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[2018] ZACC 37
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S.O.S Support Public Broadcasting Coalition and Others v South African Broadcasting Corporation (SOC) Limited and Others (CCT121/17) [2018] ZACC 37; 2018 (12) BCLR 1553 (CC); 2019 (1) SA 370 (CC); [2018] 2 CPLR 411 (CC) (28 September 2018)
Links to summary
Heads of arguments
CONSTITUTIONAL
COURT OF SOUTH AFRICA
Case CCT
121/17
In the matter
between:
S.O.S SUPPORT
PUBLIC
BROADCASTING
COALITION
First
Applicant
TRUSTEES FOR THE
TIME BEING OF THE
MEDIA MONITORING
PROJECT BENEFIT TRUST
Second
Applicant
CAXTON AND CTP
PUBLISHERS
AND PRINTERS
LIMITED
Third
Applicant
and
SOUTH AFRICAN
BROADCASTING
CORPORATION (SOC)
LIMITED
First
Respondent
MULTICHOICE (PTY)
LIMITED
Second
Respondent
COMPETITION
COMMISSION
OF SOUTH
AFRICA
Third
Respondent
Neutral citation:
S.O.S Support Public Broadcasting Coalition and Others v South
African Broadcasting Corporation (SOC) Limited and Others
[2018]
ZACC 37
Coram:
Cameron J, Froneman J, Jafta J, Kathree-Setiloane
AJ, Kollapen AJ, Madlanga J, Mhlantla J, Theron J and Zondi AJ
Judgment:
Kathree-Setiloane AJ (unanimous)
Heard on:
23
November 2017
Decided on:
28 September 2018
Summary:
Competition Act 89 of 1998
— notifiable merger —
Competition Commission — investigatory powers — Part
B of Chapter 5 of the
Competition Act
South
African
Broadcasting Corporation — Competition Tribunal —
interpretation of court orders — admission of new evidence
on
appeal
ORDER
On appeal from the
Competition Appeal Court:
1. Leave to appeal is granted.
2. The appeal is upheld, and the Competition Appeal Court’s
order of 28 April 2017 is set aside and replaced with
the
following:
(a)
It is declared that the order handed down by the Competition Appeal
Court on 24 June 2016 does not preclude the Competition Commission
from exercising its non-coercive and coercive investigative powers in
terms of Part B of Chapter 5 of the
Competition Act 89 of 1998
for
purposes of discharging its obligations under paragraph 3 of the June
2016 order.
(b)
The Competition Commission is directed to file its report with the
Competition Tribunal, as contemplated in paragraph 3 of the
June 2016
order, within 30 court days of this order.
(c)
The first and second respondents are ordered jointly and severally to
pay the costs of the application, including the costs
of two counsel.
3. The appeal against the order of the Competition Appeal Court
dismissing the applicants’ application to adduce new evidence
is dismissed with no order as to costs.
4. The applicants’ application to adduce new evidence on appeal
is dismissed with no order as to costs.
5. The Competition Commission’s application to adduce new
evidence on appeal is dismissed with no order as to costs.
JUDGMENT
KATHREE-SETILOANE
AJ:
[1]
At issue is the interpretation the Competition Appeal Court
gave on 28 April 2017 to its own order of 24 June 2016
concerning
the powers of the Competition Commission (Commission).
Behind that issue lies the question of the Commission’s powers
in a matter of considerable public importance, namely a controversial
agreement between the public broadcaster, the South African
Broadcasting Corporation (SABC), and MultiChoice (Pty) Limited
(MultiChoice).
[2]
The applicants
-
S.O.S Support
Public Broadcasting Coalition (SOS Coalition), Media Monitoring
Project Benefit Trust (Media Monitoring Trust) and
Caxton and CTP
Publishers and Printers Limited (Caxton)
-
seek leave to appeal against the order of the Competition Appeal
Court which was handed down on 28 April 2017 (April 2017 order).
This order clarified the meaning of the Competition Appeal
Court’s earlier order of 24 June 2016 (June 2016 order)
which
set aside a decision of the Competition Tribunal (Tribunal) that the
Commercial and Master Channel Distribution Agreement
(agreement)
concluded between the SABC and MultiChoice on 3 July 2013 did not
give rise to a notifiable merger.
[3]
The SABC and MultiChoice are the first and second respondents
in the application for leave to appeal, respectively. The SABC
is the national public broadcaster in South Africa. MultiChoice
is the largest private television broadcast company in South
Africa.
The Commission, a regulatory body established in terms of
section 19(1)
of the
Competition Act,
="#_ftn1" NAME="_ftnref1">
[1]
is the third respondent. The Commission supports the relief
sought by the applicants in this application.
[4]
SOS Coalition and Media Monitoring Trust are non-profit
organisations that campaign for access to high quality public
broadcasting
that is in the public interest. Media Monitoring
Trust is a member of SOS Coalition, which represents a broad spectrum
of
civil society stakeholders committed to the broadcasting of
quality, diverse, citizen-oriented public interest programming that
is aligned with the objectives of the Constitution and the Electronic
Communications Act.
[2]
[5]
Their application for leave to appeal is supported by Caxton,
a listed company which publishes and prints books, magazines and
newspapers
in South Africa. It is also involved in commercial
printing and is exploring the potential expansion of its business
into
digital television and video content on South Africa’s
migration to digital terrestrial television (DTT).
[6]
This application arises in the context of a pending,
court-sanctioned, investigation by the Commission into whether the
agreement
constitutes a notifiable merger. Although concluded
on 3 July 2013, the agreement only became public when it was later
leaked.
[7]
The agreement had a five-year term. The television
channels licensed under the agreement included: (a) an entertainment
channel
to be developed and produced by the SABC for MultiChoice, and
in respect of which MultiChoice would have exclusive distribution
and
marketing rights; and (b) free-to-air channels (FTA) to be
transmitted by the SABC on its DTT platform, and in respect of which
MultiChoice would have non-exclusive distribution and marketing
rights. MultiChoice agreed in terms of the agreement to pay
the
SABC fees of more than R500 million over a period of five years, in
exchange for which the SABC undertook that the entertainment
channel,
to be broadcast on the MultiChoice platform, would consist mainly of
content from the SABC’s substantial archive
of programmes (SABC
archive) and it would not encrypt any of its FTA channels on South
Africa’s migration to DTT.
Litigation
history
[8]
The agreement has been the subject of a hearing at the
Tribunal and three separate hearings in the Competition Appeal Court.
The
applicants consistently argued in both these fora that the
agreement amounted to a notifiable merger as defined in the
Competition Act.
In
the Tribunal
[9]
In February 2015, the applicants bypassed the Commission and
made an application directly to the Tribunal for an order compelling
the SABC and MultiChoice to notify the agreement to the Commission.
In the alternative, they sought an order that the Commission
exercise its investigatory powers to determine if the agreement is
notifiable as a merger.
[10]
The Tribunal dismissed the
applicants’ application on 11 February 2016. The SABC
challenged the Tribunal’s jurisdiction
on the basis that the
Commission is the forum of first instance to investigate a merger or
whether a transaction is a notifiable
merger. The Tribunal held
that although the parties to a notifiable merger should first
approach the Commission, the failure
to do so does not constitute a
bar to the Tribunal’s jurisdiction to hear such an
application.
[3]
The Tribunal accordingly concluded that it had the authority to
compel the parties to notify a transaction giving rise to
a merger to
the Commission.
[4]
On the merits of the application, the Tribunal found that the
agreement did not give rise to a notifiable acquisition of
control by
MultiChoice and that the
Plascon-Evans
rule
[5]
precluded it from granting the applicants any relief. The
Tribunal refused to grant the applicants the alternative relief
sought because they had not made out a prima facie case that the
conclusion of the agreement between the SABC and MultiChoice
constituted a merger.
[6]
In the Competition Appeal Court
[11]
The applicants appealed against the
Tribunal’s decision to the Competition Appeal Court. On
24 June 2016, the Competition
Appeal Court set aside the Tribunal’s
decision that the conclusion of the agreement did not give rise to a
notifiable merger
and referred the transaction to the Commission. In
doing so, it reasoned that “[i]t must be in the public interest
for transactions involving the public broadcaster to be examined with
a particular consideration of the purpose of the [Competition]
Act”
and that there was “a considerable lack of clarity on a number
of factual aspects which were disputed”.
