CONSTITUTIONAL COURT OF SOUTH AFRICA
Case CCT 31/20
In the matter between:
COMPETITION COMMISSION OF SOUTH AFRICA Applicant
and
MEDICLINIC SOUTHERN AFRICA (PTY) LIMITED First Respondent
MATLOSANA MEDICAL HEALTH SERVICES
(PTY) LIMITED Second Respondent
Neutral citation: Competition Commission of South Africa v Mediclinic Southern
Africa (Pty) Ltd and Another [2021] ZACC 35
Coram: Mogoeng CJ, Jafta J, Khampepe J, Madlanga J, Majiedt J,
Mhlantla J, Pillay AJ, Theron J, Tlaletsi AJ and Tshiqi J.
Judgments Mogoeng CJ (majority): [1] to [88]
Theron J (dissenting): [89] to [123]
Heard on: 11 March 2021
Decided on: 15 October 2021
Summary: section 12A of the Competition Act 89 of 1998 — substantial
lessening of competition — impact of a merger on competition —
impact on section 27 of the Constitution — interpretation in
accordance with sections 7(2) and 39(2) of the Constitution —
interference by appellate courts with findings of trial courts
Competition Appeal Court not entitled to interfere with findings of
the Tribunal — appeal is upheld — no order as to costs
2
ORDER
On appeal from the Competition Appeal Court of South Africa (hearing an appeal from
the Competition Tribunal):
1. Leave to appeal is granted.
2. The appeal is upheld.
3. The order of the Competition Appeal Court is set aside.
4. There will be no order as to costs.
JUDGMENT
MOGOENG CJ (Jafta J, Madlanga J, Majiedt J, Mhlantla J, Pillay AJ, Tlaletsi AJ and
Tshiqi J concurring):
Essential context
[1] This is an application for leave to appeal against the judgment and order of the
Competition Appeal Court. The question to be answered is whether that Court was, in
law, correct in interfering as it did with the findings of and remedy given by the
Competition Tribunal to prohibit a merger in the private health care services sector. But
first, the essential context for the proper appreciation of the issues.
[2] It does not require an award-winning and world-acclaimed economic scientist to
be persuaded that almost everything of consequence turns on the economy, here and
across the nations of the earth . The ability of government and a nation to function in
keeping with and for the advancement of shared constitutional aspirations, in
MOGOENG CJ
3
circumstances where integrity and meritocracy are necessarily allowed to occupy their
rightful place, depends largely on the state of the economy. After all, poverty
alleviation, the provision of high-quality education, the best health-enhancing facilities
or necessities, and the enablement of the best business environment and job
opportunities, would all be a pipe dream in the absence of an inclusive, ethical, truly
human rights-oriented and vibrant or prosperous economy. This is what the notion or
philosophy of business with a conscience or a social justice-sensitive economy is about.
[3] It ought never to be acceptable for any of us, including the corporate citizens of
this land, to indulge, talk less of over-indulge, in the unconscionable practice of seeking
to record the highest profit margin possible by any means necessary, in wanton
disregard for what that would do to th e rest of humanity. Neither should the historic
exclusion of some from meaningful participation, particularly in the mainstream
economy, be normalised. For, this seems to be one of the most stubborn injustices of
our past that require a more deliberate, intentional and systematic confrontation
appropriately enabled by independent, incorruptible, efficient and effective law
enforcement and justice-dispensing institutions.
[4] Colonialism, neo -colonialism and apartheid orchestrated an institutionalised
concentration of ownership and control of all things of consequence in our national
economy along racial lines. Unsurprisingly, the commanding heights of the corporate
sector are seemingly the exclusive terrain of our white compatriots. It is this
indisputable reality and our shared commitment to ensuring that South Africa really
does get to belong to all who live in it, that the constitutional imperatives, laid out in
the Preamble, to improve the quality of life of all citizens and free the potential of each
are realised, that the likes of the Competition Act1 had to and got to see the light of day.
[5] Sight must therefore never be lost of the central purpose for the enactment of that
Act and for the investigative and adjudicatory structures that it gave birth to. To sharply
1 89 of 1998.
MOGOENG CJ
4
channel the focus to where it belongs, to remind all of us and ensure that the
fundamental challenges sought to be remedied through this Act and allied institutions
are never left out of consideration, it is necessary that the Preamble to the Act be quoted
in its entirety. It reads:
“The people of South Africa recognise:
That apartheid and other discriminatory laws and practices of the past resulted
in excessive concentrations of ownership and control within the national
economy, inadequate restraints against anti-competitive trade practices. and
unjust restrictions on full and free participation in the economy by all South
Africans.
That the economy must be open to greater ownership by a greater number of
South Africans.
That credible competition law, and effective structures to administer that law
are necessary for an efficient functioning economy.
That an ef ficient, competitive economic environment. balancing the interests
of workers, owners and consumers and focused on development will bene fit
all South Africans.
IN ORDER TO−
provide all South Africans equal opportunity to participate fairly in the
national economy;
achieve a more effective and efficient economy in South Africa;
provide for markets in which consumers have access to, and can freely select,
the quality and variety of goods and services they desire;
create greater capability and an environment for South Africans to compete
effectively in international markets;
restrain particular trade practices which undermine a competitive economy;
regulate the transfer of economic ownership in keeping with the public
interest;
establish independent institutions to monitor economic competition; and
give effect to the international law obligations of the Republic.”
MOGOENG CJ
5
[6] And this finds further reinforcement from the purpose of the Act which is among
other things to:
(a) provide consumers with competitive prices;2
(b) ensure that small and medium-sized enterprises have an equitable
opportunity to participate in the economy;3
(c) “promote” greater spread of owne rship, in particular to increase
the ownership stakes of historically disadvantaged persons; and
(d) detect and address conditions in the market for any particular
goods or services, or any behaviour within such a market, that
tends to impede, restrict or dist ort competition in connection with
the supply or acquisition of those goods or services within the
Republic.4
[7] Institutions created to breathe life into these critical provisions of the Act must
therefore never allow what the Act exists to undo and to do, to somehow elude them in
their decision-making process. The equalisation and enhancement of opportunities to
enter the mainstream economic space, to stay there and operate in an environment that
permits the previously excluded as well as small and medium -sized enterprises to
survive, succeed and compete freely or favourably must always be allowed to enjoy
their pre -ordained and necessary pre -eminence. The legitimisation through legal
sophistry or some right -sounding and yet effectively inhibitive jurispru dential
innovations must be vigilantly guarded against and deliberately flushed out of our
justice and economic system.
[8] To achieve that noble and just objective, it bears emphasis that sight should never
be lost of the need to pay special attention to the preceding realisable imperatives of our
national economy. The merger that is the subject matter of this application mus t thus
2 Section 2(b) of the Act.
3 Id at section 2(e).
4 Id at section 2(g).
MOGOENG CJ
6
be approached with due regard to what would help achieve these goals and thus be in
the best interests of the public – to approve or not to approve. Some of the more pointed
and relevant questions that come to the fore are whether: (a) the approval of the merger
would contribute towards ownership and control in the private health care services
market still being excessively concentrated in the hands of historical players or in a way
that would contribute towards the progressive realisation of the se t ownership-spread
objectives; ( b) entry into this market or sector would be eased to allow for greater
participation by a greater number of South Africans or would be allowed to become an
even more difficult objective to achieve; ( c) free and fair competi tion would be
enhanced or hampered to some concerning degree; ( d) the determination of the local
geographic market would enable consumers to have access to and freely select the
quality and variety of services in the private health care services sector; an d
(e) sufficient regard is being had, in dealing with substantial public interest
considerations, to the ever -rising costs of private health care services in South Africa
and whether regulatory and adjudicatory institutions in the competition environment do
what the Constitution demands of them by containing this trend and discouraging
mergers that would most likely or inevitably give rise to, and in a way normalise, tariff
hikes for desperately needed goods or services in any economic space where they are
already costly and somewhat unaffordable or inaccessible.
[9] The invocation of section 39(2) of the Constitution in interpreting legislation that
implicates a right in the Bill of Rights, ought not to be viewed as an optional extra. It
should rather be seen as a constitutional injunction. Whether any of the parties have
specifically contended for the interpretation of legislation with express reference to or
through the prism of section 39(2) should not really matter. It is, broadly speaking, a
constitutional obligation that rests on the shoulders of any court interpreting legislation
or developing the common law or customary law , to promote the spirit, purport and
objects of the Bill of Rights. 5 That a court, whose judgment and order is appealed
5 Chisuse v Director -General, Department of Home Affairs [ 2020] ZACC 20; 2020 (6) SA 14 (CC); 2020 (10)
BCLR 1173 (CC) at para 58; Bato Star Fishing (Pty) Ltd v Minister of Environmental Affairs and Tourism [2004]
ZACC 15; 2004 (4) SA 490 (CC); 2004 (7) BCLR 687 (CC) at para 72 and Investigating Directorate: Serious
MOGOENG CJ
7
against, might not have heeded this constitutional call to duty should only point to its
failure to do what it was obliged to do in the first place.
[10] Not only are courts, as integral parts of the State machinery, arguably under a
section 7(2) obligation to promote, protect, respect and fulfil rights in the Bill of Rights,
but the Tribunal and Competition Appeal Court have the added responsibility to do so
imposed on them by the Preamble to the Act and its purpose.
[11] Confronting these issues in this way, is what fidel ity to the promotion of the
spirit, purport and objects of the right of access to health care services and of this Act
are really about. 6 And that should inform our approach to the determination of the
issues in this matter.
Parties
[12] The applicant is the Competition Commission established in terms of the Act.
And the first respondent is Mediclinic Southern Africa (Pty) L imited whereas the
second is Matlosana Medical Health Services (Pty) L imited (interchangeably referred
to as target firm, MMHS or Matlosana).
Background
[13] Mediclinic owns a multidisciplinary hospital in Potchefstroom. In total it owns
50 hospitals in South Africa. Matlosana owns two multidisciplinary hospitals in
Klerksdorp called Wilmed Park Private Hospital and Sunningdale Hospita l
(target hospitals) and a psychiatric hospital named Parkmed. Potchefstroom and
Klerksdorp, which are in the North West Province, are just under 50km apart, with the
travelling time of about 41 minutes.
Economic Offences v Hyundai Motor Distributors (Pty) Ltd In re: Hyundai Motor Distributors (Pty) Ltd v Smit
N.O. [2000] ZACC 12; 2001 (1) SA 545 (CC); 2000 (10) BCLR 1079 (CC) (Hyundai) at paras 21-2.
