IN THE COMPETITION APPEAL COURT
CASE NUMBER: 02/CAC/SEPTOO
DATE: 13 OCTOBER 2000
In the matter between:
GLAXO WELLCOME (PROPRIETARY) LIMITED
First Appellant
PFIZER LABORATORIES (PROPRIETARY)
LIMITED
Second Appellant
PHARMACARE LIMITED
Third Appellant
SMITHKLINE BEECHAM PHARMACEUTICALS
(PROPRIETARY) LIMITED
Fourth Appellant
WARNER LAMBERT SA (PROPRIETARY LIMITED
Fifth Appellant
SYNERGISTIC ALLIANCE INVESTMENTS
(PROPRIETARY) LIMITED
Sixth Appellant
DRUGGIST DISTRIBUTORS ([PROPRIETARY
LIMITED
Seventh Appellant
and
TERBLANCHE, DIANE, N.O.
First Respondent
FOURIE, FREDERICK, N.0.
Second Respondent
HOLDEN, MERLE, N.O.
Third Respondent
THE COMPETITION TRIBUNAL
Fourth Respondent
NATIONAL ASSOCIATION OF PHARMACEUTICAL
WHOLESALERS
Fifth Respondent
NATIONAL WHOLESALE CHEMISTS
(PROPRIETARY) LIMITED
Sixth Respondent
MIDLANDS WHOLESALE CHEMISTS
(PROPRIETARY) LIMITED, t/a PHARM
PIETERMARITZBURG
Seventh Respondent
EAST CAPE PHARMACEUTICALS LIMITED
t/a ALPHA PHARM EASTERN CAPE
Eighth
Respondent
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FREE STATE BUYING ASSOCIATION
LIMITED, t/a ALPHA PHARM BLOEMFONTEIN
(KEMCO)
Ninth Respondent
PHARMED PHARMACEUTICALS LIMITED
Tenth Respondent
L'ETANGS WHOLESALE CHEMIST CC,
t/a L'ETANGS
Eleventh Respondent
RESEPKOR (PROPRIETARY) LIMITED
t/a RESKOR
Twelfth Respondent
PHARMACEUTICAL WHOLESALERS
MAINSTREET 2 (PROPRIETARY) LIMITED,
t/a NEW UNITED PHARMACEUTICAL
DISTRIBUTORS
Thirteenth Respondent
J U D G M E N T DELIVERED ON 13 OCTOBER 2000.
DAVIS JP:
1.
INTRODUCTION
On 28 August 2000 the Competition Tribunal, acting in terms of section 59(1) of the
Competition Act, 89 of 1998 ("the Act"), granted an order of interim relief to the 5th to 13th respondents against appellants,
of whom the 1st to 5th appellants are pharmaceutical manufacturers and importers who have established a joint exclusive distribution
agreement for their products, the 6th appellant is a company formed by these manufacturers to establish a distribution agency and
the 7th appellant is the distribution agency.
In granting an order the Tribunal justified its decision thus:
"We find that an interim order is necessary in this case to prevent the purposes of the Act from being frustrated. The main purpose
of the Act is to promote and maintain competition. The effect of
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the prohibited practice found in this
case is to lessen competition in the distribution of pharmaceutical products. It is our view that it is reasonably necessary for
us to give the interim relief order, as failure to do so will be allow (sic) the continuous frustration of the purposes of the Act.
If we do not grant the interim order and the claimants subsequently get a final order the competitive process and structure for the
distribution of the respondents' manufacturers products will have been so skewed in favour of DD (7th appellant in the present appeal)
and the respondents, that a final order may not be able to adequately address the effects of DD's conversion on the nature of competition
in the distribution market."
Accordingly the Tribunal made the following order:
1.
The claimants' application for interim relief in terms of section 59 of the Competition Act
89 0f 1998 is granted in respect of the respondents' alleged contraventions of section 4(1)(a) of the Act.
2.
Respondents supply their products directly to the claimants and other wholesalers on terms
and conditions similar to those that apply to transactions between them and the claimants and other wholesalers immediately before
the conversion of DD to a joint exclusive distribution agency for their products.
3.
The order is to remain in force until the earlier of
(i) conclusion of the hearing into the prohibited practices alleged by the
claimants to have been committed by the respondents; or
(ii) the date that is six months after the date of the issue of the order.
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The appellants have now launched an urgent application to suspend the operation and
execution of this order pending the final determination of an application for review and the setting aside of the Tribunal's decision
and order in that matter and an appeal against such decision and order.