[7]
Although acknowledging that on the
Plascon-Evans
test
the respondents’ version is preferred, the Competition Appeal
Court sharply criticised the Tribunal for deciding the
matter on its
strict application, and for failing to invoke its wide inquisitorial
powers to investigate the agreement.
[8]
In this regard, it stated that—
“the Tribunal is clothed with inquisitorial powers. A
merger proceeding is not a trial in the ordinary civil sense
of that
word. The Tribunal should employ inquisitorial powers to
interrogate evidential questions beyond the strict confines
of
Plascon-Evans
to ensure that the full evidential complexity is
available to it in order that it might come to a decision which
advances the purposes
of the [Competition] Act. Mergers are not
a place for the accusatorial formation adopted by the Tribunal in all
too many
of its hearings. Again it regrettably failed to
inquire in this particular case. There are many questions
regarding
disputed factual contentions which we have raised in this
judgment which could have been better answered if an inquisitorial
approach
had been adopted and a more sustained line of questioning
been implemented by the Tribunal in the hearing before it.”
[9]
[12]
The Competition Appeal Court described the case as being
exceptional as there was “enough evidential doubt, coupled to a
clear
public interest component”, in the transaction that
required “a less formalistic and more substantive approach to
the
enquiry”.
[10]
In conclusion, it stated:
“We are cognisant of the fact that the agreement has been
entered into in July 2013 and that the matter must be brought to
finality. Accordingly a restricted timetable must be employed
for any relief granted. Furthermore, in the event that
the
Competition Commission files a report to the effect that the
agreement does not give rise to a change of control in terms of
the
[Competition] Act, it would appear to be a fruitless exercise for the
matter to be reheard by the Tribunal in the light of
the exhaustive
enquiry which has already taken place in this court and previously in
the Tribunal.”
[11]
[13]
The Competition Appeal Court, accordingly, made the following
order:
“1. The order of the Tribunal of 11 February 2016 is set aside.
2. [The SABC and MultiChoice] are directed to provide the
Competition Commission within 21 days of this judgment [with]
all
documentation including but not limited to all correspondence,
board minutes, internal memoranda pertaining to the negotiation,
conclusion, and implementation of the agreement of 3 July 2013.
3. The Competition Commission is directed within 30 days of the
receipt of the aforesaid information and documentation to file
a
report with the Competition Tribunal recommending whether or not the
agreement gives rise to a notifiable change of control.
4. In the event that the Competition Commission recommends that the
agreement gives rise to a notifiable change of control which
falls
within the definition of a merger in terms of
section 12
of the
[Competition] Act, it is directed that a rehearing of the matter
shall be conducted by the Tribunal to determine whether
the
conclusion of the agreement did entail such a merger as defined.”
[12]
[14]
In a separate concurring judgment,
Vally AJA held that to make a definitive determination as to whether
the agreement gave rise
to a notifiable merger, “it would be
necessary to have regard to more evidence than is presently
available. The information
that would shed more light on this
important issue rests in the hands of MultiChoice and the SABC”.
[13]
Approach to the Tribunal
[15]
Following the June 2016 order, the SABC and MultiChoice handed
over a limited number of documents to the Commission but claimed that
the bulk of the documents sought by the Commission either did not
exist, could no longer be traced, or were not relevant. The
Commission found itself unable to make a recommendation based on the
limited documents received from the SABC and MultiChoice.
It
therefore wrote to the Tribunal on 4 October 2016 recording that the
documents received were not sufficient for it to
discharge its court
mandated task. And that in order to give proper effect to the June
2016 order, it intended to interrogate relevant
executives and board
members of the SABC and MultiChoice who were involved in the
negotiation, conclusion and implementation of
the agreement. The
Commission accordingly requested the Tribunal to issue a directive on
whether it was entitled to conduct
interrogations of this kind in
order to give effect to the June 2016 order. The SABC and
MultiChoice objected on the basis
that the Tribunal had no
jurisdiction to entertain the Commission’s request. The
Tribunal declined the request for
a directive on the same basis.
Urgent application before the Competition Appeal Court (October
2016)
[16]
In the face of the impasse, in October 2016 the applicants,
supported by the Commission, applied urgently to the Competition
Appeal
Court for the following relief:
(a) Declaring that the Commission is authorised under the June 2016
order to exercise its powers of investigation under Part B
of Chapter
5 of the
Competition Act (which
include powers to subpoena witnesses
to appear before it).
(b) Alternatively, to vary the June 2016 order to authorise the
Commission to do so, or to issue a fresh order to this effect.
[17]
The application was heard on 2 December 2016 and judgment was
reserved. Subsequently, a Parliamentary inquiry commenced into
the SABC’s affairs. On 8 and 9 December 2016,
representatives of the SABC, including current board member Mr Krish
Naidoo and former group CEO, Mrs Lulama Mokhobo, testified before the
inquiry regarding the conclusion of the agreement with MultiChoice.
The applicants sought to introduce the transcripts from this
inquiry on appeal to the Competition Appeal Court.
[18]
On 28 April 2017, the Competition
Appeal Court handed down judgment.
[14]
It held that its June 2016 order “did not and cannot be read to
give the [Commission] powers in terms of
section 49A
of the
Act”.
[15]
It also held that the order was “clear and unambiguous”
and that it “expressly confined the source of the
inquiry to be
conducted by the Commission
exclusively
to documentation as
set out in the order”.
[16]
(Emphasis added.)
[19]
In relation to the meaning of its June 2016 order and the
applicants’ application to adduce further evidence, the
Competition
Appeal Court held that the Commission was not entitled to
interview Mr Naidoo or Mrs Mokhobo. It held that “an
order
which would empower [the Commission] to conduct interviews with
Mr Naidoo and Ms Makhobo falls outside of the scope of the order
which was granted on 24 June 2016”.
[17]
[20]
It is against this order – the April 2017 order −
that the applicants seek leave to appeal.
This Court
Jurisdiction and leave to appeal
[21]
The Commission is a regulatory body
established by
section 19(1)
of the
Competition Act. The
ambit
of its investigatory powers under the
Competition Act is
central to
this application for leave to appeal. This question is
manifestly a constitutional issue.
[18]
There is a reasonable prospect of the appeal succeeding as
well.
[22]
Although the agreement between MultiChoice and the SABC ended
in July 2018, this does not diminish the necessity for the
Commission
to investigate whether the agreement constitutes a
notifiable merger. We were informed that the agreement may be
renewed
or a similar one may be concluded between the SABC and
MultiChoice, having regard especially to the ongoing debates on
encryption
regarding South Africa’s migration to DTT. It
is essential, for this reason, that clarity be obtained from the
competition
authorities on whether the agreement constitutes a
notifiable merger as defined in the
Competition Act. Accordingly
,
the interests of justice require that leave to appeal be granted.
Issues for determination
[23]
The June 2016 order of the Competition Appeal Court directed
the Commission to investigate whether the agreement constituted a
“notifiable
merger” as defined in the
Competition Act.
If
it is found to be a notifiable merger as defined, then the SABC
and MultiChoice would be in contravention of the
Competition Act for
failing to obtain approval for the merger, from the Commission, the
Tribunal or the Competition Appeal Court, before implementing
it.
[19]
This Court is, however, not required in the appeal to determine
whether the agreement amounts to or gives rise to a merger.
Based on the June 2016 order, that is a matter which the Commission
must investigate.
[24]
This appeal, by contrast, is concerned with the ambit of the
powers of the Commission to investigate whether the agreement
constitutes
a merger as defined in the
Competition Act. As
is
expected, there are two sharply divergent views on this issue.
The SABC and MultiChoice contend that the Commission is
limited to a
“desktop study” of the documents produced by each of
them. On their version, the Commission is precluded
from
exercising any further powers of investigation, coercive or
non-coercive, and is barred even from interviewing willing witnesses
including SABC board members who have made public statements on
relevant issues.
[25]
The applicants, supported by the Commission, argue that the
Commission has available to it its full range of standard
investigative
powers, as set out in Part B of Chapter 5 of the
Competition Act, which
includes the ability to interview individuals
who were involved in the negotiation and conclusion of the
agreement. They
contend that these powers are essential for the
Commission to adequately fulfill its court-mandated task of
investigating whether
the agreement gives rise to a merger, in
particular, because of the lack of documents made available by the
SABC and MultiChoice.