6 Hyundai id at para 22.
MOGOENG CJ
8
[14] It is common cause that Parkmed’s services are not in the same product market
as those provided by the three multidisciplinary hospitals, and that the acquisition of
control by Mediclinic over Parkmed would not give rise to any competition or public
interest concerns. The dispute is about Mediclinic’s acquisition of control over Wilmed
and Sunningdale.
[15] The context within which the proposed merger should be understood is that there
are three large corporate hospital groups in South Africa: Netcare, Life Healthcare and
Mediclinic. Many independent hospita ls are affiliated to the National Health
Network (NHN), a non-profit company. Nationally, the numbers of hospitals and beds
operated by these four groups, and by unaffiliated independents, are as follows:7
(a) Netcare: 54 hospitals/10,004 beds (24.9%);
(b) NHN: 62 hospitals/6,611 beds (24.7%);
(c) Life: 57 hospitals/7,987 beds (21.3%);
(d) Mediclinic: 50 hospitals/7,164 beds (20.3%);
(e) Unaffiliated: 3,065 beds (8.8%);
(f) Total beds: 34,831.
The target hospitals have 247 beds. If they are acquired by Mediclinic, the latter’s
national market share based on beds will increase by about 0.7%.
[16] Historically the NHN has been permitted, by way of an exemption granted in
terms of section 10 of the Act, to negotiate tariffs and other benefits with medical
schemes on behalf of its affiliated hospitals. In November 2018 , this exemption was
expanded to include procurement on behalf of affiliated hospitals. Target hospitals are
part of the NHN.
7 The national market share, by number of beds, is given in brackets. See Mediclinic Southern Africa (Pty) Ltd v
The Competition Commission [2020] ZACAC 3(Competition Appeal Court judgment) at para 5.
MOGOENG CJ
9
[17] Apart from Mediclinic Potch efstroom, there is one other multidiscipl inary
hospital in Potchefstroom, MooiMed, which falls under the NHN. The drive -time
between Mediclinic Potchefstroom and MooiMed is five minutes. Apart from the target
hospitals, there is one other multidisciplinary hospital in Klerksdorp, Life Anncron,
which belongs to the Life Healthcare g roup of hospitals . The drive -time between
Wilmed and Anncron is also five minutes.
[18] Mediclinic intends acquiring a controlling share in Matlosana. And it will
post-merger own inter alia Mediclinic Potchefstroom and M atlosana’s Wilmed Park
Private Hospital and Sunningdale Hospital, all multi -disciplinary private hospitals, as
indicated, located in the North West Province.
[19] The robust, common cause evidence in this matter was found by the Tribunal to
be that the proposed transaction will result in a significant increase in tariffs at the target
hospitals when their tariff files change from the current NHN tariff files to the
Mediclinic tariff files. This is because Mediclinic has, in comparison to the NHN, been
able to achieve higher tariffs to date.
[20] It was also common cause that the tariff, which comes about because of national
negotiations between hospital groups and medical schemes, is the major component of
the total cost to a patient for hospital services, s ometimes referred to as cost per event.
The differences in tariff must, in the Tribunal’s view, be weighed against other factors
such as the cost of ethicals and surgicals to arrive at a final cost per event, which is the
relevant figure for assessing the pricing effects of the proposed merger. According to
the Tribunal, most medical aids raised concerns in relation to the anticipated effects of
the proposed transaction on competition – especially in relation to tariff effects.
[21] The Tribunal concluded that the merger would remove the lower tariffs that are
available to uninsured patients at the target hospitals and the proposed merger would
significantly affect the uninsured patients by limiting their ability to switch to cheaper
hospitals which have hitherto been the target hospitals. These uninsured patients do not
MOGOENG CJ
10
have the benefit of a medical scheme negotiating on their behalf and from a public
interest perspective, this group is thus important and significant. They are admittedly
vulnerable when one considers consumer welfare and the importance of private health
care in South Africa.
[22] The merging parties argued that the above common cause tariff effects would be
offset by certain claimed efficiencies8 that Mediclinic could post-merger achieve in the
target hospitals. Mediclinic argued that it was able to achieve inter alia procurement
and utilisation efficiencies at hospitals because it ran them as a group. It also contended
that the NHN is a loose alliance of independent hospitals which only used to have an
exemption to bargain tariffs collectively and not to procure collectively. Mediclinic
further maintained that the relevant counterfactual9 to the proposed merger is the status
quo and that the actuaries based their calculations on this being the case without
considering the effect of these efficiencies.
[23] The Tribunal noted that , between the end of the hearing of oral testimonies on
13 June 2018 and final argument on 12 December 2018 and 15 January 2019 , a new
development occurred which changed the relevant counterfactual. This was that in
November 2018 the Commission published its decision to conditionally approve an
exemption application of the NHN to undertake collective or centralised procurement
on behalf of its members. Because of the relative size of the NHN and the large volumes
of surgicals and ethicals that it will procure on behalf of its members after the
exemption, the Tribunal concluded that the procurement costs of Wilmed and
Sunningdale will significantly reduce absent the proposed merger.10 The Tribunal also
held that the merging parties failed to demonstrate that other likely, merger -specific,
timely efficiencies would result from the proposed merger that would outweigh the
likely adverse tariff and other anti-competitive effects.
8 Technological efficiencies which ought to be considered in determining if the merger is likely to substantially
prevent competition.
9 Mediclinic Southern Africa (Pty) Limited v Matlosana Medical Health Services (Pty) Limited [2019] 2 CPLR
805 (CT) (Tribunal judgment) at para 10.
10 Id.
MOGOENG CJ
11
[24] The Tribunal also observed that certain medical schemes raised concerns in
relation to increased concentration and regional dominance 11 and its effects on
Mediclinic’s bargaining position in negotiations. It also concluded that the merging
parties would, post-merger, be the dominant player in the market for the provision of
private multi -disciplinary acute inpatient hospital services in the “MaJB” area
consisting of the Ditsobotla, City of Matlosana and JB Marks local municipalities with
a combined market share of approximately 63% – a market share that markedly towers
over that of the next largest competitor.
[25] The Tribunal concluded that the merging parties’ dominant position in the
relevant market and the combined Mediclinic Potchefstroom, Wilmed and Sunningdale
post-merger capability to provide a medical scheme wanting representation in the
relevant geographic area with a complete coverage and range of services, would leave
the medical schemes with little or no choice but to include the merged entity when
constructing networks, including designated service providers. 12 It held the view that
the proposed merger would make medical schemes’ and patients’ outside options much
less attractive, giving the merged firm the ability to offer lower or no discounts on
designated service providers and deteriorate non -price factors13 in the relevant market.
It also held that the medical aid members on the various low -cost options collectively
are an important group from a public interest perspective. And that this is so because
they are particularly vulnerable to the increasing costs of private health care in South
Africa. The Tribunal went on to say that if the parties on the low-cost options could no
longer afford private health care, this would put further constraints on the public health
care sector in our country.
11 Id at para 313, after considering submissions from the medical schemes, the Tribunal concluded that the merging
parties will post merger have a dominant position in the market.
12 This is a healthcare provider or a group of healthcare providers selected by a scheme as a preferred provider(s)
to offer to its members the diagnosis, treatment and care for PMB conditions.
13 This refers to clinical quality and patient experience.
MOGOENG CJ
12
[26] The Tribunal also took account of evidence to the effect that Mediclinic has, in
the past, attempted to leverage its dominance in one geographic region. This, it said,
was where it did not face much competition. It reportedly required medical schemes to
increase their utilisation of hospital facilities in a geographic region where it does face
competition. Discovered correspondence in this case did, according to the Tribunal,
reveal that the attainment of a dominant position in one geographic area or market can
be leveraged to restrict members’ choice of hospitals in a different geographic area or
market. Because restricting choice is also considered to have an anticompetitive effect,
the proposed merger may, in the Tribunal’s view, potentially also have adverse effects
on consumers outside of the defined relevant geographic market.
[27] From a non -price competition perspective, the Tribunal concluded that the
proposed merger will likely lead to a deteriorat ion in patient experience at the target
hospitals if it is implemented.
[28] The merging parties submitted a continual iteration of different behavioural
conditions14 to address the competition concerns. This included a pricing remedy in the
form of a post -merger discount off the Mediclinic tariffs. Considering the concerns
raised by medical schemes, the Tribunal found that the proposed remedies did not
address the source of the competitive harm, were limited in duration and were also
inappropriate or inadequate in several other respects. The more pointed example it cited
was the Commission’s inability to effectively monitor and enforce the various proposed
behavioural conditions.
[29] It was found that the adverse effects of the merger were not confined to the
post-merger prevention or lessening of competition but also extended to public interest
grounds that had to be considered by the Tribunal in terms of section 12A(3)(a) of
the Act, which requires a consideration of the effects of a merger on “ a particular
industrial sector or region”.
14 Tribunal judgment above n 9 at para 18.
MOGOENG CJ
13
[30] The proposed merger would, in the view of the Tribunal, have a significant effect
on the health care costs of both insured and uninsured patients living in a specific region,
the rural Potchefstroom/Klerksdorp region, in view of the target hospitals’ significantly
lower tariffs in comparison to Mediclinic. Moreover, the uninsured patients in that area,
who are a vulnerable group, would, as stated, have less choice of cheaper hospitals post-
merger and this would adversely affect their ability to switch between cheaper options.
The Tribunal emphasised that the robust common cause evidence was that the proposed
merger would significantly increase the tariffs at the target hospitals for both the insured
and uninsured patient market segments. And it would thus, in the Tribunal’s view, lead
to an adverse public interest effect with no countervailing positive public interest
ground advanced to mitigate this.
[31] For these reasons, on 29 January 2019 the Tribunal prohibited the merger.
[32] Aggrieved by the prohibition, the respondents successfully lodged an appeal to
the Competition Appeal Court against the findings and remedy of the Tribunal. As a
result of that outcome, the Commission has now approached this Court for leave to
appeal.
Issues
[33] The main issues are:
(a) leave to appeal;
(b) is this a case in which the Competition Appeal Court was , in law,
entitled to interfere with the findings and remedy of the Tribunal;
(c) did that Court have regard to the relevant provisions of the
Constitution and act in line with them;
(d) did it pay proper attention to the Preamble, purpose and relevant
provisions of the Act, high costs in the private health care sector
MOGOENG CJ
14
and the impact that the merger was likely to have on the consumers
within the context of considerations of public interest;
(e) is the merger likely to substantially prevent or lessen competition;
and
(f) remedy.
