission’s participation.
The exception
in subsection (2) contemplates costs in proceedings in which the
Commission is not involved.
[33]
The proviso that the general “own costs” rule is “subject
to subsection (2) and the Competition Tribunal’s
rules of
procedure” is somewhat ambiguous. While subsection (2) clearly
carves out an exception to the general rule, the
import of the
general rule being subject to the “Tribunal’s rules of
procedure” is less clear.
[34]
The Tribunal’s Rules of Procedure frame the possibility of a
costs award by the Tribunal rather broadly. Rule 58 provides
in
relevant part:
“
Costs
and taxation
(1)
Upon making an order under Part 4, the Tribunal may make an order for
costs.
(2)
Where the Tribunal has made an award of costs in terms of section 57,
the following provisions apply:
(a)
The fees of one representative may be allowed between party and
party, unless the Tribunal authorises the fees of additional
representatives.
(b)
The fees of any additional representative authorised in terms of
paragraph (a) must not exceed one half of those of the first
representative, unless the Tribunal directs otherwise.
(c)
The costs between party and party allowed in terms of an order of the
Tribunal, or any agreement between the parties, must be
calculated
and taxed by the taxing master at the tariff determined by the order
or agreement, but if no tariff has been determined,
the tariff
applicable in the High Court will apply.
(d)
Qualifying fees for expert witnesses may not be recovered as costs
between party and party unless otherwise directed by the
Tribunal
during the proceedings”.
Part
4, to which rule 58 refers, elaborates general procedural rules for
proceedings in the Tribunal.
[35]
The CAC in Omnia Fertilizer considered whether the reference to the
Tribunal’s Rules of Procedure in section 57(1) creates
an
exception to the “own costs” rule.
23
The CAC held that the meaning of the words “subject to”
in statutory interpretation—
“
has
no a priori meaning. . . . While the phrase is often used in
statutory contexts to establish what is dominant and what is
subservient,
its meaning in a statutory context is not confined
thereto and it frequently means no more than that a qualification or
limitation
is introduced so that it can be read as meaning ‘except
as curtailed by’”
24
.
(Footnotes omitted.)
[36]
The CAC held further:
“
On
a literal interpretation of the Tribunal Rules, it appears that Rule
58(2)(a)-(j) merely sets the procedure to be followed when
seeking a
costs order. If the Legislature had intended to include the
Commission as being capable of having costs awarded against
it, the
Act would have so stated. The fact that it did not do so is, in my
view, an indication that that is not what it had in
mind.”
25
[37]
The interpretation in Omnia Fertilizer in these respects is correct.
The phrase “subject to” in section 57 in reference
to the
Rules of Procedure curtails the application of the general “own
costs” rule to the procedure as set out in the
Rules. It does
not create an exception. This would defeat the purpose of the general
“own costs” rule in section 57.
The reference to the
Rules of Procedure ought not to be understood as an invitation to the
Minister to craft further exceptions
beyond section 57(2). The Rules
of Procedure should not be understood to give the Tribunal
substantive powers contrary to the general
scheme of the Act or
contrary to the substance of section 57. This understanding respects
the hierarchy of legislation as a source
of law and affirms the rule
of law by not permitting the Minister extensive powers to craft rules
beyond the laws which the Legislature
has enacted.
[38]
The Rules of Procedure provide the Tribunal with tools to regulate
its proceedings other than through imposing adverse costs
orders.
26
As a creature of statute, the Tribunal’s power to regulate its
proceedings is circumscribed by the Act. It has no inherent
powers to
control its own process comparable to those of an ordinary High
Court, the Supreme Court of Appeal or this Court as contained
in
section 173 of the Constitution.
[39]
Indeed, rule 58 is capable of being read in a manner that does not
extend the Tribunal’s costs powers beyond section
57 of the
Act. The reference to section 57 in rule 58(2) and the use of “an”
order for costs, rather than “any”
order for costs, can
be understood as an attempt to frame the rules within the confines of
section 57.
[40]
The purpose of the Act is well served in this reasoning. Considering
that the protection of public-interest concerns will seldom
be
advanced by an opposing party at the Tribunal stage in the majority
of cases, a thorough defence of the public interest and
the
protection of the Commission’s decision-making independence
necessitates the preservation of the “own costs”
rule at
the Tribunal stage. The correct interpretation is therefore that the
Tribunal has no powers to award costs against the
Commission under
the Act.
The
power of the CAC to award costs in relation to Tribunal proceedings
[41]
Section 61(2) of the Act empowers the CAC to award costs “against
any party in the hearing, or against any person who
represented a
party in the hearing”.