[26]
Accordingly, the following issues arise for determination:
(a) Does the
Competition Act authorise
the Commission to exercise its
investigatory powers under Part B of Chapter 5 on whether the
agreement constitutes a notifiable
merger?
(b) The proper interpretation of the June 2016 order by the
Competition Appeal Court. In particular, does it permit
the Commission to exercise its investigative powers under Part B of
Chapter 5 of the
Competition Act to
discharge its obligations under
the order?
(c) If the June 2016 order does not have the meaning for which the
applicants contend, should the Competition Appeal Court have:
(i)
varied the order to accord it that meaning, or (ii) issued a new
order in the terms sought by the applicants, despite the Competition
Appeal Court having discharged its function by determining the appeal
before it?
[27]
The SABC and MultiChoice contend that the first issue is not
for determination on appeal, as it was neither raised by the
applicants
in the Competition Appeal Court nor determined by it. On
the contrary, I consider this issue to be fundamental to the primary
issue on appeal that is the proper interpretation of the June 2016
order and, in particular, whether it permits the Commission
to
exercise its investigative powers, under Part B of Chapter 5 of
the
Competition Act, to
discharge its obligations under the order.
[28]
The Commission gets its original investigative powers from the
Competition Act and
not the June 2016 order. Consequently,
if the Commission may ordinarily exercise its investigatory powers in
Part B of Chapter
5 in investigating whether a transaction is a
notifiable merger, then the only question remaining for determination
is whether
the June 2016 order precluded it from doing so.
[29]
The new issue raised is a point of law that turns on the
interpretation of the
Competition Act. It
is central to the
primary question on appeal. It can prejudice no-one and no
prejudice is claimed. It is accordingly
in the interests of
justice that this issue be determined on appeal.
Are the powers in Part B of Chapter 5 available to the Commission
to investigate mergers and transactions that constitute mergers?
[30]
The provisions of the
Competition Act must
be interpreted to
give effect to their purpose in the context of the Act as a
whole.
[20]
Section 1(2)(a)
of the
Competition Act demands
that its
provisions be interpreted in a manner consistent with the
Constitution, and which give effect to the purposes of the Act
set
out in section 2. The purpose of the Act is “to promote
and maintain competition in the Republic” to, amongst
other
things: (a) promote the efficiency, adaptability and development of
the economy; (b) provide consumers with competitive prices
and
product choices; and (c) ensure that small and medium-sized
enterprises have an equitable opportunity to participate in the
economy.
[21]
[31]
In
Senwes
, this Court considered the statutory
framework of the functions of the Commission and the Tribunal.
[22]
Echoing the long title of the
Competition Act,
[23
]
the Court observed that the Act was enacted—
“to provide for, among other matters, the establishment of the
Competition Commission which is charged with the investigation
of
restrictive practices, abuse of dominant position and the evaluation
and approval of mergers. It also established a Competition
Tribunal whose responsibility it is to adjudicate these matters. 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.
The Act seeks to promote a greater spread of business ownership so as
to increase access to it by historically disadvantaged people.
It
sets for itself the task of promoting employment so that the social
and economic welfare of South Africans may be improved.
It
further seeks to provide consumers with competitive prices for goods
and services. It prohibits trade practices
which undermine a
competitive economy.”
[24]
(Footnotes omitted.)
[32]
As a specialist regulator, the Commission is tasked
with, among other things, the regulation of mergers that have an
anti-competitive
effect in South Africa.
[25]
In terms of
section 20(1)
of the
Competition
Act, the
Commission is independent, subject only to the Constitution
and the law and must be impartial and perform its functions without
fear, favour or prejudice.
It is empowered to approve a
proposed merger outright, approve it subject to conditions, or refuse
merger approval where the
proposed transaction will lead to a
substantial lessening of competition, and cannot be justified by
merger-specific pro-competitive
gains or in the public interest.
[26]
[33]
Parliament has crafted a compulsory “self-notification”
pre-merger regime. The
Competition Act obliges
parties to
notify the Commission of proposed transactions when two
jurisdictional facts are present: the first is where the proposed
transaction meets the definition of a “merger” in
section 12(1)
, and the second is where it meets the financial
threshold for an intermediate or large merger.
[27]
Since
merger approval gives the merged firm
immunity from any future challenges, “
firms are obliged
to notify mergers before they are implemented and to delay
implementation until they get regulatory approval”.
[28]
[34]
Section 12(1)
of the
Competition Act defines
a merger as
follows:
“(1)(a) For purposes of this Act, a merger occurs when
one or more firms directly or indirectly acquire or
establish direct or indirect control over the whole or part of the
business of another firm.
(b) A merger contemplated in paragraph (a) may be achieved in any
manner, including through—
(i)
purchase or lease of the shares, an interest or assets of the other
firm in question; or
(ii)
amalgamation or other combination with the other firm in question.”
[35]
Section 12(1)(b)
provides that a merger may be achieved
in any manner, including where one firm purchases or leases an
interest or assets of another
firm;
[29]
or when one firm acquires the ability to “materially influence”
the policy of another firm.
[30]
These are the grounds on which the applicants contend the agreement
gives rise to a merger.
[36]
Section 13A(1)
and (2) of the
Competition Act oblige
parties
to a notifiable merger (intermediate or larger mergers) to notify the
Commission in the manner and form prescribed, and
to furnish copies
of the notification to any registered trade union representing a
substantial number of the firm’s employees,
or to the employees
concerned.
[31]
Section 13A(3)
prohibits parties from implementing a merger until it
is approved by the Commission, the Tribunal or the Competition Appeal
Court,
as the case may be.
[32]
[37]
A failure to formally notify the Commission of a notifiable
merger attracts an administrative penalty under the
Competition Act.
Secti
on 59(1)(d) empowers the Tribunal to impose an administrative
penalty on parties to a merger that have—
(a) failed to give notice of the merger;
(b) implemented it in contravention of a decision of the Tribunal or
the Commission;
(c) implemented it contrary to any conditions imposed; and
(d) proceeded to implement it without approval.
[33]
Unlike other
contraventions of the
Competition Act, the
legislature has imposed
administrative penalties for “first time” contraventions
of
section 13A.
[34]
[38]
Section 13B
of the
Competition Act makes
provision for merger
investigations. It provides:
“(1) The Competition Commission may direct an inspector to
investigate any merger and may designate one or more persons to
assist the inspector.
(2) The Competition Commission may require any party to a merger to
provide additional information in respect of the merger.
(3) Any person, whether or not a party to or a participant in merger
proceedings, may voluntarily file any document, affidavit,
statement
or other relevant information in respect of that merger.”
[39]
Section 21(1)(c)
and (2)(c) deal with the functions of the
Commission. They provide:
“(1) The Competition Commission is responsible to
¾
. . .
(c) investigate and evaluate alleged contraventions of Chapter 2;
. . .
(2) In addition to the function listed in subsection (1), the
Competition Commission may—
. . .
(c) perform any other function assigned to it in terms of this Act or
any other Act.”
[40]
MultiChoice contends that the
Competition Act, as
presently
framed, does not confer
any
of the powers contained in Part B
of Chapter 5 on the Commission to investigate alleged contraventions
of
section 13A.
It relies on
section 21(1)(c)
, which
itsubmits limits the Commission’s investigatory powers to
alleged infringements of Chapter 2. The effect of
the
limitation, they posit, is that the Part B, Chapter 5 powers apply
only to investigations conducted by the Commission into
whether a
firm is guilty of engaging in a “prohibited practice”
under Chapter 2, for instance, price-fixing, market
division, bid
rigging or abuse of dominance.
[41]
This argument is misplaced as the long title of the
Competition Act, which
plays a central role in the interpretative
process, expressly states that the Commission is responsible for the
investigation of
mergers.
Section 13B
of the Act then assigns
that function to the Commission. Accordingly although
section
21(1)(c)
of the
Competition Act does
not explicitly refer to
mergers, that is an apparent omission which the proposed amendment to
section 21(1)
of the
Competition Act intends
to cure.
[35]
It seeks to do this by making it clear that the Act already
includes that function.
[36]
However, this does not mean that the Commission presently lacks
this power. On the contrary, this Court held in
NEHAWU
that
“it is permissible to refer to a subsequent statute if it
throws light on the meaning of a provision in an earlier statute”.