APPELLANTS' CASE
Mr Loxtonwho appeared together with Mr Unterhalterand Mr Wilsonon behalf of appellants, submitted that this Court has a power to suspend the operation and execution of any decision of the Tribunal.
In his view this would be consistent with the inherent jurisdiction of the High Court to stay the execution of a judicial order pending
review or appeal proceedings. As Corbett JA(as he then was) stated in SAFCOR FORWARDING (PTY) LTD v NATIONAL TRANSPORT COMMISSION1982(3) SA 654 (A) at 675C-E:
“The decisions of public bodies or officialdom sometimes bear hard on the individual. The impact thereof may be sudden and devastating.
Therefore, as in the case of many other types of litigation, applications for the review of such decisions may require urgent handling
and in proper circumstances the grant of interim relief."
Mr Loxtonsubmitted that the High Court will grant interim relief in circumstances where (a) the applicant can show prima faciethat its rights have been infringed and (b) the balance of convenience favours the granting of such interim relief. See SAFCOR FORWARDING (PTY) LTDsupraat 674-675; SOUTH CAPE CORPORATION (PTY) LTD v ENGINEERING MANAGEMENT SERVICES (PTY) LTD1977(3) SA 534 (A) at 545.
He thus contended that the same considerations should be applied in the present dispute to suspend the decision of
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the Tribunal. The Tribunal's decision should be suspended on the grounds that appellants have a prima facieright to the setting aside of the Tribunal's decision and order on review and or on appeal and that the balance of convenience favours
the suspension of the Tribunal's order.
Before it is possible to canvass the merits of these submissions and hence the substantive
justification for the appeal, it is necessary to examine a jurisdictional argument which was raised by respondents.
THE JURISDICTION OF THIS COURT IN SUSPENDING THE OPERATION OF AN ORDER IN TERMS OF SECTION 59(1)
Mr Nelsonwho appeared together with Mr Van Dorstenon behalf of respondents, referred to section 38(2)(A)(d) of the Act which provides that the Judge President or any other judge of
the Competition Appeal Court designated by the Judge President, may sit alone to consider an application to suspend the operation
and execution of an order that is thesubject of a review or appeal(my emphasis). Accordingly the Tribunal's interim order must be subject to either a review or an appeal before the Competition Appeal
Court may consider the application to suspend the operation and execution of the order.
When the application for a suspension of the Tribunal's order was launched by way
of notice of motion, it was common cause that no application had been made to review the order of the Tribunal. An appeal however
had been launched.
Accordingly, Mr Nelsonreferred to section 37(1) (b) of the Act which provides that the Competition Appeal Court may consider an appeal arising from the
Competition Tribunal in respect of
(i)
any of its final decisions other than a consent order made in terms of section 63; or
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(ii)
any of its interim or interlocutory orders that may, in terms of the Act, be taken on appeal.
Section 58 of the Act which sets out the right of appeal to the Competition Appeal Court,makes no mention of any interlocutory or
interim decision which may be taken on appeal.Thus there is no express provision which recognises an appeal of an order granted by
the Tribunal in terms of section 59.
Mr Nelson'scontention that a decision of the Tribunal in terms of section 59 is not appealable is supported by a decision of Lewis Pon behalf of the Tribunal in SOUTH AFRICAN RAISINS (PTY) LTD v SAD HOLDINGS LTD(Case No: 16/IR/DEC 99). In deciding that a section 59 decision was not appealable, Lewis Psaid:
"The statute clearly does not accord a right of appeal to the Competition Appeal Court in respect of Section 59 hearings. The
claimants are correct in submitting that neither section 17 nor section 58 - or, for that matter, any other provision in the Act
- provides for an appeal against an order of the Tribunal for interim relief. Moreover, the claimant's contention that the common
law and High Court treatment of interim relief supports their interpretation of the Act, is well-founded. In fact, it would appear
that the legislature intended section 59 to provide a remedy similar to a simple interlocutory interdict, which at common law is
not appealable, as opposed to an order that finally and definitively disposes of the matter."