27
The Commission sought to interpret the words “in the hearing”
(in the singular) as limiting the CAC’s powers
to granting
costs in its own proceedings only. The amicus argued that this
interpretation is overly restrictive and that, to keep
a congruent
view of its permissive interpretation of the Tribunal’s powers,
the CAC ought to be able to award costs in relation
to those
proceedings.
[42]
A reading of the words “in the hearing” to restrict the
CAC’s costs powers to the proceedings in the CAC
only, is
congruent with the scheme of the Act. Section 37(1) of the Act
confines the functions of the CAC to reviewing and considering
appeals from Tribunal decisions.
28
The orders that it may make in terms of section 37(2) are in relation
to any order made by the Tribunal: it may confirm, amend,
set aside
or remit its decisions and no more. Having established that the
Tribunal has no power to grant costs outside of the exception
to the
“own costs” rule in section 57(2) of the Act, it would be
contrary to the CAC’s position as an appellate
court to
interpret section 61(2) to include a power to award costs in relation
to Tribunal proceedings that the Tribunal itself
is not empowered to
make.
[43]
Furthermore, it would defeat the purpose of the limitation on the
Tribunal’s powers to award costs to read section 61(2)
as
empowering the CAC to do what the Tribunal may not do. Therefore,
insofar as the Tribunal is limited in its powers to award
costs, the
CAC is similarly limited in its powers to award costs in relation to
Tribunal proceedings.
The
CAC’s costs award
[44]
The Commission asks that this Court set aside both aspects of the
CAC’s award of costs: (1) in relation to Tribunal proceedings;
and (2) in relation to the CAC’s own proceedings. It is trite
law that a court on appeal will be slow to interfere with the
court a
quo’s exercise of discretion to award costs. The CAC’s
discretion must, however, be exercised judicially, upon
consideration
of all the facts.
[45]
In relation to the first challenge to the CAC’s costs award
(the costs in the Tribunal proceedings), it is clear from
the
exposition set out above that the CAC had no power to grant the
award. Because the CAC had no discretion, it is not interference
for
this Court to set this aspect of the costs award aside. The CAC acted
beyond its statutory powers. Further to this, it is clear
that no
parties sought costs in the Tribunal and that the merging parties in
the CAC formally limited their plea to the costs of
the appeal. This
adds to the irregularity of the CAC’s award. This aspect of the
order must accordingly be set aside.
[46]
In relation to the CAC’s award of costs in the appeal, it is
clear from the above analysis that it had a discretion to
do so. But
did the CAC exercise this discretion properly? The CAC judgment on
the merits is devoid of any reasons for its costs
award. While it
gives a lengthy exposition of the merits of the merger, it is silent
on why it granted the particular costs order.
And we can look no
further than that judgment for its reasons. Nothing in the judgment
indicates mala fides, irregularity or unreasonable
conduct by the
Commission. In this light and in the absence of reasons for the costs
order, the inference is inescapable that there
was no judicial
exercise of the CAC’s discretion.
[47]
The CAC took a different view from that of the Tribunal. The
Commission defended the decision of the Tribunal. The CAC was
certainly critical of that stance. This is not sufficient, however,
to motivate a costs award against the Commission. If it was
zealous
in its defence of the public-interest criteria that caused it to
prohibit the merger, and no irregularities or causes of
unfairness on
the facts can be shown, the Commission should not be mulcted with
costs in the appeal. Indeed the facts point only
to its vigilance in
fulfilling its statutory mandate. Accordingly, clear grounds are
established for this Court to set aside the
CAC’s orders of
costs in the appeal.
29
[48]
Finally, in its notice of motion in this Court, the Commission prayed
that the costs in this Court be the costs in the appeal.
Given that
there was no opposition in this matter, taking into account the
principles enunciated above, it is not appropriate to
grant any costs
to the Commission in these proceedings.
Order
[49]
The following order is made:
1.
Leave to appeal is granted.
2.
The order of the Competition Appeal Court granting costs against the
Competition Commission in the appeal and in the Competition
Tribunal
proceedings is set aside.
3.
There is no order as to costs.
For
the Applicant:
Advocate
W Trengove SC, Advocate J Wilson and Advocate K Serafino-Dooley
Instructed
by the State Attorney.
Appointed
by the Constitutional Court:
Advocate
K McLean.
1
89
of 1998.
2
An
intermediate merger of firms occurs when the
value
of a proposed merger equals or exceeds R560 million and the annual
turnover or asset value of the transferred or target
firm is at
least R80 million.
In
terms of Chapter 3 of the Act, firms may not implement an
intermediate merger until it has been approved by the Commission.