[37]
[42]
The omission in
section 21(1)(c)
is, in any event, not
material because
section 21(2)(c)
of the
Competition Act
provides
that “[i]n addition to the functions listed in
subsection (1), the Competition Commission may . . . perform any
other function
assigned to it, in terms of
this
or any other
Act”.
Section 21(2)(c)
read with
section 13B
put
beyond question that the Commission is authorised to investigate
notifiable mergers in Chapter 3 of the
Competition Act. But
does the power to investigate a notifiable merger also extend to
whether a transaction constitutes a notifiable merger or gives
rise
to a notifiable merger? Sutherland comments that:
“The competition authority, which would have the power to
adjudicate an acquisition in terms of
section 12A
once it constitutes
a merger, should always have the power to first determine whether it
constitutes a merger.”
[38]
[43]
The power to investigate whether a transaction constitutes a
notifiable merger stems from
section 13A(1)
and (3) read with
section
59(1)(d)(i)
of the Competition Act.
Section 13A(1)
obliges
a party to an intermediate or large merger to notify the Commission
of the merger.
Section 13A(3)
prevents prior implementation of
a notifiable merger without the approval of the Commission, the
Tribunal or the Competition Appeal
Court. If the Commission
finds that a notifiable merger has been implemented without approval,
it must refer that transaction
to the Tribunal for adjudication.
Section 59(1)(d)(i)
empowers the Tribunal to impose an
administrative penalty on firms that fail to give notice of a merger
or implement a notifiable
merger without prior approval. The
necessary implication of these provisions is that the Commission is
authorised to investigate
transactions to determine whether they
constitute or give rise to a notifiable merger as defined in the
Competition Act, and
whether proceedings should be initiated in the
Tribunal to impose appropriate penalties.
[44]
What would it mean to merger regulation if the
Competition Act
is
construed as not permitting the Commission to investigate
transactions that may constitute notifiable mergers, or are suspected
of being so but are implemented without notification? In a
compulsory “self-notification” statutory regime, where
parties to a transaction fail or refuse to notify the Commission of a
merger, the Commission would be powerless to investigate
whether it
is notifiable or not. This would effectively leave the
Commission at the mercy of parties to a transaction.
If those
parties notify the Commission of a merger, then it has the full range
of investigative powers. But if they refuse
to notify the
Commission, even intentionally, the Commission is powerless to
investigate.
[45]
Another consequence from this interpretation is that
section
13A(1)
and (3) of the
Competition Act, which
obliges firms to notify
mergers and prohibits their implementation until investigated and
approved by the Commission, would become
superfluous. As would
section 59(1)(c)
which imposes administrative penalties on firms for
breaching these obligations. Accordingly, if the Commission, a
specialist
regulator, tasked with enforcing the
Competition Act, were
found to be without powers to investigate transactions to enforce
these provisions, this would emasculate the entire “edifice”
of compliance that characterises the merger regime of
self-notification under the
Competition Act.
[39]
That would undermine the purpose of merger regulation which the
Competition Appeal Court in
Bulmer
articulated as follows:
“The applicable sections of the Act thus provide a clear
indication of the purpose of Chapter 3, namely that transactions
which are likely [to] substantially lessen competition should be
carefully examined by the competition authorities . . .
It
follows that the [Competition] Act was designed to ensure that the
competition authorities examine the widest possible range
of
potential merger transactions to examine whether competition was
impaired and this purpose provides a strong pointer in favour
of a
broad interpretation to [section] 12 of the Act.”
[40]
Part B, Chapter 5 powers
[46]
Chapter 5 of the
Competition Act, entitled
“Investigation
and Adjudication Procedures”, confers various powers on the
Commission, including coercive powers to
enable it to exercise its
functions under the
Competition Act. Part
B of Chapter 5
confers powers of search and entry and summons on the Commission.
[47]
These investigative powers apply to any investigation that the
Commission may conduct in terms of the
Competition Act. For
instance
,
section 46(1)(b)
provides for a judge
of the High Court, regional magistrate or a magistrate to issue a
warrant to enter and search any premises
when there are grounds to
believe that “anything connected with an investigation in terms
of the Act is in the possession,
or under the control of a person who
is on or in those premises”.
Section 49A
also provides:
“(1)
At any time during an investigation in terms of this
Act
, the Commissioner may summon any person who is believed to be
able to furnish any information on the subject of the investigation,
or to have possession or control of any book, document or other
object that has a bearing on that subject—
(a)
to appear before the Commissioner or a person authorised by the
Commissioner, to be interrogated at a time and place specified
in the
summons; or
(b)
at a time and place specified in the summons, to deliver or produce
to the Commissioner, or a person authorised by the Commissioner,
any
book, document or other object specified in the summons.
(2) A person questioned by an inspector conducting an investigation,
or by the Commissioner or other person in terms of subsection
(1)
must answer each question truthfully and to the best of that person’s
ability, but the person is not obliged to answer
any question if the
answer is self-incriminating.
(3) No self-incriminating answer given or statement made to a person
exercising any power in terms of this section is admissible
as
evidence against the person who gave the answer or made the statement
in criminal proceedings, except in criminal proceedings
for perjury
or in which that person is tried for an offence contemplated in
section 72
or
section 73(2)(d)
, and then only to the extent that the
answer or statement is relevant to prove the offense charged.”
(Emphasis added.)
[48]
The purpose of the merger provisions, in particular
section
13A(3)
of the
Competition Act, is
to ensure that as many mergers as
possible are examined by the Commission for anti-competitive conduct.
Section 49A
must be construed broadly to give effect to this
objective. The powers of search and summons, as provided for in
sections 49
and
49A
, are vital to the Commission’s power to
investigate a merger. Contrary to the joint contention of the
SABC and MultiChoice,
nothing in the
Competition Act suggests
that
these powers are reserved only for the investigation of prohibited
practices in Chapter 2 of the Act
.
[41]
[49]
The need to summons relevant information and documents from
persons believed to be in possession or control thereof, as well as
the need to summons persons with knowledge of relevant facts under
section 49A
of the
Competition Act, are
crucial to the powers of the
Commission to investigate mergers and transactions that may give rise
to a merger as defined. Any
contrary interpretation would
defeat the purpose of merger regulation under the
Competition Act
which
is to maintain competitive market structure by ensuring “that
transactions which are likely substantially to prevent or lessen
competition should be carefully examined by the competition
authorities”.
[42]
[50]
It is essential that where the Commission has grounds to
believe that the parties to a merger have a motive not to notify a
merger,
it must investigate that merger and not accept their mere
say-so.
[43]
Nor, in these circumstances, should the investigation be
confined only to the documents submitted by the parties.
Significantly,
merger investigations are not meant to be
rudimentary “desktop” evaluations of the documents
submitted by the parties
to a merger or a transaction giving rise to
a merger. Legh argues that:
“Very few mergers are approved solely on the basis of the
documents filed. The filings are generally followed by a
series
of questions from the Commission clarifying issues and verifying
information provided. The person signing the merger documentation
is
under a duty to declare that the information disclosed is
comprehensive and correct and the provision of false information is
an offence under [section 73(2)(d) of] the Act. . . . The
Commission may require any party to a merger to provide additional
information in respect of the merger [under
section 13B(2)].
”
[44]
Does the June 2016 order preclude the Commission’s statutory
investigative powers?
[51]
The Commission’s investigative powers, both generally
and in relation to merger control specifically, are sourced in the
Competition Act itself
. These powers were not conferred by the
June 2016 order of the Competition Appeal Court, as the April 2017
judgment seemingly
suggests. Thus absent any prohibition in the
June 2016 order relating to the Commission’s use of its
coercive and non-coercive
statutory powers in carrying out its
mandate under that order, the Commission’s statutory powers
remain intact.
[52]
Court orders are intended to
provide effective relief and must be capable of achieving their
intended purpose. That must be
the starting point in
interpreting a court order.
[45]
The well-established principles governing the interpretation of
a court order were expounded in
Firestone
[46]
and more recently endorsed in
Eke
:
“The starting point is to determine the manifest purpose of the
order. In interpreting a judgment or order, the court’s
intention is to be ascertained primarily from the language of the
judgment or order in accordance with the usual well-known rules
relating to the interpretation of documents. As in the case of
a document, the judgment or order and the court’s reasons
for
giving it must be read as a whole in order to ascertain its
intention.”