Jurisdiction and leave to appeal
[34] Whether leave to appeal should be granted is essentially a function of
establishing two crit ical factors. The first is whether the jurisdiction of this Court is
engaged. And the second and much broader one hinges on the demands of the interests
of justice which, as is the case with jurisdiction, are informed by several factors.
[35] Beginning with jurisdiction, one of the relevant jurisdictional requirements is
that a matter be constitutional in character. 15 Such a matter arises in circumstances
where the issue involved is about the interpretation, protection or enforcement of
constitutional rights and obligations.16 Another is where “the matter raises an arguable
point of law of general public importance which ought to be considered by [this]
Court”.17 Either way, it remains for this Court to finally decide whether the matter falls
within its jurisdiction.18 And any one of the requirements grappled with immediately
below must inescapably be met, for it to be established.
[36] The merger that is the subject-matter of this litigation is in the health care sector.
And the case is essentially about whether access to private health care services would
be impeded, enhanced or unaffected by the merger. It involves the interpretation ,
protection and actualisation of this constitutional right and therefore implicates the
constitutional right of access to health care services.19 Arguably, it also concerns the
15 Section 167(3)(b)(i) of the Constitution.
16 Id at section 167(7).
17 Id at section 167(3)(b)(ii).
18 Id at section 167(3)(c).
19 Id at section 27.
MOGOENG CJ
15
obligation of the State to respect, promote, protect and fulfil this right as well20 as a
court’s obligation to promote the spirit, purport and objects of the Bill of Rights when
interpreting legislation.21
[37] The issues concerning competition in this particular economic sector, what the
test or correct interpretive approach to section 12A is, and under which circumstances
it would be appropriate for the Competition Appeal Court, as an appellate court, to
interfere with and set aside the factual and policy findings as well as the remedy of the
Tribunal, which is a trial court equivalent, are points of law which are arguable in this
matter. These issues are intertwined with the need to open and allow for greater
participation and ownership by more South Africans in that economic sector and access
to or the affordability of private health care services. And they are no doubt of general
public importance, implicating the macro -economic landscape in the sphere of health
care services. All things considered, these are matters that have some merit and deserve
the attention of this Court.
[38] Noteworthy are factors that implicate this Court’s jurisdiction . They do not
necessarily have to be raised by litigan ts. It would suffice that “the matter raises” an
arguable point of law of general public importance for this Court to have jurisdiction.
Meaning, even if an applicant might not have raised an arguable point of law of general
public importance, that is manifestly raised by the matter, it would still be open to this
Court to consider its jurisdiction as established, based on that point.
[39] Not only is the jurisdiction of this Court engaged here, but the fact that there is a
majority and a minority decision in the Competition Appeal Court concerning important
legal questions does, according to our decision in De Klerk,22 point strongly to the need
to grant leave. It bears emphasis, that questions around circumstances under which the
Competition Appeal Court may interfere with the factual findings or predictive
20 Id at section 7.
21 Id at section 39(2).
22 De Klerk v Minister of Police [2019] ZACC 32; 2020 (1) SACR 1 (CC); 2019 (12) BCLR 1425 (CC) at para 12.
MOGOENG CJ
16
decisions of the Tribunal and the exercise of its discretion in relation to remedy need to
be addressed squarely by this Court. The Commission has reasonable prospects of
success. I am satisfied that it is in the interests of justice that leave be granted.
The Tribunal’s power on mergers
[40] Section 12A of the Act sets out the powers of the Commission and the Tribunal
in considering a merger—
“12A. 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 le ssening 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—
MOGOENG CJ
17
(a) the actual and potential level of import competition in the
market;
(b) the ease of entry into the m arket, 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 remo val 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.”
[41] It was in the exercise of these powers that the Tribunal concluded that the
proposed merger was likely to substantially lessen competition. It then assessed the
strength of competition before and after the proposed merger in the relevant market with
particular reference to the eas e or difficulty with which new players would gain entry
into the market regard being had to the tariffs and regulatory barriers. It for instance
considered that it took many years, about nine to ten, for existing private hospitals, like
MooiMed in Potchefstroom, to have additional beds or other facilities approved by the
Department of Health , North West . And it concluded that entry was not only very
difficult at a regulatory level but that it was even more difficult to start an altogether
MOGOENG CJ
18
new establishment in the private health care sector by reason of the capital expenditure
inevitably involved. This would necessarily affect the previously disadvantaged as well
as small and medium enterprises desirous of entering into this economic sector. As
stated, th e Tribunal also had regard to national concentration levels , the regional
dominance of Mediclinic and the impact of that on competition should the proposed
merger be approved.
[42] The Tribunal, as will be pointed out later, took account of the impact of the
merger on the private health care services sector or region, as an industry, and the
inability of the merger to promote a greater spread of ownership by a greater number of
South Africans in line with the Preamble to the Act and its purpose. Presumably, th e
plight of the disadvantaged aspirant entrants in the health care services market was
considered as well. It again bears emphasis that it concluded that the merger cannot be
justified on substantial public interest grounds regard being had to, among other things,
the predictable hike in tariffs that it would bring about, the impact on the consumer’s
ability to choose cheaper options and the need to give practical expression to the
constitutional right to have access to health care services, particularly i n the private
sector.
The Competition Appeal Court’s power to interfere with the Tribunal’s findings
[43] In a majority judgment, the Competition Appeal Court reversed the findings of
the Tribunal. And the question arises whether it was legally empowered to do so under
the circumstances. To answer this question properly, requires a brief tour of our
jurisprudential landscape to view the appellate courts’ powers to interfere with or set
aside factual findings and remedies of trial courts.
[44] Like all appellate courts, the Competition Appeal Court does not have unbridled
powers to interfere with the decision of the Tribunal. Its powers to interfere with the
decision of the Tribunal were more aptly set out by Rogers JA in Imerys in these terms:
MOGOENG CJ
19
“Where a determination of the Tribunal on a matter identified in section 12A(1) is
brought on appeal, this Court will, apart from the well-known restrictions on appellate
interference in factual findings, show a measure of deference to the Tribunal. The
matter was put thus in the Schumann Sasol case:
‘The approach which this Court adopts to an appeal against the
decision of the Tribunal in respect of a merger should take cognisance
of the composition and role of the Tribunal as a specialist body which
consists not only of lawyers but also of members possessed of the
necessary financial and economic knowledge and thorough grasp of
the relevant policy issues required in these kind of deliberations.
Section 12A requires that the Tribunal make a determination after a
holistic inquiry into whether the proposed merger is likely to
substantially prevent or lessen competition. In assessing such a
decision, this Court should take account of the composition and
expertise of the Tribunal as well as the nature of the enquiry w hich
entails an element of probabilistic investigation into the effect of the
proposed merger . . . . In its decision as to whether to set aside, amend
or confirm the decision of the Tribunal, this Court must be cautious
before imposing its own conception of the policy considerations
adopted by the Tribunal. The Court should seek rather to examine and
test rigorously the justifications offered by the Tribunal for the
decision to which it has arrived before it invo kes its powers in terms
of section 17.’”23
[45] Although the majority could not be said to have forgotten the essence and
applicability of what it referred to in Imerys as “the well-known restrictions on appellate
interference in factual findings”24 it does not appear to have acted in keeping with that
understanding. It is therefore necessary that we remind ourselves of those well -known
guiding principles as articulated by this Court in Bernert25 and Makate26. In Bernert
Ngcobo CJ said:
23Imerys South Africa (Pty) Ltd v The Competition Commission [2017] ZACAC 1; 2017 JDR 0531 (CAC) (Imerys)
at para 43.
24 Id.
25 Bernert v Absa Bank Ltd [2010] ZACC 28; 2011 (3) SA 92 (CC); 2011 (4) BCLR 329 (CC) (Bernert).
26 Makate v Vodacom (Pty) Ltd [2016] ZACC 13; 2016 (4) SA 121 (CC); 2016 (6) BCLR 709 (CC) (Makate).
MOGOENG CJ
20
“The principle that an appellate court will not ordinarily interfere with a factual finding
by a trial court is not an inflexible one . . . . this rule of practice should not be used to
‘tie the hands of appellate courts’. It should be used to assist, and not to hamper, the
appellate court to do justice to the case befor e it. Thus, where there is a misdirection
on the facts by the trial court, the appellate court is entitled to disregard the findings on
facts and come to its own conclusion on the facts as they appear on the record.
Similarly, where the appellate court i s convinced that the conclusion reached by the
trial court is clearly wrong, it will reverse it.”27
Interference with factual findings by appellate courts would thus be justified only in the
event of a misdirection or a clearly wrong decision. And this is to be done for the sole
purpose of achieving justice.
[46] In Makate Jafta J, drawing from the above-quoted principle, had this to say about
an appellate court’s entitlement to interfere with findings of fact:
“But even in the appeal, the deference afforded to a trial court’s credibility findings
must not be overstated. If it emerges from the record that the trial court misdirected
itself on the facts or that it came to a wrong conclusion, the appellate court is
duty-bound to overrule factual findings of the trial court so as to do justice to the
case.”28
[47] The Justice went on to say:
“Here there was no misdirection and the trial court did not reach a wrong conclusion .
On the contrary, it comprehensively analysed the evidence and set out compelling
reasons for accepting evidence led by the applicant and rejecting that of the respondent.
Consequently, we must approach this matter on the footing that the evidence of an
agreement between the applicant and Mr Geissler was established.”29
27 Bernert above n 25 at para 106.
28 Makate above note 26 at para 40.
29 Id at para 41.
MOGOENG CJ
21
[48] This conclusion, in Makate, regarding how the trial court approached and dealt
with factual issues or disputes, is on all fours with what is to be made of the Tribunal’s
factual findings in this matter. Neither did the Tribunal misdirect itself nor can it rightly
be said to have been clearly wrong in its conclusion on the factual or policy issues. The
Competition Appeal Court therefore had no legally-acceptable basis for interfering with
the Tribunal’s analysis and compelling reasons advanced for its conclusion and remedy.
But, there is more.
[49] The Tribunal embarked on its probabilistic investigation while it was enquiring
into the effect of the merger. But, the Competition Appeal Court did not factor this and
the Tribunal’s specialist character and thorough grasp of economic, financial and policy
issues into its reflections. Interestingly and somewhat tellingly, even the Competition
Appeal Court was constrained to pass the following compl iment about the Tribunal’s
reasoning: “[t]he Tribunal, to whose careful and comprehensive reasons I pay tribute,
make the following key findings”.30
[50] The reversal of the Tribunal’s factual findings and decision on remedy is not a
consequence of a rigorous test and examination of its justifications with due deference
to the expertise of its members demanded of the Competition Appeal Court by its Imerys
and Schumann31 decisions. It is more of an imposition of that Court’s conception of
what is right and a consequential replacement of the Tribunal’s factual findings and
discretionary decision on remedy with its own preference.