3
Pioneer
Hi-Bred International Inc, Pannar Seed (Pty) Ltd v the Competition
Commission
,
Case No 81/AM/Dec10, Competition Tribunal, 9 December 2011,
unreported.
4
Pioneer
Hi-Bred International Inc and Another v Competition Commission and
Another
[2012]
ZACAC 3.
5
Competition
Commission v Pioneer Hi-Bred International Inc and Others
[2013]
ZACAC 1.
6
Competition
Commission v Loungefoam (Pty) Ltd and Others
[2012]
ZACC 15
;
2012 (9) BCLR 907
(CC) (
Loungefoam
)
at para 16 and
Competition
Commission of South Africa v Senwes Ltd
[2012] ZACC 6
;
2012 (7) BCLR 667
(CC) (
Senwes
)
at para 17.
7
In
Senwes
above n 6 at para 3 this Court held that the “Act is aimed at
promoting and maintaining competition. Some of its
objectives
are directed at addressing the inequalities and imbalances which
were created by the apartheid order.”
(Footnote
omitted.)
8
Biowatch
Trust v Registrar, Genetic Resources, and Others
[2009]
ZACC 14
;
2009 (6) SA 232
(CC);
2009 (10) BCLR 1014
(CC) at para 11.
9
Tsosane
v Minister of Prisons
1982
(3) SA 1075
(C) at 1076E-1077B.
10
Section
2 of the Act.
11
Section
21 provides:
“
(1)
The Competition Commission is responsible to—
(a)
implement measures to increase market transparency;
(b)
implement measures to develop public awareness of the provisions
of
this Act;
(c)
investigate and evaluate alleged contraventions of Chapter 2;
(d)
grant or refuse applications for exemption in terms of Chapter 2;
(e)
authorise, with or without conditions, prohibit or refer mergers
of
which it receives notice in terms of Chapter 3;
(f)
negotiate and conclude consent orders in terms of section
63;
(g)
refer matters to the Competition Tribunal, and appear before the
Tribunal, as required by this Act;
(h)
negotiate agreements with any regulatory authority to co-ordinate
and harmonise the exercise of jurisdiction over competition matters
within the relevant industry or sector, and to ensure the
consistent
application of the principles of this Act;
(i)
participate in the proceedings of any regulatory authority;
(j)
advise, and receive advice from any regulatory authority;
(k)
over time, review legislation and public regulations, and report
to
the Minister concerning any provision that permits uncompetitive
behaviour; and
(l)
deal with any other matter referred to it by the Tribunal.
(2)
In addition to the functions listed in subsection (1), the
Competition
Commission may—
(a)
report to the Minister on any matter relating to the application
of
this Act;
(b)
enquire into and report to the Minister on any matter concerning
the
purposes of this Act; and
(c)
perform any other function assigned to it in terms of this or any
other Act.”
12
Loungefoam
above
n 6 at para 2.
13
Section
20 of the Act.
14
Section
12A of the Act provides for the consideration of mergers:
“(1)
Whenever required to consider a merger, the Competition Commission
or Competition Tribunal must initially determine whether or not the
merger is likely to substantially prevent or lessen competition,
by
assessing the factors set out in subsection (2), and—
(a)
if it appears that the merger is likely to substantially prevent
or
lessen competition, then determine—
(i)
whether or not the merger is likely to result in any technological,
efficiency or other pro-competitive gain which will be greater than,
and offset, the effects of any prevention or lessening of
competition, that may result or is likely to result from the merger,
and would not likely be obtained if the merger is prevented;
and
(ii)
whether the merger can or cannot be justified on substantial public
interest grounds by assessing the factors set out in subsection (3);
or
(b)
otherwise determine whether the merger can or cannot be justified
on
substantial public interest grounds by assessing the factors set out
in subsection (3).
(2)
When determining whether or not a merger is likely to substantially
prevent or lessen competition, the Competition Commission or
Competition Tribunal must assess the strength of competition in
the
relevant market, and the probability that the firms in the market
after the merger will behave competitively or co-operatively,
taking
into account any factor that is relevant to competition in that
market, including—
(a)
the actual and potential level of import competition in the market;
(b)
the ease of entry into the market, including tariff and regulatory
barriers;
(c)
the level and trends of concentration, and history of collusion,
in
the market;
(d)
the degree of countervailing power in the market;
(e)
the dynamic characteristics of the market, including growth,
innovation,
and product differentiation;
(f)
the nature and extent of vertical integration in the market;
(g)
whether the business or part of the business of a party to the
merger or proposed merger has failed or is likely to fail; and
(h)
whether the merger will result in the removal of an effective
competitor.