[47]
[53]
In respect of an order that is “clear and unambiguous”,
Firestone
enunciated:
“If, on such a reading, the meaning of the judgment or order is
clear and unambiguous, no extrinsic fact or evidence is admissible
to
contradict, vary, qualify, or supplement it. . . .[N]ot even the
court that gave the judgment or order can be asked to state
what its
subjective intention was in giving it.”
[48]
[54]
The June 2016 order must be interpreted in line with
Firestone
and
Eke
to ascertain the Competition Appeal Court’s
intention from the reasons for the judgment and the order as a whole.
A
determination of the legal context within which the words in
an order are used is also required.
[49]
The legal context here is the
Competition Act and
the
investigative powers and duties that it confers on the Commission to
effectively discharge its investigative responsibilities
and
reporting role to the Tribunal, in the context of the implementation
of a suspected merger in contravention of
section 13A(3)
of the Act.
The Commission’s mandate under the June 2016 order must
be understood in this context.
[55]
Applying these principles, I fail to see how the June 2016
order can be understood to have curtailed the Commission’s
ability
to exercise its statutory powers of investigation under Part
B of Chapter 5 of the
Competition Act. But
the Competition
Appeal Court found otherwise in its judgment of April 2017. There
are, however, apparent discrepancies between
its reasoning in the two
judgments.
[56]
In its June 2016 judgment, the Competition Appeal Court found
that the public interest demanded that the Commission investigate the
agreement, and it criticised the Tribunal for adopting a formalistic,
as opposed to a substantive, approach by applying
Plascon-Evans
.
In contrast, in its April 2017 judgment, the Competition Appeal
Court held, regardless of the inadequacy of the documentary
evidence
furnished, that the Commission must complete its investigation simply
on the documents before it, and without interviewing
any of the
individuals involved in the negotiation or conclusion of the
agreement. The two approaches are incompatible.
[57]
The Competition Appeal Court held that it is “in the
public interest for transactions involving the public broadcaster to
be examined with a particular consideration of the purpose of the
Act”.
[50]
And it added that the factual disputes on the papers, regarding
whether the conclusion of the agreement gave rise to a change
of
control, should not be determined within the strict confines of the
Plascon-Evans
test. It accordingly held that—
“[t]he Tribunal should employ inquisitorial powers to
interrogate evidential questions beyond the strict confines of
‘
Plascon-Evans
’ to ensure that the full evidential
complexity is available to it in order that it might come to a
decision which advances
the purposes of the Act. . . . There
are many questions regarding disputed factual contentions which we
have raised in this
judgment which could have been better answered if
an inquisitorial approach had been adopted and a more sustained line
of questioning
been implemented by the Tribunal in the hearing before
it. [Additionally], as is evident from paras 49-50 of the
judgment
of SCA in the
e.tv
case . . . questions of encryption
may well stifle competition.”
[51]
[58]
The Competition Appeal Court’s recognition that
transactions involving the public interest be examined with a
particular consideration
for the purposes of the
Competition Act,
coupled
with a need for a substantive rather than a formalistic
approach, supports an interpretation of the June 2016 order that
leaves
the statutory investigative powers of the Commission
intact.
[52]
There is no reason why an inquisitorial approach should exclude
other investigative powers under the Act.
[59]
Since the purpose of the June 2016 order was to reverse the
deficiency of the Tribunal’s order that was made without an
investigation
by the Commission, the Competition Appeal Court would
have intended that the Commission undertake a similar exercise,
however cursory.
In the first place, an investigation of this
kind has to be undertaken in terms of the Act and, if done on that
basis, then
the full suite of investigative powers conferred by
sections 13A
and
13B
and Part B of Chapter 5 would apply. This
interpretation follows by necessary implication from the Competition
Appeal Court’s
judgment.
[60]
The Competition Appeal Court’s emphasis on the need for
finality and expedition in its June 2016 judgment is consistent with
this interpretation. Indeed, the best way to bring closure to
the matter was for the Competition Appeal Court to allow the
Commission to exercise its full suite of investigative powers (within
the time allowed) to ensure that its recommendations to the
Tribunal
were based on the best available evidence. Absent express
language to that effect, the fact that the order was an
exceptional
remedy was not a basis for the Competition Appeal Court to conclude
that it stripped the Commission of its statutory
investigative
powers. There is simply nothing in the Competition Appeal
Court’s June 2016 judgment which precludes
the Commission from
exercising its statutory investigative powers. On the contrary,
the Competition Appeal Court’s
reasons, in support of its
order, imply that these powers are necessary to ensure the
effectiveness of the order.
[61]
The order itself is uncomplicated and written in plain
language. There is no hint in the order to suggest that it
prohibits
the Commission from exercising its statutory investigative
powers. Paragraph 2 of the order instructs the SABC and
MultiChoice
to hand over copies of
all
documentation to the
Commission within 21 days. It gives the Commission access
to a wide range of documents “including,
but not limited to,
all correspondence, board minutes, internal memoranda pertaining to
the negotiation, conclusion, and implementation”
of the
agreement. Paragraph 3 of the order then directs the Commission
to compile a report, within 30 days of receipt of
the documents, and
file it with the Tribunal, setting out its recommendation on whether
the agreement gives rise to a notifiable
merger.
[62]
There is nothing in either of these two paragraphs that
implies that the Commission is obliged only to consider the documents
supplied
by the SABC and MultiChoice. Nor does it constrain the
Commission from exercising its statutory powers, within the time
allowed,
to interview individuals with knowledge of the agreement,
where the documentation furnished was incomplete and inadequate.
[63]
On the contrary, paragraph 3 of the order envisages that the
Commission may consider not only documentation in coming to its
conclusion,
but also “information”. Although
paragraph 2 of the order does not expressly refer to “information”,
it is implicit from paragraph 3 of the order, that “information”
would form part of paragraph 2 of the order as well.
For the
most part, because “documents” are unlikely, on their
own, to resolve the factual disputes that the Competition
Appeal
Court found to exist on the papers.
[53]
[64]
The order directs the Commission to conduct its investigation
within 30 days of receipt of all the documentation from the SABC and
MultiChoice. In
its April 2017 judgment, the
Competition Appeal Court misconstrues these timelines as being
indicative of the apparently “limited”
nature of the
Commission’s investigation.
This is wrong in law
because the time periods in the order are consistent with the
ordinary time periods for the investigation
of mergers, being an
initial 20 business days in respect of intermediate mergers, and an
initial 40 business days in respect of
large mergers.
[54]
It certainly seems to me that in formulating the timetable, the
Competition Appeal Court recognised that there is a
degree of
urgency in having the Commission’s investigation concluded
quickly, not least because of the public interest in
the agreement.
[65]
The June 2016 order did not strip the Commission of its
investigatory powers in Part B of Chapter 5 of the
Competition Act.
In
fact, on the face of the order, the statutory investigative
powers of the Commission in Part B of Chapter 5 of the
Competition
Act remain
intact. The Competition Appeal Court, accordingly,
erred in finding that the June 2016 order, read in the light of its
reasons,
“clearly and unambiguously” defined the
Commission’s investigative powers in compiling its report, and
“expressly
confined the source of its inquiry exclusively to
the documentation set out in the order”.
[55]
Applications to
adduce new evidence on appeal
[66]
There are two applications to adduce new evidence on appeal in
this Court and one that was dismissed by the Competition Appeal Court
in its April 2017 order that require consideration. They are as
follows:
(a) The first is the applicants’ application to introduce new
evidence on appeal consisting of the Minister of Communication’s
testimony before Parliament’s Standing Committee on Public
Accounts (SCOPA) on 17 May 2017.
(b) The second is the Commission’s application to adduce new
evidence on appeal that was brought after the hearing of the
application for leave to appeal. It consists of a transcript of
the proceedings of a meeting held on 6 June 2013 (June 2013
meeting)
between members of the interim board of the SABC and representatives
of MultiChoice, concerning the possible conclusion
of a channel
licensing agreement between the SABC and Multichoice.
(c) The third is the appeal against the dismissal of the application
in the Competition Appeal Court to adduce new evidence that
consisted
of the transcript of the testimony of a board member and a past CEO
of SABC, which was given at a Parliamentary inquiry
into the SABC on
8 and 9 December 2016. The Competition Appeal Court
dismissed this application in the April 2017
order.