[51] Based on the expertise of its members, the evidence of economists, and other
expert witnesses, the Tribunal made certain decisions. Those factual and policy
decisions are indeed well -reasoned, insightful and comprehensive. I will limit myself
to highlighting only a few key findings that do not require tha t we delve into factual
disputes, which would in any event have been most inappropriate for this apex Court to
30 Competition Appeal Court judgment above n 7 at para 20.
31 Schumann Sasol (SA) (Pty) Ltd v Price’s Daelite (Pty) Ltd [2002] ZACAC 2; [2001-2002] CPLR 84 (CAC).
MOGOENG CJ
22
do. And they are whether the merger would give rise to a substantial lessening of
competition; the determination of the local geographic market ; regional dominance; a
likelihood of harm ; or a substantially negative impact on the interests of the public ,
regard being had to the constitutional right of access to health care services and whether
prohibition is the appropriate remedy under the circumstances.
[52] Additional to the test for setting aside factual and policy findings on appeal, it is
necessary that brief reflections be shared on the test for the assessment of harm or the
substantial prevention or lessening of competition and the correct approach to
constitutional interpretation.
[53] Beginning with the test and the correct interpretive approach, the Appeal Court
failed to give proper effect to the purpose of the Act set out in section 2(b). This is
particularly so in relation to its assessme nt of the likely substantial prevention or
lessening of competition and public interest considerations. It also misdirected itself in
a material respect by construing section 12A(1)(a) and (2) of the Act as requiring that a
price increase post-merger be shown to be the result of the market share changes, which
it termed “enhancement of market power”. This is not the test required by the Act. And
nothing in the language and context of section 12A(1)(a) and (2) allows for the
assessment to be conducted wit h reference to the “enhancement of market power”
which is not even among the factors listed in section 12A(2). There is no textual or
contextual support for this new test. In Mondi,32 the Competition Appeal Court itself
accepted that the assessment of harm has to be conducted within the specific framework
of the Act. This enquiry necessitates recourse to the Preamble to the Act and the
purpose thereof as set out in section 2. 33 The Appeal Court thus failed to fol low this
approach in circumstances where it was required to and innovatively laid down the
“enhancement of market power” as the yardstick for the assessment to be conducted
under section 12A(1)(a) and (2).
32 Mondi Limited v Kohler Cores and Tubes [2003] ZACAC 1; [2003] 1 CPLR 25 (CAC) (Mondi).
33 Id at para 48.
MOGOENG CJ
23
[54] All that section 12A requires in th is regard is t hat a determination be made
whether there is a substantial prevention or lessening of competition . And this is
ordinarily measured with reference to a potential increase in price. It does not lay down
the “enhancement of market power” as the test or provide any basis for a court to do so.
It follows that the majority departed from the wording of the Act which is the point of
departure in statutory interpretation.
[55] In its interpretation of section 12A(1)(a) and (2) of the Act, the majority
overlooked sections 7(2) and 39(2) of the Constitution, thus failing to adopt the correct
interpretive approach to statutes as set out in this Court ’s judgments.34 Its approach
fails to advance the purpose of the Act and to promote the spirit, purport and object of
section 27 of the Constitution.
[56] That said, a somewhat detailed elaboration on the impermissibility of the Appeal
Court’s interference with the Tribunal’s decision follows. This is not to be mistaken
for an attempt to determine which of the factual findings made by the Tribunal or the
Appeal Court are correct. Its purpose is merely to demonstrate that the Tribunal dealt
with all the issues in line with its statutory powers , the jurisprudence of the Appeal
Court and this Court . Additionally, it is to make the point that the Appeal Court was
not entitled, in law, to interfere with the Tribunal’s decision.
Local geographic market and substantial lessening of competition
[57] Based on the internal documentation of the merging parties and all other
evidence tendered, the Tribunal concluded that Potchefstroom and Klerksdorp should
constitute or be part of one local geographic market for the provision of private
multidisciplinary health care services. Unsurprisingly, because of the proximity of the
two cities. Additionally, the historical trend reveals that patients from places as far
away as 150km use the health care facilities in either of these cities for their treatment.
34 Cool Ideas v 1186 CC v Hubbard [2014] ZACC 16; 2014 (4) SA 474 (CC); 2014 (8) BCLR 869 (CC).
MOGOENG CJ
24
Regardless of what the trend might have been, concerning the willingness or apparent
reluctance of the residents of Potchefstroom to travel to and use the Klerksdorp private
multidisciplinary hospitals and vice versa, it cannot be a misdirection or a clearly wrong
decision for the Tribunal to have found that there i s actual competition or a real
likelihood of future competition between similarly poised hospitals in the two cities.
After all, they are only 50km and a 41 minutes’ drive apart. And this , the Tribunal
considered together with the trends relied on by the Competition Appeal Court for
setting aside the Tribunal’s determination of the local geographic market. If patients
from rural areas could travel for more than double the distance between Klerksdorp and
Potchefstroom, although admittedly because they hav e no facilities nearby, how can it
be clearly wrong or a misdirection for the Tribunal to have concluded that residents of
these two cities could, as some have already done, travel from one city to another in
search of cheaper or high-quality health care services?
[58] More importantly, as both the Tribunal and the Competition Appeal Court
minority’s decisions observe, Mediclinic’s own internal strategic documents have, as
already said, revealed that it considers Klerksdorp and Potchefstroom private
multidisciplinary hospitals to be competitors. It took some strenuous exercise for the
majority to find some basis to support a view to the contrary. That said, the centrality
of the local geographic market in determining whether the merger would lessen or not
lessen competition substantially is self -evident here. The separation of the two cities
for the determination of the local geographic market renders Mediclinic’s footprints in
Potchefstroom irrelevant to that determination. And that would then mean that the
question of the possible regional dominance of Mediclinic, as a result of its acquisition
of the two target hospitals in Klerksdorp, is thereby eliminated. Consequently, it would
then simply be a case of a new player or replacement in the sector, that poses no threat
to competition , harmlessly arriving in Klerksdorp. All this would then lead to the
merger not being viewed as one that would result in the removal of a potentially or
actually effective competitor to Mediclinic Potchefstroom in the form of th e target
MOGOENG CJ
25
firm.35 This factor alone has, as just indicated, contributed immensely to the reversal
of the Tribunal’s factual and policy findings as well as its remedy.
[59] The Appeal Court’s majority rejected the findings of the Tribunal for reasons
that do not demonstrate how the Tribunal could be said to have misdirected itself or
been clearly wrong in its factual findings or policy decisions. Some of its key reasons
are that no evidence was led to show that patients from Potchefstroom are likely to
travel to Klerksdorp in the event of a small but significant non -transitory increase in
price (SSNIP)36 being imposed by hospitals in any of the two cities. And, as stated, that
the history shows that only a small percentage of patients travelled from one city to
another for medical treatment and presumably only when the specialist services they
needed were not available in hospitals in their resident city. It also found that more
patients do travel distances much longer than the distance between Potchefstroom and
Klerksdorp, unlike the residents of these cities, only because they come from rural areas
where similar medical facilities do not exist. They are, so to speak, forced by
circumstances beyond their control to do so. The majority also placed some premium
on inconvenience, travelling costs and the time factor as countervailing factors against
the possible switch of “allegiance” in search of more affordable tariffs or better quality
of services.
[60] Furthermore, the Competition Appeal Court dismissed Mediclinic’ s internal
document that reveals that it regards private multidisciplinary hospitals in Klerksdorp
as rivals or competitors of its Potchefstroom outfit for reasons that are not clear and
satisfactory. It sought to explain away this damaging document as on e that “contains
the puffery one would expect in a sales pitch”. That is not even what Mediclinic or the
merging parties said in their own defence. Company documents must be taken for what
35 See section 12A(2)(h) of the Act.
36 The “SSNIP test” defines a market by asking whether a small (usually 5 -10%) but non -transitory increase in
price of the impugned good would cause customers to procure a substitute for the good (in which case such
substitutes fall within the relevant market), or would cause customers to procure the good (or its substitute) from
a different geographical location (in which case that location falls within the relevant market).
MOGOENG CJ
26
they plainly represent or what they actually say and that is what the Tribunal did. The
Tribunal cannot therefore be faulted for taking the view, as it did, that these strategic
documents were the most reliable source of what the merging parties regarded as the
relevant geographic market because “they were prepared based on commercial realities
at the time and not for purposes of the merger proceedings”.
[61] Additionally, the Court treated and reduced the predicted and undisputed tariff
hike to the level of insignificance. Lest we forget, to the overwhelming majority of
South Africans, regard being had to our acute economic inequalities, even a 1% fuel or
bread price hike probably constitutes a threat to their presumably shallow pockets and
survival. And to the vulnerable group of uninsured patients it is even more so with the
predicted percentage hike for health care services. It was therefore most unfortunate
that the plight of the 100 or 200 uninsured patients that receive treatment from the
Potchefstroom or Klerksdorp private multidisciplinary hospitals per year, was not
accorded and handled, by the majority, with the necessary sensitivity and concern that
their vulnerability c ries out for or deserves. And that Court is , with respect, not in a
position to tell whether or not the uninsured are price -sensitive. And we would all do
well to avoid speculation on this issue.
[62] It is quite interesting and telling to note how the majority concluded its reasoning
on the issues of the local geographic market and substantial lessening of competition.
It, among other things, said—
“I thus consider that the Tribunal erred in holding that the relevant local market
included both Klerksdorp and Potchefstroom. The Tribunal should have held that only
the Klerksdorp hospitals compete for Klerksdorp patients and only Potchefstroom
hospitals compete for Potchefstroom patients.”37
[63] I hasten to say that the test or trigger for the Competition Appeal Court to
exercise its power to interfere with the Tribunal’s findings is not merely that it “erred”.
37 See the Competition Appeal Court judgment above n 7 at para 97.
MOGOENG CJ
27
The Tribunal must have misdirected itself or rendered a decision that is clearly wrong,
as set out in Bernert and Makate as well as Schumann and Imerys. The majority went
on to say:
“Because Potchefstroom and Klerksdorp do not fall in the same local market, the
merger will not give rise to an SLC in relation to the local market within the meaning
of section 12A(1) . . . . Accordingly, any post -merger price increases at the target
hospitals will not be a consequence of an SLC.”38
This buttresses the point made earlier in this judgment that the determination of the
local geographic market is arguably the all essential component of the puzzle here. This
finds further support from the majority’s remarks immediately below.