In adopting this approach, Lewis P attempted to reconcile the provisions of the Act with established common law as articulated by Howie JAin GUARDIAN NATIONAL INSURANCE COMPANY LTD v SEARLE NO1999(3) SA 296 (SCA) at 301-302,
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namely:
"Where this approach has been relaxed (the right to appeal the interim order) it has been because the judicial decisions in question,
whether referred to as judgments, orders, rulings or declarations had three attributes. First they were final in effect and not susceptible
of alteration by the court of first instance. Secondly they were definitive of the rights of the parties, for example, because they
granted a definitive and distinct relief. Thirdly, they had the effect of disposing of at least a substantial portion of the relief
claimed."
An order granted by the Tribunal in terms of section 59 does not represent a final
order because it enures only for for a limited period. Furthermore where a person complains against a prohibited practice, or where
the complaint is initiated by the Commissioner in terms of section 44, an inquiry which follows an investigation in terms of section
45 and which would then proceed in terms of sections of 50 or 51 will have to canvass the same issues which were examined by the
Tribunal when it awarded interim relief in terms of section 59. On the basis of this legislative scheme the order granted by the
Tribunal does not meet with the three fundamental attributes to which Howie JAin the GUARDIAN NATIONAL INSURANCEcase, suprahad made reference.
Mr Loxtonsubmitted that although not all interim orders under section 59 are appealable, the words "interim or interlocutory decisions
that may, in terms of this Act, be taken on appeal" should be interpreted to be congruent with the common law. Hence interpretative
guidance should be obtained from the test set out in ZWENI v MINISTER OF LAW AND ORDER1983(1) SA 523 (A) at 533 that judgments and orders are appealable which have the following attributes:
"first a decision must be final in effect and
not susceptible of alteration by the court of first instance;
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second, it must be definitive of the rights of the parties; and third, it must have the effect of disposing of at least a substantial
portion of the relief claimed in the main proceedings."
Mr Loxtoncontended that an interim order in terms of section 59 complied with all these requirements. It was final in effect and was not susceptible
of alteration by the Tribunal. Unlike an interim interdict granted in terms of the common law, a section 59 order could not be altered
by the Tribunal on application by either of the parties or mero motubefore the end of the six-month period prescribed in terms of section 59 or a hearing by the Tribunal which would flow from a section
44 complaint, whichever is the earlier.
As the section 59 order was not capable of anticipation nor was there any guarantee
either that the Competition Commissioner would refer the complaint made in terms of section 44 to the Tribunal, or that the complaint
would be referred on the same basis as the grounds upon which the Tribunal granted the interim order in terms of section 59 , it
could not be contended that such an order effectively functioned in the same fashion as an interim order granted in terms of the
common law.
A section 59 order granted a distinct and definitive relief and accordingly the second
element of the test was met. Mr Loxtonwas constrained to argue that the third element of the ZWENItest was not applicable to section 59 proceedings as in effect a section 59 order was a parallel procedure to that initiated in terms
of the complaint under section 44. Accordingly the consideration of "expense and convenience" that lie at the root of this
third requirement, do not apply in respect of section 59 proceedings and for this reason Mr Loxtonsubmitted that this element was not applicable in
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proceedings governed by section 59.
Mr Loxtonattempted to bolster this argument by reference to section 34 of the Constitution of the Republic of South Africa 108 of 1996, namely
that everyone has the right to have any dispute that can be resolved by the application of law decided in a fair public hearing before
a court or where appropriate an independent and impartial Tribunal or forum. Thus when the empowering statute is unclear to whether
a right to appeal lies to a court of law, he contended that the Constitution obliges a court which is vested with judicial scrutiny
of an administrative organ to hear appeals from decisions of that organ.
The determination of this question does depend upon an examination of the architecture
of the Act. Once a complaint is initiated in terms of section 44, an investigation takes place pursuant to section 45 et seqIn terms of section 50, the Competition Commission can refer the dispute to the Tribunal or issue a notice of non referral in terms
of section 50 of the Act. If a decision is taken not to refer, the complainant can refer the matter in terms of section 51. Then
a determination as to whether a prohibited practice has been established will be examined by the Tribunal. To this extent thus the
hearing by the Tribunal will dispose of the substance of the complaint which was initially canvassed in terms of section 59. For
this reason it is my view that the ZWENItest is inapplicable to the order granted under section 59. The matter will be canvassed again by the Tribunal save in a case where
the complainant does not want to take the matter further (in the event of non referrral) .For reasons which I shall set out presently,
the ambiguity, if any, should be resolved in favour of respondents.
In so far as the recourse to section 34 of the Constitution is concerned, appellants
have already had a right to have the dispute resolved by an independent and impartial Tribunal, the Competition Tribunal, which has
been
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