Rules governing
the admission of new evidence on appeal in this Court
[67]
Rules 30
[56]
and 31
[57]
of the Rules of this Court regulate the admission of further evidence
on appeal in this Court.
Rule 30
incorporates the approach
under section 22 of the Supreme Court Act.
[58]
Section 22 has been interpreted by this Court in
Rail Commuters’
as permitting the admission of new evidence in appeal cases only in
exceptional circumstances.
[59]
There, this Court held:
“The court should exercise the powers conferred by section 22
‘sparingly’ and further evidence on appeal (which
does
not fall within the terms of Rule 31) should only be admitted in
exceptional circumstances. Such evidence must be weighty,
material and to be believed. In addition, whether there is a
reasonable explanation for its late filing is an important factor.
The existence of a substantial dispute of fact in relation to it will
militate against it being admitted.”
[60]
[68]
The pivotal requirement in both rules is that the evidence
sought to be admitted must be relevant to the issues to be determined
by the Court. In terms of rule 31(1), a party may “canvas
factual material that is relevant to the determination of
the issues
before the Court and does not specifically appear on the record”,
subject to the facts being incontrovertible
or capable of easy
verification.
[69]
When leave to admit further evidence is sought after the
hearing of an appeal, and prior to the Court reaching a final
decision,
the Court will also consider whether it is in the interests
of justice for the evidence to be placed before the Court.
Commission’s
application
[70]
I will first consider the application to adduce new evidence
which was brought by the Commission after the hearing of the
application
for leave to appeal.
[71]
Just short of a fortnight after the hearing of the application
for leave to appeal (main application), the Commission filed an
interlocutory
application seeking leave to adduce new evidence on
appeal.
[61]
The Commission took the view that the new evidence might have a
bearing on the Court’s decision in the main application,
which
was pending.
[72]
The new evidence which the Commission seeks leave to adduce on
appeal relates to the transcript of a meeting held between members
of
the interim board of the SABC and representatives of MultiChoice, on
6 June 2013, concerning the possible conclusion of a channel
licensing agreement between the SABC and Multichoice (transcript).
It was published by, amongst others, City Press Newspaper
on
29 November 2017.
[73]
The existence of the transcript apparently came to the
attention of the Commission on 29 November 2017, when an article
attaching
the transcript was published online. On 28 November
2017, a journalist emailed a copy of the transcript to MultiChoice
for
comment. Before this, MultiChoice, in compliance with the
June 2016 order, furnished the Commission with a note, prepared
by
one of its representatives who attended the June 2016 meeting,
summarising the key issues discussed there.
[74]
The SABC, too, had furnished a copy of the transcript to the
ad hoc Parliamentary Portfolio Committee on Communications as part of
its enquiry into the state of the SABC. As the SABC had
explained, its failure to provide the transcript to the Commission
in
compliance with the June 2016 order was due to an oversight.
The SABC nevertheless provided the Commission with the minutes
of the
board meeting at which the terms of the agreement were discussed and
approved.
[75]
In essence, the Commission’s application is premised on
two bases. The first is that the transcript (which the
Commission
refers to as “minutes”) should be accepted
into evidence, as it has a bearing on the merger investigation it
must conduct
and report on to the Tribunal, in accordance with the
June 2016 order which this Court has to interpret in the main
application.
The second is that it is in the interests of
justice that the minutes be accepted into evidence as they reveal the
discussions
that took place between the SABC and MultiChoice prior to
the conclusion of the agreement, and mention documents that were
possibly
exchanged between the parties prior to its conclusion.
[76]
The Commission maintains that the transcript raises matters
which are known to both the SABC and MultiChoice and does not require
a lengthy response from either of them regarding their relevance to
the proceedings before this Court. And that none of the
parties
will suffer any prejudice if the transcript is admitted into
evidence. Not surprisingly, the SABC and MultiChoice
oppose the
application with the vigour of voluminous answering affidavits, which
direct their opposition to the Commission’s
failure to meet the
higher threshold of exceptional circumstances for the admission of
new evidence on appeal. They contend
that, although the
transcript may be relevant to the exercise which the Commission is
required to perform in terms of the June
2016 order, it has no
bearing on the determination of the narrow issues raised in the main
application, namely the proper interpretation
of the order.
[77]
Lastly, they highlight a damaging concession made in the
Commission’s founding affidavit where it explains that the
transcript
is “not dispositive of the matters before this
Court”, but simply “shows the thinking of these two
parties leading
up to the conclusion of the agreement”
.
However, on realising its folly, the Commission changed tack in
its replying affidavit, alleging that—
“the evidence is dispositive of the fact that the SABC had in
fact not complied fully with the order of the Competition Appeal
Court and that the Commission requires access to further documents
and information by way of investigation in order to meet its
obligation under the June 2016 order.”
The Commission
cannot, of course, make out a new case in reply outside certain
exceptional instances, none of which has been pleaded
or applied to
the present facts.
[78]
Whether the existence of the transcript is evidence of the
SABC’s non-compliance with the June 2016 order is not an issue
for determination in this appeal. The issues for determination
turn on the proper interpretation of the June 2016 order.
Its
“manifest purpose” must be ascertained primarily from the
language used and the Competition Appeal Court’s
reasons for
making it.
[62]
The only extraneous considerations which are permissible in the
interpretation of the order are those which contextualise
it,
including material known to the Competition Appeal Court when making
it.
[63]
There is no place for the consideration of facts or material
which came to light after the order had been handed down.
[79]
The transcript which the Commission seeks to adduce on appeal
was not before the Competition Appeal Court when it formulated the
June 2016 order and subsequently interpreted it. It is
therefore, not relevant. The relevant facts and argument were
placed before this Court prior to the hearing of the matter on
23 November 2017. The SABC will suffer the prejudice
of
having new factual evidence adduced not only before the court of last
instance, but after the hearing of the appeal. All
the parties,
the general public, and this Court have an interest in the finality
of litigation. The admission of further
evidence and further
argument after the hearing of the appeal is inconsistent with this
important principle. The Commission
has also failed to meet the
higher threshold of exceptional circumstances for the admission of
new evidence on appeal. It
is accordingly not in the interests
of justice that the new evidence be admitted into the appeal record.
The December 2016
application
[80]
In the December 2016 application before the Competition Appeal
Court, the applicants sought to adduce further evidence consisting
of
untested statements made, before a Parliamentary ad hoc committee, by
a former board member of the SABC and its former CEO on
the basis
that it was relevant to the determination of the October 2016
application.
[81]
That application was fundamentally misconceived, as it was
based on the incorrect premise that evidence which came to light
after
a court order has been handed down, can somehow be considered
relevant to the interpretation of that court order. The
Competition
Appeal Court was accordingly justified in dismissing that
application in its April 2017 order.
The November 2017
application
[82]
This misconception was perpetuated in the applicants’
application to adduce new evidence at the hearing of the application
for leave to appeal by this Court. They sought, in that
application, to adduce a transcript of a parliamentary hearing
conducted
after the Competition Appeal Court had handed down its
April 2017 order.
[83]
As with the other two applications to adduce further evidence,
the new evidence sought to be admitted here was not before the
Competition
Appeal Court when it made the June 2016 order and
subsequently interpreted it. It is not an admissible
consideration in the
interpretation of that order. The
transcript is not relevant – a pivotal requirement for the
admission of new evidence
on appeal to this Court. There are
also no exceptional circumstances shown to justify the admission of
the new evidence.
This application must also fail.
Relief
[84]
In
Hoërskool Ermelo
this Court held that the
remedial powers envisaged in section 172(1)(b) of the Constitution to
make a just and equitable order are
not only available when a court
makes an order of constitutional invalidity of a law or conduct under
section 172(1)(a), but also
“in instances where the outcome of
a constitutional dispute does not hinge on the constitutional
invalidity of legislation
or conduct”.
[64]
The power is sufficiently wide and flexible to enable a court
of competent jurisdiction to formulate an order that is both
appropriate and effective in resolving the underlying dispute, and
ensuring that the defaulting party meets its statutory or
constitutional
obligations.
[85]
The June 2016 order was ambiguous. The applicants were
therefore justified in seeking clarity on its meaning in relation to
the ambit of the Commission’s statutory investigative powers.