[64] On regional dominance in particular, the Court had this to say:
“The Tribunal found that the merger would give regional dominance in MaJB, which
Mediclinic could exploit, at a national level, in its negotiations with schemes . . . . To
the extent that the Tribunal’s reasoning depended on its finding that Klerksdorp and
Potchefstroom are part of a single geographical market, it fails at the threshold. To the
extent that it is a self -standing competition concern, the evidence in supp ort of this
theory is not compelling. . . . The Tribunal thus erred in finding that the merger would
confer regional dominance on Mediclinic and that this would give rise to an SLC in
negotiations between hospital groups and schemes for the construction o f designated
or preferred service provider networks.”39
That the Competition Appeal Court does not consider the evidence to be compelling,
and that the Tribunal has in its view erred, does not in law empower it to set aside the
Tribunal’s findings of fact.
[65] The Tribunal did not disregard the trend of a small percentage of patients from
Potchefstroom seeking cheaper or better treatment in Klerksdorp and the residents of
38 Id at paras 98-9.
39 Id at paras 97 and 100-1.
MOGOENG CJ
28
the latter travelling to Potchefstroom for the same reason. It set out to determine the
“smallest geographic area over which a hypothetical monopolist 40 could impose and
sustain a small but significant non -transitory increase in price or effect a deterioration
in non-price effects”. The extent of that market was meant to depend on the distanc e
that a patient would ordinarily be willing to travel in the event of a small but significant
non-transitory increase in price at any of the hospitals.41 And it was in this context that
regard was had, not only to the proximity of the two cities to each o ther and expert
evidence, but also “to what the merging parties’ own strategic documents reveal about
the parameters of the geographic area in which they compete and who their competitors
are in that ‘catchment’ area”. Again I say that Mediclinic had of i ts own accord said
that private multidisciplinary hospitals in Klerksdorp were their competitors. And there
is a detailed analysis of this issue by the Tribunal.42 Although the Competition Appeal
Court found an explanation out of this dilemma for them, it did so and interfered with
the Tribunal’s decision in circumstances where the law does not allow it to.
[66] The Appeal Court’s approach to the provision of private health care services in
a sector so difficult to enter, to survive in and be accessed by the b roader public seems
to inadvertently but effectively undermine the section 27 constitutional imperative, the
need to open up space and ease entry into this sector for new and previously excluded
players. This approach effectively frustrates the need to ta mper with regional, and by
extension national, dominance and to enhance easy competition, which is the set
objective of the Act. As will be demonstrated shortly hereafter, the majority decision
paid scant attention to the Preamble and purpose of the Act a nd thus failed to ensure
that the local geographic market it determines will help consumers to have access to
and freely select the quality and variety of services in the already costly private health
care sector.43
40 See Tribunal judgment above n 9 at para 31.
41 Id at para 123.
42 Id at paras 124–149.
43 See the Competition Appeal Court judgment above n 7 at para 136, which is reproduced at [74].
MOGOENG CJ
29
[67] It is common cause or overwhelmingly accepted or not seriously disputed that:
(a) entry into the private health care services sector is very difficult;
(b) the merger would result in an immediate increase in tariffs in a sector
where costs are already high;
(c) tariff increase would be no less than the predicted percentage;
(d) the tariff would only be kept at a pre-existing level for a limited period;
(e) uninsured patients, who are vulnerable, would be hard hit by the tariff
hike occasioned by the merger;
(f) the Commission would be unable to monitor the measures proposed by
the merging parties to contain the tariff increase that would be occasioned
by the merger; and
(g) Mediclinic is one of the three big unitary players in the private health care
sector.
[68] And to buttress this point, it is nec essary to again have the Tribunal speak to
some of the key features of this case. It said:
“Furthermore, we note that the robust, common cause evidence during these
proceedings was that:
(i) there is a significant difference between the tariffs of Medicl inic and
the target firms, with the target firms having significantly lower tariffs;
(ii) the target firms provide significantly better discounts to uninsured
patients than Mediclinic and on more tariff items; and
(iii) the majority of medical aids were co ncerned about the effects of the
proposed transaction on competition, specifically on tariffs.”44
The implications of the tariff hike for the most vulnerable group of patients – the
uninsured – were dealt with at some length.
44 Tribunal judgment above n 9 at para 160.
MOGOENG CJ
30
[69] The Tribunal identified and sought to arrest the risk of the Potchefstroom and
Klerksdorp combined catchment areas evolving or being marshalled into an effective
dominant regional Mediclinic group. Again, this cannot be said to be a consequence of
the Tribunal’s clearly wrong assess ment of the facts and issues or a misdirection. The
target hospitals provide services at comparatively lower tariffs than Mediclin ic
Potchefstroom. This breathes life into the competitive spirit demanded by the Preamble,
the purpose set out in section 2, the overall thrust of the Act and the constitutional right
of access to health care services. That competitive environment ensures that
“consumers have access to, and can freely select the quality and variety of goods and
services they desire”. Taking this away, as the merger would, was rightly found by the
Tribunal to constitute a substantial lessening of competition.45
[70] The deference, by the Competition Appeal Court to the Tribunal, alluded to in
both Schumann and Imerys, dictates that the Tribunal’s fa ctual findings and
policy-oriented predictive decision should, in this case, have been left unaltered. The
Tribunal has rendered a well-reasoned decision regarding the local geographic market,
and the substantial lessening of competition. And Mediclinic’ s inability to address or
provide a satisfactory solution to the deleterious effect of the immediate post -merger
tariff increase on the consumer or the market, and its long term effects is properly
explained. Much more is required than a mere difference o f opinion or preference, for
the Competition Appeal Court to be entitled to set aside these findings of the Tribunal.
The Constitution and substantial public interest
[71] The Constitution provides for a fundamental human right “to have access to
health care services”.46 In interpreting section 12A of the Act, the Competition Appeal
Court majority was required to have had regard to the provisions of section 39(2) of the
Constitution which provides instructive guidance in construing any provision, including
section 12A, the Preamble and purpose of the Act. This should have been done also
45 Id at paras 436-8.
46 Section 27 of the Constitution.
MOGOENG CJ
31
with due regard to the State’s constitutional obligation 47 to give effect to the rights in
the Bill of Rights. Besides, both the Tribunal and the Competition Appeal Court are
institutions of the State that bear the obligation to facilitate rather than impede, albeit
inadvertently, the right of access to health care services.
[72] That approach to this interpretive exercise gives context to how the Tribunal and
the Competition Appeal Court should have practically embraced their obligation to
promote the spirit, purport and objects of the right to have access to health care services.
In doing so, the pre-existing difficulty to enter that market and, the high and ever-rising
tariffs consumers of medical services already have to contend with in the private sector,
would necessarily have had to be factored into that process.
[73] With that understanding, Mediclinic’s predicted post -merger tariff hike, in this
country of huge inequalities and in this distressed economy, would not have been
understood and treated as insignificant or miniscule as the Appeal Court seems to have
perceived it. To a wealthy South African, the percentage by which tariffs would go up
after the merger is understandably negligible and inconsequential. But, not so to an
average South African who is not even a member of any medical scheme, not that
members of medical schemes necessarily find these high tariffs any eas ier to live with.
Maintaining or increasing the scope for choice of essential and much -needed services
with particular regard to the plight of the financially under-resourced or the vulnerable,
should always be at the back of the decision-makers’ minds when dealing with mergers.
This is, after all, one of the key demands of the Preamble and purpose of the Act.
[74] The Tribunal and the minority judgment confronted and grappled with these
fundamental issues regarding access to medical services in the private s ector in a
practical and realistic way. Not much to that end is evident from the Competition
Appeal Court’s majority judgment. Of grave concern is, again, how the majority dealt
with the implications of its judgment on the constitutional right of access to health care
47 Section 7 of the Constitution.
MOGOENG CJ
32
services, regard being had to the ever-increasing costs in the private health care industry
and the impact thereof on the interests of the public. The majority underscores all the
relevant constitutional and statutory principles but takes t hem no further. This is all it
had to say in this connection:
“The position is different for uninsured patients. Although their number in Klerksdorp
is likely to be small, perhaps only one or two hundred admissions per year, they can be
viewed as a vulnerable class. Medical care is not a discretionary item. Health care is
a fundamental right guaranteed by section 27(1) of the Constitution. Among the
Competition Act’s purposes, as listed in section 2, are to provide consumers with
competitive prices an d product choices, and to advance the social welfare of South
Africans. In the Preamble one reads that the Act was passed inter alia to ‘provide for
markets in which consumers have access to, and can freely select, the quality and
variety of goods and services they desire.”48
The vulnerability of uninsured patients, the fundamental right to access health care
services, the objectives laid out in the Preamble and purpose of the Act and the need for
consumers to have a free and wider choice of the high quality goods and services are
commendably alluded to by the majority here. Sadly, nothing of consequence is said
about them in reasoning its way to setting aside the findings and remedy of the Tribunal.
This is fatal to that Court’s judgment and order.
[75] Not only does the minority judgment allude to the Tribunal’s acute awareness of
the fundamental importance of everyone’s need for the service that lies at the heart of
this matter – health care – but it also went on to say:
“The evidence, in my view, demo nstrates that the proposed merger would undermine
rather than advance the constitutional right of the populace on the MaJB area to health
care. This is because the proposed merger would make access to health care in that
area more rather than less onerous . It would therefore not be in the public interest to
approve the proposed merger.”49
48 Competition Appeal Court judgment above n 7 at para 136.
49 Id at paras 278–9.
MOGOENG CJ
33
[76] The Tribunal expressed itself as follows in these key issues:
“The competition effects of any hospital merger should be considered in the context of
the private health care sector as ‘a particular industrial sector or region’ contemplated
in section 12A(3)(a) of the Act. We concur with the Commission that this sector serves
an essential public good, which the Constitution protects under section 27. The
proposed transaction will have a significant effect on the health care costs of both
insured and uninsured patients living in a specific region – the rural
Potchefstroom/Klerksdorp region, given that the target hospitals have significantly
lower tariffs than Mediclinic. Moreover, the uninsured patients in this area, which are
a vulnerable group, will have less choice of cheaper hospitals post-merger and this will
adversely affect their ability to switch between cheaper options.