(3)
When determining whether a merger can or cannot be justified on
public interest grounds, the Competition Commission or the
Competition Tribunal must consider the effect that the merger will
have on—
(a)
a particular industrial sector or region;
(b)
employment;
(c)
the ability of small businesses, or firms controlled or owned by
historically disadvantaged persons, to become competitive; and
(d)
the ability of national industries to compete in international
markets.”
15
See
[31]-[32] below.
16
Section
36 of the Act.
17
Id
section
37.
18
Nortje
and Another v Attorney-General, Cape, and Another
1995
(2) SA 460
(C) at 485F. This decision affirms the seminal case
on costs involving statutory bodies and public officers in
Coetzeestroom
Estate and GM Co v Registrar of Deeds
1902 TS 216
(
Coetzeestroom
)
at 223-4. In
Coetzeestroom,
Innes CJ emphasised that it would be inequitable to mulct an
official (the Registrar of Deeds in that case) with costs where
his
action or attitude, though mistaken, was
bona
fide
,
emphasising that it would be detrimental to the vigilance required
in the public interest of the particular public office.
19
Id.
See also
Fleming
v Fleming en ‘n Ander
1989 (2) SA 253
(AD) in which the Appellate Division held that costs
should not be awarded against a public officer who carried out his
official
duties mistakenly but in good faith. In
Deneysville
Estates Ltd v Surveyor-General
1951 (2) SA 68
(C) at 69H, it was held that in the absence of
special circumstances, it would not order costs against the
Surveyor-General even
where he was unsuccessful in litigation but
acting
bona
fide
and in the course of his duty. In
Omnia
Fertilizer Ltd v The Competition Commission in re: The Competition
Commission of South Africa v Sasol Chemical Industries
(Pty) Ltd and
Others
[2009]
ZACAC 5
(
Omnia
Fertilizer)
at para 18 the
CAC
itself affirmed this general principle
.
20
In
analogous provisions,
sections 162(1)
and
179
(1) of the
Labour
Relations Act
66 of 1995
provide
that cost orders may be made “according to the requirements of
the law and fairness” in the Labour Court and
Labour Appeal
Court. The Supreme Court of Appeal in
Chevron
Engineering (Pty) Ltd v Nkambule and Others
2004
(3) SA 495
(SCA) at para 42
has
interpreted this requirement as follows:
“
The proper approach is to take account
of the conduct of the parties during the dispute and in the conduct
of the litigation.
The general approach developed by courts
acting in terms of this Act is that costs do not automatically
follow the result, unless
there are special or exceptional
circumstances justifying a costs order.
Mala
fides
, unreasonableness and
frivolousness have been found to be factors in justifying the
imposition of a costs order.”
These
principles are comparatively useful and are reflected in
Coetzeeroom
above n 5 where it was held that
conduct
that is
mala
fide
or grossly irregular or where brought against a party unreasonably
or frivolously may invite a costs award.
21
Rules
for the Conduct of Proceedings in the Competition Tribunal (Rules of
Procedure).
22
Section
1
as read with
section 49B(2)(b)
of the Act defines a “complainant”
as any person who has submitted a complaint or information about an
alleged prohibited
practice to the Commission. The Commission
is necessarily excluded from the definition of a “complainant”.
23
Omnia
Fertilizer
above
n 19.
24
Id
at para 13.
25
Id
at para 15.
26
See,
for example,
rules 45(1)
and (2),
47
,
52
,
53
(2) and
55
(2) of the
Rules of Procedure.
27
Emphasis
added.
28
Section
37
of the Act sets out the CAC’s functions:
“
(1)
The Competition Appeal Court may—
(a)
review any decision of the Competition Tribunal; or
(b)
consider an appeal arising from the Competition Tribunal in respect
of—
(i)
any of its final decisions other than a consent order made
in terms
of
section 63
; or
(ii)
any of its interim or interlocutory decision that may, in terms
of
the this Act, be taken on appeal.
(2)
The Competition Appeal Court may give any judgment or make any
order, including an order to—
(a)
confirm, amend or set aside a decision or order of the Competition
Tribunal; or
(b)
remit a matter to the Competition Tribunal for a further hearing on
any appropriate terms.”
29
I
am aware that in
Loungefoam
above n 6 and in
Competition
Commission v Yara South Africa (Pty) Ltd and Others
[2012] ZACC 14
;
2012 (9) BCLR 923
(CC), this Court awarded costs
against the Commission as an unsuccessful litigant. In both
instances, the judgments reveal
that the Commission had acted in a
manner that was unreasonable and outside of regular procedure,
exposing the respondents to
undue costs.