The applicants and the Commission have made out a case
for the
declaratory relief sought in prayer 2 of the notice of motion. The
relief is both appropriate and effective as it
will enable the
Commission properly to conclude its investigation in terms of the
Competition Act, thus
giving proper effect to its investigatory and
reporting obligations under the June 2016 order read with
section 13A(3)
of the
Competition Act. It
may use its
statutory investigative powers, both coercive and non-coercive, if it
deems this necessary to compile its report.
[86]
In
Rail Commuters’
this Court emphasised the
benefit of declaratory orders as a means of remaining sensitive to
separation of powers concerns:
“It should also be borne in mind that the declaratory relief is
of particular value in a constitutional democracy which enables
courts to declare the law, on the one hand, but leave to the other
arms of government, the Executive and Legislature, the decision
as to
how best the law, once stated, should be observed.”
[65]
[87]
The Competition Appeal Court accordingly erred in not granting
the declaratory relief sought by the applicants in their notice of
motion confirming that the Commission may exercise its statutory
powers of investigation in this matter.
[88]
In the light of the relief granted, there is no need to
consider whether the applicants and the Commission have made out a
case
for the alternative relief sought.
Costs
[89]
The Competition Appeal Court erred in granting costs against
the applicants in the October 2017 application as well as in the
application
to adduce new evidence in that application. As
indicated, the ambit of the Commission’s powers to investigate
the agreement
between the SABC and MultiChoice is a question of great
public interest that engages constitutional issues.
[66]
In the circumstances, no adverse order of costs was warranted.
On the same principle, adverse costs orders are not
warranted
in the two applications to adduce new evidence brought by the
applicants and the Commission respectively.
Order
[90]
In the result the following order is made:
1. Leave to appeal is granted.
2. The appeal is upheld, and the Competition Appeal Court’s
order of 28 April 2017 is set aside and replaced with the
following:
(a)
It is declared that the order handed down by the Competition Appeal
Court on 24 June 2016 does not preclude the Competition Commission
from exercising its non-coercive and coercive investigative powers in
terms of Part B of Chapter 5 of the
Competition Act 89 of 1998
for
purposes of discharging its obligations under paragraph 3 of the June
2016 order.
(b)
The Competition Commission is directed to file its report with the
Competition Tribunal, as contemplated in paragraph 3 of the
June 2016
order, within 30 court days of this order.
(c)
The first and second respondents are ordered jointly and severally to
pay the costs of the application, including the costs
of two counsel.
3. The appeal against the order of the Competition Appeal Court
dismissing the applicants’ application to adduce new evidence
is dismissed with no order as to costs.
4. The applicants’ application to adduce new evidence on appeal
is dismissed with no order as to costs.
5. The Competition Commission’s application to adduce new
evidence on appeal is dismissed with no order as to costs.
For the Applicants:
S Budlender, L Kelly and N Mauritz instructed by Nortons
Incorporated.
For the First
Respondent: R Bhana SC, P Ngcongo and S Scott instructed by Cliffe
Dekker Hofmeyr Inc.
For the Second
Respondent: D Unterhalter SC, M Norton SC and M Mokhoaetsi
instructed by Werksmans Attorneys.
For the Third
Respondent: N H Maenetje SC and B D Lekokotla instructed by the
Competition Commission.
[1]
89 of 1998.
[2]
36 of 2005.
[3]
Caxton and CTP Publishers and Printers Ltd v MultiChoice (Pty)
Ltd
, unreported decision of the Competition Tribunal, Case No
020727 (11 February 2016)
(Tribunal decision) at
para 26.
[4]
Id at para 27.
[5]
In terms of which in motion proceedings the matter must in general
be decided on the version of the respondent. See
Plascon-Evans
Paints Ltd v Van Riebeck Paints (Pty) Ltd
[1984] ZASCA 51
;
1984
(3) SA 623
(A) (
Plascon-Evans
) at 638.
[6]
Tribunal decision above n 3 at 111.
[7]
Caxton and CTP Publishers and Printers Ltd v MultiChoice (Pty)
Ltd
2016 JDR 1372 (CAC) (Competition Appeal Court judgment) at
para 110.
[8]
Id.
[9]
Id.
[10]
Id at para 111.
[11]
Id at para 112.
[12]
Competition Appeal Court judgment above n 7 at
para
114.
[13]
Id at
para 52.
[14]
Caxton and CTP Publishers and Printers Limited v South African
Broadcasting Corporation (SOC) Limited
, unreported judgment of
the Competition Appeal Court, Case No 140/CAC (28 April 2017) at
para 29.
[15]
Id at para 31.
[16]
Id.
[17]
Competition Appeal Court judgment above n 14.
[18]
Competition Commission of South Africa v
Senwes Ltd
[2012] ZACC 6
;
2012 (7)
BCLR 667
(CC) (
Senwes
)
at para 17.
[19]
Section 13A(3)
provides:
“The parties to an intermediate or large merger may not
implement that merger until it has been approved, with or without
conditions, by the Competition Commission in terms of
section
14(1)(b)
, the Competition Tribunal in terms of
section 16(2)
or the
Competition Appeal Court in terms of
section 17.
”
[20]
Cool Ideas 1186 CC v Hubbard
[2014]
ZACC 16
;
2014 (4) SA 474
(CC);
2014 (8) BCLR 869
(CC)
at
para 28.
[21]
Sections 2(a)
, (b) and (e) of the
Competition
Act.
[22
]
Senwes
above n 18 at
para 3 and
Competition Commission v Loungefoam
(Pty) Ltd
[2012] ZACC 15
;
2012 (9)
BCLR 907
(CC);
2012 JDR 1119 (CC)
at para
2.
[23]
The long title of the
Competition Act reads
:
“To provide for the establishment of a Competition Commission
responsible for the investigation, control and evaluation
of
restrictive practices, abuse of dominant position, and mergers; and
for the establishment of a Competition Tribunal responsible
to
adjudicate such matters; and for the establishment of a Competition
Appeal Court; and related matters.”
[24]
Senwes
above n 18 at paras 3-4.
[25]
In terms of
section 21(1)(e)
of the
Competition
Act, one
of the functions of the Commission is to, “authorise,
with or without conditions, prohibit or refer mergers of which it
receives notice in terms of Chapter 3”.
[26]
Section 12A
of the
Competition Act, headed
“Consideration of mergers” sets out the approach that
the Commission is enjoined to follow when conducting a substantive
analysis of a proposed merger.
[27]
Section 13A(1)
of the
Competition Act provides
that a party to an “intermediate or large merger must notify
the Competition Commission of that merger in the prescribed
manner
and form”. A merger is classified as an “intermediate”
merger where the combined annual turnover
or asset value of
acquiring and target firms equals or exceeds R560 million, and where
the turnover or asset value of the target
firm equals or exceeds R80
million; a merger is classified as a “large” merger
where the combined annual turnover
or asset value of acquiring and
target firms equals or exceeds R6.6 billion, and where the turnover
or asset value of the target
firm equals or exceeds R190 million.
[28]
In
Netcare Hospital Group (Pty) Ltd and Community Hospital Group
(Pty) Ltd
[2007] ZACT 83
(
Netcare
)
at
para 7.
[29]
Section 12(1)(b)(i)
of the
Competition Act.
See
Competition Commission v Edgars Consolidated Stores
Limited
[2003] 1 CPLR 151
(CT) at para 37.
[30]
Section 12(2)(g)
provides that a person controls a firm if that
person—
“has the ability to materially influence the policy of the
firm in a manner comparable to a person who, in ordinary commercial
practice, can exercise an element of control referred to in
paragraphs (a) to (f).”
See
Caxton and
CTP Publishers and Printers Ltd v Media24 (Pty) Ltd
[2015] ZACAC
(25 November 2015) at para 35ff, for a definitive exposition of the
concept of material influence.
[31]
The requirement to give notice only applies in respect of
“intermediate” or “large” mergers, which are
discussed in n 27 above.
[32]
Section 13A(3)
provides:
“
The parties to an intermediate or large
merger may not implement that merger until it has been approved,
with or without conditions,
by the Competition Commission in terms
of
section 14(1)(b)
, the Competition Tribunal in terms of
section
16(2)
or the Competition Appeal Court in terms of
section 17.