The merging parties themselves submitted that it is trite that there are serious concerns
about private health care inflation in South Africa, and that there is a need to curb,
escalating costs. They however submitted that there is substantial debate as to precisely
what the drivers are of such escalations.”50
[77] Here the Tribunal, unlike the majority, sought to do what the Constitution, the
Preamble to the Act and its purpose enjoin it to do. The impact of the merger on health
care costs for both insured and uninsured patients, the vulnerability of u ninsured
patients, and the choice-enhancing effect of costs being lower at target hospitals, were
engaged with and addressed. Additionally, the Tribunal grappled with a pertinent
public interest concern that there is already a high and historical concentr ation of
ownership and control in the private hospital sector which would be somewhat
exacerbated by the proposed merger, and that Mediclinic would have regional
dominance which would have an impact on bargaining dynamics in negotiating for
discounts. It also addressed that the undisputed increase in tariffs at the target hospitals
that must be seen within the broader context of serious concerns about private health
care inflation in South Africa and the need to curb that escalation. The real risk of the
merger limiting the uninsured patients’ choice between alternative hospitals since
50 Tribunal judgment above n 9 at paras 455–6.
MOGOENG CJ
34
cheaper options, in the form of target hospitals and their lower tariffs, would be
eliminated by the merger, was also addressed.
[78] A more significant part of the Tribunal’s c onclusion, that the Competition
Appeal Court has been unable to explain why it is entitled to interfere with, bears
repetition. Here it is:
“We have found that the proposed transaction is likely to result in a substantial
prevention or lessening of compe tition in the relevant market, with significant price
and non -price effects that would be harmful to customers. The merging parties’
proposed behavioural remedies do not address the source of the competitive harm, are
limited in duration and inappropriate or inadequate in a number of respects, including
the Commission’s inability to effectively monitor and enforce the various proposed
behavioural conditions. Furthermore . . . the private hospital market is of public
importance in South Africa with serious concerns about rising private health care costs
in our country and will be prejudiced if the proposed behavioural conditions failed to
remedy the likely substantial prevention or lessening of competition (SLC).
We note that, as the Competition Appeal Court said in Imerys, should market conditions
change, the proposed transaction may still be presented for investigation by the
Commission and possible approval. The door would not be permanently shut to the
merging parties by this prohibition.”51
Remedy
[79] The preceding statement links up well with the remedy component of both the
Tribunal and the Competition Appeal Court’s decisions. And Rogers JA drove that
point home more compellingly in Imerys. He, among other things, said:
“‘The merger will likely gi ve rise to an SLC . Although the proposed conditions are
more likely than not to remedy the likely SLC, there is a reasonable possibility that
they will fail to do so. Therefore, we prohibit the merger.’
[W]here the uncertainty about the adequacy of the c onditions concerns the likely
duration of the SLC rather than the nature and content of the SLC, prohibition has this
51 Id at paras 436–8.
MOGOENG CJ
35
advantage over conditional approval. . . . If the merger is conditionally approved and
the conditions turn out to be inadequate to neutra lise the SLC, the harm cannot be
reversed.”52
[80] This is exactly where the Tribunal found itself here. It concluded that the merger
would most likely give rise to a substantial lessening of competition and that the
conditions put forward by Mediclinic to ame liorate that substantial lessening of
competition were inadequate. Heeding the sound word of caution in Imerys and in the
exercise of its discretion, it chose to prohibit rather than approve the proposed merger.
Evidently, the benefit of doing so was to circumvent the highly detrimental
consequences of approving the merger in circumstances where the predictable h arm,
most likely to flow from the approval, would be irreversible. This would be so should
the remedial conditions propounded by Mediclinic turn out to be inadequate for the
purpose of neutralising the substantial lessening of competition, particularly be cause
the Commission lacked the necessary capacities and resources to effectively monitor
Mediclinic’s compliance. And this applies with equal force to the consequential harm
the merger posed to the substantial interests of the public.
[81] It bears repetitio n, that South Africa is at present the land of gross economic
inequalities. Its wealth or economic ownership and control is concentrated in the hands
of a few. And in the private health care services sector, Mediclinic is one of the three
dominant groups at a national level. Grounding the substantiality of lessened
competition on a tariff hike, as “insignificantly” low as the predictive percentage is to
the opulent, and with due regard to the already high and ever -escalating costs in the
private health care services sector, the already dominant position of a company seeking
to take over and the constitutional imperative to fulfil the right of access to health care
services do, all things considered, justify the discretionary choice of prohibition as a
remedy in this matter. This is supported by the Tribunal’s finding that the
constitutionally-inspired public interest consideration would be harmed rather than
advanced by the proposed merger.
52 Imerys above n 23 at paras 40-1.
MOGOENG CJ
36
[82] The choice of this remedy does not constitute a material misdirection that would
otherwise allow an appellate court to interfere with the exercise of this true discretion.
Laying down the permissible basis for interfering with the exercise of this kind of
discretion this Court had this to say in National Coalition:
“A Court of appeal is not entitled to set aside the decision of a lower court granting or
refusing a postponement in the exercise of its discretion merely because the Court of
appeal would itself, on the facts of the matter before the lower court, have come to a
different conclusion; it may interfere only when it appears that the lower court had not
exercised its discretion judicially, or that it had been influenced by wrong principles or
a misdirection on the facts, or that it had reached a decision which i n the result could
not reasonably have been made by a court properly directing itself to all the relevant
facts and principles. On its face, the complaint embodied in the ground of appeal
sought to be introduced by the amendment does not meet this test be cause it alleges
only an error in the exercise of its discretion by the High Court.”53
Here too, th e Competition Appeal Court identifi es only an error on the part of the
Tribunal.
Conclusion
[83] In sum, all the key issues on which this matter turns were comprehensively and
methodically analysed and sound reasons advanced in support of the findings made.
That the Competition Appeal Court s aw the issues somewhat differently or holds the
view that the Tribunal “erred”, is not the test. The issue is whether the Tribunal, a
specialist adjudicator which had embarked on a probabilistic investigation before it gave
a predictive decision, misdirected itself or was clearly wrong in its key findings and did
commit a material misdirection with regard to remedy. And the answer is NO!
53 National Coalition for Gay and Lesbian Equality v Minister of Home Affairs [1999] ZACC 17; 2000 (2) SA 1
(CC); 2000 (1) BCLR 39 (CC) (National Coalition) at para 11.
MOGOENG CJ
37
[84] The Competition Appeal Court was thus not entitled to set aside that remedy
unless it could demonstrate that this is a case where a material misdirection had been
committed by the Tribunal.54
[85] For these reasons, the findings and remedy of the Tribunal should have been left
intact. The decision of the Competition Appeal Court thus falls to be set aside.
[86] In the view we take of this matter, it is not necessary to deal with the
Commission’s conditional Rule 31 application relating to the exem ption it had granted
to the National Health Network.
Costs
[87] The Commission is the successful party and costs should ordinarily follow the
result. But, it is an institution of the State which draws its budget from the national
fiscus. In line with Biowatch,55 and t here being no exceptional circumstances that
would warrant ordering the respondents to pay the Commission’s costs since
constitutional issues are implicated and ventilated, each party will have to bear its own
costs
Order
[88] In the result, the following order is made:
1. Leave to appeal is granted.
2. The appeal is upheld.
3. The order of the Competition Appeal Court is set aside.
4. There will be no order as to costs.
54 Id.
55 Biowatch Trust v Registrar Genetic Resources [2009] ZACC 14; 2009 (6) SA 232 (CC); 2009 (10) BCLR
1014 (CC).
THERON J
38
THERON J (Khampepe J concurring):
Introduction
[89] I have had the benefit of reading the judgment of my Brother Mogoeng CJ
(main judgment). Regrettably, I am unable to agree that this matter engages our
jurisdiction. In my view, the questions of law which are alleged to arise either amount
to purely factual questions or relate to remarks made by the Competition Appeal Court
that were obiter dicta (comments made in passing) or, at most, are questions about the
application of a settled legal test. Properly understood, this appeal turns on three
questions o f fact: what is the relevant market, will the merger cause a substantial
lessening of competition, and will the merger cause prices at the target hospitals to
increase or the quality of service to decrease?
[90] It is trite that a court is obliged, in terms of section 39(2) of the Constitution, to
interpret legislation in a manner which promotes the spirit, purport and objects of the
Bill of Rights. Accordingly, where the Competition Act is interpreted without sufficient
regard to the section 39(2) injunction, this Court might well have cause to intervene.
But this is not the case here. In this matter, we are not required to interpret the
Competition Act. What we are asked to do, under the guise of constitutional and legal
argument, is to overturn the factua l findings of a specialist court that is statutorily
empowered to make such determinations. This is not what section 167(3)(b) of the
Constitution permits.56
The nature of this matter
[91] As the main judgment explains, the Tribunal and Competition Appeal Cour t
were required to consider whether Mediclinic and Matlosana’s proposed merger should
56 S v Ramabele [2020] ZACC 22; 2020 (2) SACR 604 (CC); 2020 (11) BCLR 1312 (CC) at para 33; Tjiroze v
Appeal Board of the Financial Services Board [2020] ZACC 18; 2021 (1) BCLR 59 (CC) at para 16; Mbatha v
University of Zululand [2013] ZACC 43; 2014 (2) BCLR 123 (CC) at paras 196-8; and S v Boesak [2000] ZACC
25; 2001 (1) SA 912 (CC); 2001 (1) BCLR 36 (CC) (Boesak) at paras 15-6.
THERON J
39
be approved or prohibited. Section 12A of the Competition Act sets out the relevant
inquiry for such a determination. It requires that three questions be answered:
(a) Is t he impugned merger likely to substantially prevent or lessen
competition?57
(b) If so, is the merger likely to result in any technological, efficiency or other
pro-competitive gain which will offset the anti-competitive effects of the
merger, and would not likely be obtained if the merger is prevented, and
can the merger be justified on substantial public interest grounds?58
(c) Irrespective of the answer to the first question, can the merger be justified
on substantial public interest grounds, or do such grounds wei gh against
its approval?59
[92] In order to answer these questions, various antecedent factual inquiries must take
place. In particular, a court must evaluate the relevant facts that undergird an
application of the SSNIP test, 60 and assess the evidence as to th e likely effect that the
proposed merger will have on market conditions and on prices.
[93] This is illustrated by the case before us. For example, before they could apply
section 12A, both the Tribunal and Competition Appeal Court considered the proximity
of Klerksdorp and Potchefstroom, patient flows between those two towns, and the likely
effect of the merger on the hospital market structure and on prices.61
[94] It follows that there is a complex fact-based inquiry in merger proceedings which
is antecedent to t he application and interpretation of section 12A. And crucially, in
57 Section 12A(1) of the Act.
58 Id at section 12A(1)(a) and (b).
59 Id at section 12A(1A).
60 See above n 36.
61 Tribunal judgment above n 9 at paras 125, 146, 205-8, 298 and 338-9 and Competition Appeal Court judgment
above n 7 at paras 44-7, 98, 145 and 202.
THERON J
40
certain cases, such as the one before us, the dispute may turn entirely on this fact-based
inquiry.
Is this Court’s jurisdiction engaged?
[95] For leave to appeal to be granted in this Court, the applicant must meet two
requirements. First, the matter must fall within the jurisdiction of this Court in that it
raises a constitutional issue or an arguable point of law of general public importance.
Second, the interests of justice must warrant that leave to appeal be granted.
[96] The Commission contends that this matter involves four issues which engage our
jurisdiction:
(a) First, it says that the Competition Appeal Court erroneously interpreted
section 12A(1) of the Competition Act, by holding that a change in market
structure is the only relevant consideration in determining whether a
merger will likely cause a substantial lessening of competition.
(b) Secondly, that the Competition Appeal Court failed, in assessing the price
effects of the merger on the public interest, to place an onus on the
merging parties to demonstrate “off-setting efficiencies”.
(c) Thirdly, that the Competition Appeal Court failed to show the required
deference to the Tribunal’s factual determinations and its findings on
remedy. The Commission argues that, in doing so, the Competition
Appeal Court departed from the approach laid down in Imerys
(the deference issue).
(d) Fourthly, that the Competition Appeal Court failed to adequately consider
the right of access to healthcare services in its section 12A inquiry and
that its interpretation and application of section 12A was therefore not
accordance with sections 7(2) and 39(2) o f the Constitution (the
section 27 issue).
THERON J
41
[97] The Commission contends that these issues routinely arise in merger proceedings
and that their determination will affect how the Commission, the Tribunal and the
Competition Appeal Court assess mergers in the future.
[98] The main judgment places particular reliance on the section 27 and deference
issues. In respect of the former, it holds, in substance, that our constitutional jurisdiction
is engaged because the proposed merger is in the healthcare sector and may have an
impact on access to private healthcare services. However, as this Court has held time
and again,62 the fact that a matter impacts or implicates a constitutional right by itself is
insufficient to engage our jurisdiction. In Loureiro, this Court held that—
“the mere fact that a matter is located in an area of the common law that can give effect
to fundamental rights does not necessarily raise a constitutional issue. It must also pose
questions about the interpretation and development of that law and not merely involve
the application of an uncontroversial legal test to the facts.”63
[99] This is because it is difficult to conceive of a matter totally without implications
for constitutional rights. Accordingly, if our jurisdiction was engaged by the mere
implication of constitutional rights, section 167(3)(b)(i) of the Constitution would be
rendered meaningless and o ur doors would be thrust open to adjudicate any and all
disputes. The fact that this matter could implicate section 27 therefore does not mean,
without more, that it engages our jurisdiction.
[100] How is section 27 implicated in this matter? As mentioned, th e first and most
obvious way in which the merger has implications for section 27 is that it is in the
healthcare sector. However, as I have said, this, in itself, does not mean that our
jurisdiction is engaged.
62 Boesak above n 56 at paras 15-6; Loureiro v Imvula Quality Protection (Pty) Ltd [2014] ZACC 4; 2014 (3) SA
394 (CC); 2014 (5) BCLR 511 (CC) at para 33; and Thebus v S [2003] ZACC 12; 2003 (6) SA 505 (CC); 2003
(10) BCLR 1100 (CC) at para 46.
63 Loureiro id at para 33.
THERON J
42
[101] The second way in which section 27 might be implicated, and which appears to
animate the main judgment, is through the Competition Appeal Court’s section 12A(3)
analysis. The main judgment bemoans the fact that, unlike the Tribunal, the
Competition Appeal Court purportedly failed to have regard to the vulnerability of
uninsured patients, and to the fact that the merger might hinder the realisation of
section 27 rights by driving hospital costs up. This appears to be the central basis upon
which the main judgment holds that this matter concerns the State’s obligation to
respect, promote and protect the Constitution, and a court’s duty to interpret legislation
in terms of section 39(2). It is significant that the main judgment’s finding that
section 27 rights are adversely impacted is premised on th e assumption that the
proposed merger will in fact increase concentration in the healthcare market and
increase prices.
[102] With respect, in making this assumption, the main judgment appears to
misconstrue the Competition Appeal Court’s reasoning. In my view , that Court’s
judgment reveals why section 27 is not implicated in a manner that renders this a
constitutional matter. The Competition Appeal Court held, after a careful assessment
of the facts and the Tribunal’s decision, that the impugned merger was not likely to
cause prices to increase, or result in increased concentration in the healthcare market.
It did not hold, as the main judgment appears to suggest, that the vulnerable uninsured
patients were of such a miniscule number as to be irrelevant to th e public interest
inquiry. Indeed, the Competition Appeal Court was clearly alive to the fact that the
services rendered by the merging parties impact upon the realisation of section 27 rights
and was mindful that in this regard uninsured patients stand o n a different footing to
insured patients:
“The position is different for uninsured patients. Although their number in Klerksdorp
is likely to be small, perhaps only […], they can be viewed as a vulnerable class.
Medical care is not a discretionary item. Health care is a fundamental right guaranteed
by section 27(1) of the Constitution. Among the Competition Act’s purposes, as listed
in section 2, are to provide consumers with competitive prices and product choices, and
to advance the social welfare of South Africans. In the preamble one reads that the Act
THERON J
43
was passed inter alia to ‘provide for markets in which consumers have access to, and
can freely select, the quality and variety of goods and services they desire’.”64
[103] Had the Competition Appeal Court failed to take cognisance of these concerns,
our jurisdiction might well have been engaged. We would then have been required to
assess, with regard to sections 27 and 39(2) of the Constitution, whether the plight of
the uninsured patients constituted a “substantial public interest ground” justifying the
prohibition of the merger. The Commission argued that this is precisely what we were
required to assess. But the Competition Appeal Court did not hold that the effect of the
merger on uninsured patients was an irrelevant concern, and this question is therefore
plainly not before us. Rather, as I have said, it held that the likely effect of the merger
was that prices would decrease. To avoid any doubt, I note that early in its judgment
the Competition Appeal Court noted that “prices for uninsured patients in Klerksdorp
might thus go up”.65 However, after considering the actuarial evidence, the Competition
Appeal Court held:
“[O]ne may reasonably expect that the net effect of the merger and the implementation
of Mediclinic’s efficiency initiatives will be that, despite the implementation of
Mediclinic’s higher tariffs, CPE at the targets will fall by about […]%.”66
[104] We might doubt whether the actuarial evidence justified this finding in respect
of both the insured and uninsured, but this was nonetheless Competition Appeal Court’s
finding, and it was plainly a finding of fact. Until this factual finding is set aside, there
is no basis upon which this Court can embark on an enqu iry as to the relevance of
sections 27 and 39(2) when interpreting and applying section 12A. Indeed, if the
Competition Appeal Court’s finding that there will be no price increase stands, how can
it be said that the constitutional rights of uninsured pati ents are imperilled? It should
be recalled that in Jiba, this Court said that “[f]or a constitutional issue to arise the claim
advanced must require the consideration and application of some constitutional rule or
64 Competition Appeal Court judgment above n 7 at para 136.
65 Id at para 137. (Emphasis added.)
66 Id at para 202. This figure has been omitted because it is confidential.
THERON J
44
principle in the process of deciding the matter”.67 Until and unless it is established that
there was a price increase, there is no need to apply section 27 in the context of the
public interest assessment under section 12A. Moreover, and perhaps most importantly,
because the Competition Appeal Court held that the merger would not cause prices to
increase, it cannot be said to have made any binding decision as to the effect of
section 27 on section 12A, or its effect on inquiries into mergers in the healthcare sector.
[105] The third manner in which s ection 27 might be implicated in this dispute, and
which was pressed by the Commission, relates to the interpretation of section 12A(1),
and the question of onus in the public interest inquiry where no substantial lessening of
competition has been shown.
[106] On this score, the Commission argued that the Competition Appeal Court
erroneously interpreted section 12A(1) of the Competition Act, because it did not
observe the section 39(2) injunction to promote the objects of the Bill of Rights. It
contended, in particular, that the Competition Appeal Court erred in holding that for the
purposes of determining whether a merger will cause a substantial lessening of
competition, the only relevant consideration is whether the merger will result in a
change of market share. It also argued that the Competition Appeal Court erroneously
held that, in the context of the public interest enquiry, the merging parties were not
obliged to demonstrate that Mediclinic’s off-setting efficiencies outweighed the public
interest considerations which might have militated against approving the merger. This
runs contrary to section 39(2), the Commission argued, because the
Competition Appeal Court was required to approach the matter “on the basis that it had
an obligation as far as possi ble to lower legal and financial hurdles to ensure the
realisation of the right of access to healthcare services”.
[107] These interpretive questions are, however, irrelevant to a determination of the
Commission’s appeal. Even if the Competition Appeal Court h ad accepted the
67 General Council of the Bar of South Africa v Jiba [2019] ZACC 23; 2019 (8) BCLR 919 (CC) (Jiba) at para 38.
(Emphasis added.)
THERON J
45
Commission’s construction of section 12A(1), it would not have made a different order.
And this is because it found, on the facts, that the merger was not likely to give rise to
a price increase. As a result, to the extent that it made a finding that price effects are
irrelevant to a determination of whether a merger will likely cause a substantial
lessening of competition, this was plainly obiter dictum.
[108] Likewise, while the Competition Appeal Court held that once no substantial
lessening of competition had been shown, the merging parties did not bear the onus of
justifying the merger in terms of section 12A(3), this was in no way determinative of
its finding. Instead, the central basis of the Competition Appeal Court’s decision was
that the merging parties had adduced sufficient evidence to demonstrate that
Mediclinic’s superior efficiencies would offset its higher tariffs, which would likely
mean that prices at the target hospitals would decrease post -merger. The
Competition Appeal Court also evaluated whether any other evidence justified the
prohibition of the merger, and found that there was none. In so doing, it did not rely on
the question of onus. The Competition Appeal Court’s remarks regarding onus were
thus also obiter dicta, and irrelevant to a determination of the present matter.