”
[33]
Section 59(1)(d)
must be read with
section 59(2)
,
which provides that an administrative penalty may not exceed 10% of
the firm’s annual turnover and its exports in the
preceding
financial year. See, for example, the recent settlement
agreement approved by the Tribunal in the matter between
the
Competition Commission and Fruit &
Veg City Holdings (Pty) Ltd
[2015] 2
CPLR 553
(CT) in terms of which the Commission sought an order from
the Tribunal against the parties to a series of transactions that
should have been notified as a merger. The parties settled
with the Commission, agreeing to pay a penalty for failing to
notify
the Commission as required. The Tribunal confirmed the
settlement agreement.
[34]
This is in contrast to certain other
contraventions listed in
section 59(1)(b)
where penalties may only
be imposed “
if
the conduct is substantially a repeat by the same firm of conduct
previously found by the Competition Tribunal to be a prohibited
practice”.
[35]
See Competition Amendment Act 1 of 2009 (Amendment Act).
[36]
Id. Paragraph (c) of subsection (1) of the
Competition Act currently
reads: “[t]he Commission is responsible to . . . investigate
and evaluate alleged contraventions of Chapter 2.”It
is due to
be substituted by section 5(a) of the Amendment Act to refer to
“Chapter 2 or 3”. The Amendment Act
will be put
into operation by proclamation.
[37]
National Education Health & Allied Workers Union (NEHAWU) v
University of Cape Town
[2002] ZACC 27
;
2003 (3) SA 1
(CC);
2003
(2) BCLR 154
(CC) (
NEHAWU
) at para 66.
[38]
Sutherland,
Competition Law of South Africa
, Issue 20,
10-23. In Issue 18, at paras 11.3.5.1, he expressed the
similar view that section 13B “would seem to include
the
investigation of whether a notifiable merger has been implemented
without approval, and whether a merger as implemented complies
with
the conditions for merger approval”.
[39]
Above n 28 at
para 7.
[40]
Bulmer SA (Pty) Ltd and Seagram Africa (Pty)
Ltd / Distillers Corporation (SA) Ltd, Stellenbosch Farmers Winery
Group (Pty) Ltd
and The Competition Commission
[2001–
2002] CPLR 36
(CAC) (
Bulmer
)
at 357I-358C.
[41]
Section 49A begins with the words “[a]t any time during an
investigation in terms of this Act, the Commission may summon
any
person”. These opening words make it plain that the
Commission may invoke these powers during any investigation
in terms
of the Act. This means that section 49 may be used by the
Commission when investigating anything under the Act,
including an
alleged prohibited practice under Chapter 2 (for example price
fixing or abuse of dominance) or a merger or
a potential merger
under Chapter 3.
[42]
Bulmer
above n 40 at 357J-358C.
[43]
Competition Commission v Tiso Consortium
[2004] 2 CPLR 354
(CT) at para 12.
[44]
Legh “
Mergers and Merger Control
” Competition
Law, ed. Martin Brassy et al (2016) at 259.
[45]
See, for example,
Fose v Minister of Safety and Security
[1997]
ZACC 6
;
1997 (3) SA 786
(CC);
1997 (7) BCLR 851
(CC) at para 69, in
the context of remedies for the infringement of rights contained in
the Bill of Rights. See also
Mvumvu v Minister for
Transport
[2011] ZACC 1
;
2011 (2) SA 473
(CC);
2011 (5) BCLR 488
(CC) at para 48;
Nyathi v MEC for Department of Health, Gauteng
[2008] ZACC 8
;
2008 (5) SA 94
(CC);
2008 (9) BCLR 865
(CC) at para
14 and
Minister of
Home Affairs v NICRO
[2004] ZACC
10
;
2005 (3) SA 280
(CC);
2004 (5) BCLR 445
(CC) at para 74.
[46]
Firestone South Africa (Pty) Ltd v Genticuro
AG
1977 (4) SA 298
(A);
[1977] 4 All
SA 600
(A) (
Firestone
)
at 304D.
[47]
Eke v Parsons
[2015] ZACC 30
;
2016 (3) SA 37
(CC);
2015 (11)
BCLR 1319
(CC) at para 29. See also
Electoral Commission v
Mhlope
[2016] ZACC 15; 2016 (5) SA 1 (CC); 2016 (8) BCLR 987
(CC).
[48]
Firestone
above n 46 at 304E-F.
[49]
See
Ex Parte Women’s Legal Centre: In Re Moise v Greater
Germiston Transitional Local Council
[2001] ZACC 2
;
2001 (4) SA
1288
(CC);
2001 (8) BCLR 765
(CC) at para 11.
[50]
Competition Appeal Court judgment above n 7 at para 110.
[51]
Id.
[52]
Id at paras 110-1.
[53]
A key example of the disputed facts related to the issue of
“encryption”, its timing, and the commercial relevance
of the policy on encryption. This dispute and the others
identified by the Competition Appeal Court in the April 2017 order
may require investigation if they are to inform the Commission’s
evaluation and determination on whether the agreement
constitutes a
notifiable merger. These issues are plainly relevant, but are
unlikely to turn simply on documents provided
by the SABC and
MultiChoice, but may require relevant “information” as
envisaged in paragraph 3 of the order.
[54]
See
sections 14(1)
and
14A
(1) of the
Competition
Act respectively
.
[55]
Competition Appeal Court judgment above n 14.
[56]
Rule 30
of the Rules of this Court provides:
“The following sections of the Supreme Court Act, 1959 (Act
No. 59 of 1959), shall apply, with such modifications as may
be
necessary, to proceedings of and before the Court as if they were
rules of their court.
Section
Subject
19
bis
Reference
of particular matters for investigation by referee
22
Powers of the court on hearing of appeals
32
Examinations by interrogatories of persons whose evidence is
required in civil cases
33
Manner of dealing with commissions
rogatoire
, letters of
request and documents for service originating from foreign
countries: Provided that this provision shall apply subject
to the
replacement of English or Afrikaans with the phrase “any
official language.”
[57]
Rule 31 of the Rules of this Court, which is headed “Documents
lodged to canvass factual material”, provides:
“(1) Any party to any proceedings before the Court and
amicus
curiae
properly admitted by the Court in any proceedings shall
be entitled, in documents lodged with the Registrar in terms of
these
rules, to canvass factual material that is relevant to the
determination of the issues before the Court and that does not
specifically
appear on the record: Provided that such facts—
(a) are common cause or otherwise incontrovertible; or
(b) are of an official, scientific, technical or statistical nature
capable of easy verification.
(2) All other parties shall be entitled, within the time allowed by
these rules for responding to such document, to admit, deny,
controvert or elaborate upon such facts to the extent necessary and
appropriate for a proper decision by the Court.”
[58]
See also
section 19
of the
Superior Courts Act 10 of 2013
, which is
headed “Powers of court on hearing of appeals” and
provides:
“The Supreme Court of Appeal or a Division exercising appeal
jurisdiction may, in addition to any power as may specifically
be provided for in any other law—
(a) dispose of an appeal without the hearing of oral argument;
(b) receive further evidence;
(c) remit the case to the court of first instance, or to the
court whose decision is the subject of the appeal, for further
hearing, with such instructions as regards the taking of further
evidence or otherwise as the Supreme Court of Appeal or the
Division
deems necessary; or
(d) confirm, amend or set aside the decision which is the
subject of the appeal and render any decision which the
circumstances
may require.”
[59]
Rail Commuters’ Action Group v Transnet Limited t/a
Metrorail
[2004] ZACC 20
;
2005 (2) SA 359
(CC);
2005 (4) BCLR
301
(CC) (
Rail Commuters’
).
[60]
Id at para 41.
[61]
The hearing of the application for leave to appeal took place on 28
November 2017, and the application to adduce new evidence
was made
on 8 December 2017.
[62]
Eke
above n 47 at para 29.
[63]
See
Delmas Milling Co Limited v Du Plessis
1955 (3) SA
447
(A) 454F-455A, cited with approval in
Firestone
above n
46 at 304D and
KPMG Chartered Accountants
(SA) v
Securefin Limited
[2009] ZASCA 7
;
2009 (4) SA 399
(SCA) at para
39.
[64]
Head of Department, Mpumalanga Department of Education v
Hoërskool Ermelo
[2009] ZACC 32
;
2010 (2) SA 415
(CC);
2010
(3) BCLR 177
(CC) at para 97.
[65]
Rail Commuters’
n 59 at para 108.
[66]
Biowatch Trust v Registrar, Genetic Resources
[2009]
ZACC 14
;
2009 (6) SA 232
(CC);
2009 (10) BCLR 1014
(CC).