[109] As a result, this matter is not akin to the various cases in which this Court has
held that its jurisdiction is engaged, despite the fact that it was required to engage in a
determination of factual disputes. In those matters, and unlike in the case before us,
although this Court was required to engage in an assessment of the facts, a legal question
was in dispute, and the impugned ratio decidendi (reason or rationale for the judgment)
of the lower court had determined the answer to the legal question.68
[110] For the same reason, the various questions regarding the correct interpretation of
section 12A and onus do not engage our general jurisdiction. I emphasise, even if the
68 See for example: Premier, Mpumalanga v Executive Committee of the Association of State Aided Schools:
Eastern Transvaal [1998] ZACC 20; 1999 (2) SA 91 (CC); 1999 (2) BCLR 151 (CC); President of the Republic
of South Africa v South African Rugby Football Union [1999] ZACC 11; 2000 (1) SA 1 (CC); 1999 (10) BCLR
1059; Rail Commuters Action Group v Transnet Ltd t/a Metrorail [2004] ZACC 20; 2005 (2) SA 359 (CC); 2005
(4) BCLR 301 (CC); and Thebus above n 62.
THERON J
46
Competition Appeal Court had a dopted the Commission’s interpretation of
section 12A, or imposed an onus on the merging parties in the context of the
section 12A(3) enquiry, it would not have found differently. These legal questions were
immaterial to the Competition Appeal Court’s dec ision, and therefore do not engage
our jurisdiction.
[111] This Court has held that its jurisdiction is not engaged where the alleged
jurisdictional foothold was immaterial to the lower court’s determination. In particular,
in Mbatha, this Court held that “a court’s expression of view on a matter immaterial to
its reasoning cannot confer jurisdiction on an appellate court”. 69 This is precisely the
case here. The various legal questions which the Commission suggests engage this
Court’s jurisdiction, and on whi ch the Competition Appeal Court expressed a view,
were entirely immaterial to that Court’s decision.
[112] That the dispute, in truth, is fundamentally factual, is evident from the
Commission’s founding affidavit:
“It was plain from the merging parties’ argument in the CAC, as it should be plain from
the judgment of the CAC, that the merging parties attacked the Tribunal’s findings of
fact and exercise of remedial discretion. The findings of fact also involved the
Tribunal’s economic evaluation based on the tendered evidence with regard inter alia
to market definition, the likelihood of a substantial lessening of competition (‘SLC’)
and public interest considerations.”
[113] Incorrect findings of fact do not raise constitutional issues. 70 Nor do they raise
points of law.71 As this Court explained in Jiba, “if what is at issue in a particular case
69 Mbatha above n 56 at para 198. In addition, at para 221, in a concurring judgment, Madlanga J reasoned that:
“Based on this and Boesak, in a scenario where it is clear t hat the substance of the contest
between parties is purely factual, it cannot be said to raise a constitutional issue purely because
an applicant says it does. Otherwise, that would be the simplest stratagem by means of which
the unscrupulous would have their issues ventilated in this Court under the guise that they raise
constitutional issues.”
70 Jiba above n 67 at para 49.
71 Id at para 58.
THERON J
47
is the determination of facts, the jurisdiction of this Court is not engaged”.72 Moreover,
incorrect findings of fact are not transformed into legal issues because a constit utional
right is implicated. To hold otherwise is to assume that, somehow, a factual question
can be answered with recourse to a constitutional right.
[114] The only remaining leg upon which our jurisdiction might be established is the
supposedly legal questio n about the circumstances in which the
Competition Appeal Court can permissibly interfere with the factual findings and
remedy of the Tribunal. My Brother Mogoeng CJ says this is an arguable point of law.73
This reasoning is plainly at odds with what this Court held in Jiba. There, it will be
recalled, the Supreme Court of Appeal had overturned various factual findings of the
High Court, in order to overturn the High Court’s finding that the impugned advocates
should be struck from the roll. It was argue d that this interference was impermissible,
and that our jurisdiction was therefore engaged.74 However, as this Court explained:
“It may well be that the majority in the Supreme Court of Appeal here has erroneously
interfered with the discretion of the Hi gh Court. However, this does not raise an
arguable point of law of general public importance. As outlined above, the error here
lies in the factual assessment. A decision that is based on wrong facts does not amount
to an arguable point of law. The enq uiry that is undertaken to correct it remains
factual.”75
[115] Applying the dicta from Jiba, if the Competition Appeal Court erred, it erred in
its factual assessment. This error is not elevated into a legal question by virtue of the
fact that the Competition Appeal Court allegedly failed to pay sufficient deference to
the Tribunal. And the main judgment provides ample demonstration why. In order to
assess whether the Competition Appeal Court erroneously interfered with the
72 Id at para 50.
73 See [37].
74 Jiba above n 67 at para 58.
75 Id.
THERON J
48
Tribunal’s factual findings, the main judgment is forced to evaluate and criticise the
factual findings of the Competition Appeal Court.
[116] That the main judgment does so for the purpose of determining whether the
Competition Appeal Court paid sufficient deference to the Tribunal’s factual findings
does not transform a factual inquiry into a legal one. Where a litigant complain s that
an appeal court overstepped the bounds of permissible interference with factual findings
of a trial court, the assessment that is called for is inevitably factual. A court seized
with such an appeal must establish whether the court a quo erred on the facts in a manner
sufficient to warrant appellate interference, and this invariably entails an evaluation of
the factual findings made by the respective courts. Even if there is a distinction between
revisiting factual findings made by an appeal court and evaluating whether it was
entitled to interfere with factual findings, that distinction, for present purposes, is more
apparent than real. Both would draw this Court into a determination of whether the
Tribunal or Competition Appeal Court were wrong on the facts.
[117] Relatedly, I do not agree that the Competition Appeal Court’s alleged erroneous
interference with the remedial action of the Tribunal means that our jurisdiction is
engaged. This is because, as the Competition Appeal Court correctly explaine d, once
it overturned the findings of the Tribunal in respect of the substantial lessening of
competition and public interest effects, it was at large to determine a suitable remedy.
The main judgment appears to reject this explanation as inadequate. It is difficult to see
why. In circumstances where the Competition Appeal Court finds that the Tribunal
erred in holding that the merger would cause a substantial lessening of competition or
gives rise to public interest concerns justifying its prohibition, it would be absurd to
hold that the Appeal Court was not entitled to interfere with the Tribunal’s remedy.
[118] This is also precisely why the Competition Appeal Court’s findings on remedy
do not engage our jurisdiction: in order to address those findings, we would first have
to overturn its factual findings which permitted interference with the Tribunal’s remedy.
Thus, once again, we are confronted with what is, in reality, a factual question. And,
THERON J
49
as I have been at pains to emphasise, this means that the Commission’s appeal does not
engage our jurisdiction.
[119] In any event, and as the main judgment explains, the principles governing an
appellate court’s interference with the factual findings and discretionary remedial
findings of lower courts are settled. Acc ordingly, on the assumption that the
Competition Appeal Court’s alleged errors were not purely factual, they would amount
to no more than the misapplication of a settled legal test. As this Court has repeatedly
held, the misapplication of a settled legal test does not engage our jurisdiction.76
[120] Lastly, even if, contrary to what I believe to be the correct position, our
jurisdiction is engaged, it would not be in the interests of justice to grant leave. As I
have explained, and as the main judgment demonst rates, in order to upset the decision
of the Competition Appeal Court, this Court is forced to overturn the detailed factual
findings of a specialist court statutorily empowered to make such findings. And while
the main judgment might do so under the pret ence that the Competition Appeal Court
failed to pay sufficient deference to the Tribunal, the assessment remains entirely
factual. Absent a dispute about a legal question which was material to the lower court’s
decision, this is precisely the sort of inq uiry which the interests of justice suggest we
should not undertake.
[121] In this regard, Media 2477 is instructive. There, it will be recalled, this Court
was asked to determine whether pricing above average avoidable cost but below
average total cost amounts to predation. 78 A narrow minority of this Court held that
76 University of Johannesburg v Auckland Park Theological Seminary [2021] ZACC 13; 2021 (8) BCLR 807 (CC)
at para 49; Jiba above n 67 at para 59; Booysen v Minister of Safety and Security [2018] ZACC 18; 2018 (6) SA
1 (CC); 2018 (9) BCLR 1029 (CC) at paras 50 -3; and Phoebus Apollo Aviation CC v Minist er of Safety and
Security [2002] ZACC 26; 2003 (2) SA 34 (CC); 2003 (1) BCLR 14 (CC) at para 9.
77 Competition Commission of South Africa v Media 24 (Pty) Limited [2019] ZACC 26; 2019 (5) SA 598 (CC);
2019 (9) BCLR 1049 (CC) (Media 24).
78 Id at para 34.
THERON J
50
this question did not engage our jur isdiction and that, even if it did, the interests of
justice militated against granting leave.79 To this end, the minority held that:
“The adjudicative institutions under the Competition Act are expert bodies and due
recognition must be given to this, als o in determining the proper constitutional
competence of this Court in relation to competition matters. In addition to the accepted
deference given to other courts in relation to factual findings, this means a similar
deference to the competition authorit ies as better qualified to determine economic
issues.”80
[122] A majority of the Court granted leave.81 But its reasons for doing so echoed the
concerns of the minority about the Competition Appeal Court’s functional competence.
In particular, Goliath AJ explained that “[w]ere this matter to confront the Court with a
factual question, it might well be in the interests of justice to defer to the specialist
courts but as the third judgment points out, ‘this question entails critically examining
the policy and normative implications of the various standards for predatory pricing’”.82
In this matter, we are no t confronted by a question which requires that we engage the
normative or policy underpinnings of any rule of competition law. Instead, and at its
height, this case requires that we assess whether the Tribunal’s findings were
sufficiently erroneous as to warrant interference by the Competition Appeal Court. But
that question, as I have stressed, is fundamentally factual. As a result, and on the
strength of Media 24, even if our jurisdiction is engaged, the interests of justice demand
that we defer to the expertise of the Competition Appeal Court, and thus refuse leave to
appeal.
[123] For these reasons, I would dismiss the appeal.
79 Id at para 124.
80 Id at para 136.
81 Id at para 4.
82 Id at para 52.
For the Applicant:
For the Respondents:
N Maenetje SC and Y Ntloko instructed
by Competition Commission of South
Africa
J Butler SC, M Norton SC and
M MbikIwa instructed by Cliffe Dekker
Hofmeyr