4.
The applicants have substantial prospects of success in the review application.
In my view, a careful examination of the submissions made by both counsel reveals that there was less of a difference between the
approaches respectively contended for by Mr Loxton and Mr Nelson than would superficially appear to be the case. In considering whether
to grant a stay, a conclusion that an applicant can show prima facie that his or her rights have been infringed and that there is a balance of convenience favouring the granting of such an order will
weigh heavily with a court in the exercise of its discretion.
However in taking this decision the court has a discretion to grant or refuse an application to suspend an order. As Traverso J said
in Santam Limited v Norman and another 1996 (3)SA502(C) at 505 F “It is a discretion which should be exercised judicially but generally speaking a court will grant
a stay of execution where real and substantial justice requires such a stay or where injustice would otherwise be done” see
also Strime v Strime 1983(4)SA850(C) at 852.
The position can be summarised thus: In exercising its discretion a court must, of necessity, enquire as to whether there is a prima facie case that an applicants rights have been infringed. Further the court must locate where the balance of convenience lies. But that
is not all that has to be considered in the exercise of the discretion to grant such an order. Within the context of the Act there
is the additional consideration that the suspension of an interim order in terms of section 59 can, if granted too easily, subvert
the very purpose of an important provision of the Act which created this kind of order. Hence the court must exercise its discretion
by means of a careful consideration of the policy considerations of the act in the context of the facts of the case.
If the test for the successful application for a stay of the execution of a section 59 order nods too generously in favour of the
applicant, Mr Nelson’s contention that the granting of a stay would subvert the very purpose of an order designed to ensure
the promotion of pro-competitive behaviour would be justified. For this reason a court must enquire as to whether the applicant can
show prima facie that its order has infringed a right which applicant enjoys, further that the balance of convenience favours the granting of such
interim relief within the context of the factual matrix of the case and that the injustice caused by the perpetuation of the order
would be greater than the possibility of jeopardizing the purposes of the Act promoted by the continuation of the section 59 order
itself.
5.
Grounds of Review
As set out above, applicants submitted that there were a number of grounds on which the Tribunal’s order could be justifiably
reviewed. However in his argument to the court, Mr Loxton concentrated attention on the vague and ambiguous nature of the order.
He referred for definitional support to the decision in Genticuro AG the Firestone (SA) (Pty) Ltd 1972(1)SA589(A) at 610 D where Trollip JA said, vagueness connotes ‘being not only of double but also of indefinite meaning
which cannot be resolved with the requisite degree of certainty by proper construction”.
Applying this definition, Mr Loxton submitted that the key paragraph in the order of the Tribunal was incapable of being interpreted
with the requisite degree of certainty by means of a proper construction. That paragraph provided that the respondents supply their
products directly to the claimants and other wholesalers on terms and conditions similar to those that applied 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 (our emphasis) .
Mr Loxton submitted that the word ‘similar’ was a particularly difficult word to interpret. As Schreiner ACJ noted in
R v Revelas 1959(1) SA75(A) at 80B-C “obviously there are degrees of similarity or likeness, some approaching, and exceptionally perhaps
even reaching sameness, others amounting to know more than a slight resemblance. The similarity may be basic or superficial, general
or specific. I do not think that the words “a similar” in GN 363 should be given a meaning “the same”. That
is at most a rare sense. And moreover the history of the Government Notices indicates that the word “same” was abandoned
in favour of “similar”. The change could hardly have been designed to make it clear that sameness was intended: rather
it must been aimed at substituting the notion of resemblance”.
In S v Mothobi 1972(3) SA841(O) at 842 E-F Kumleben AJ(as he then was)said “Die woord of begrip ‘ soortgelyk is egte een wat vir extensiewe
of beperkende uitleg vatbaar is. Gevolglik kan daar nie met sekerheid bepaal word welke van hulle binne of buite die besteek van
die voorwaarde val nie. Hoewel ‘n verwysing na ‘n ‘soortgelyke misdaad’ in ‘n voorwaardevan opskorting
soms in ‘n bepaalde verband in orde mag wees , meen die Hof vir die redes vermeld dat die onderhawige geval dit ‘n onwesenlike
mate van onsekerheid skep”.
Mr Loxton submitted that the approach adopted by Kumleben AJ was equally applicable to the order of the Tribunal. The manner in which
the order had been framed left great uncertainty as to how terms of a contract must be understood. For example did the qualifying
word ‘similar’ relate only to an enquiry as to comparative price or to other terms of the contract? To what extent could
terms be adjusted to take account of external exigencies such as inflation? Similarly there was no clarity as to the meaning of a
wholesaler as employed within the context of the order.
Mr Loxton also contended that the manner in which “wholesaler” was employed in the offending paragraph led to uncertainty
in that it was unclear whether the class of person contemplated was limited to companies registered with the South African Pharmaceutical
Council as wholesalers or whether it included all companies who purchase applicants products. If it was only to include the former,
then the order was unclear as to whether the class included only full line wholesalers such as respondents who offer a short line
wholesalers. If it was the latter it was unclear whether the class was limited to non retailers who purchase the principles products
for on sale to retailers or whether it also included retailers and retail buying groups who purchase applicants products for sale
to other retailers.
Mr Loxton also attacked the logic of the reasoning of the Tribunal in justifying the grant of the order. In paragraph 67 of the Tribunal’s
decision, Ms Diane Terblanche writing on behalf of the Tribunal said: “the order we have issued compels the respondent to supply
the claimants and other wholesalers on the same terms and conditions as before the advent of DD”. By contrast the order which
was granted referred to terms and conditions “similar to those that applied to transactions between them ….”
Although applicants have launched an application in terms of Section 66 of the Act to have ambiguities in the order clarified, Mr
Loxton submitted that section 66 only empowers the Tribunal to clarify its decision and vary its order if, on a proper construction,
the meaning thereof is ambiguous. However the Tribunal was not empowered to alter the substance of the decision or order. The ambiguity
and/or vagueness in the order was such that it could not be clarified without altering the very intention of the Tribunal and for
this reason any such ambiguity or vagueness could not be cured in terms of section 66.
Applicants’ further submission that it was not granted a fair hearing in respect of the relief granted in the order is relevant
to this question.
In terms of paragraph 8 of the Notice of Motion for interim relief in terms of section 59 of the Act, respondents approached the Tribunal
for an order in terms of which respondents would be ordered the continue supplying their products to applicants on terms and conditions
identical to those given by respondents to DD. This was the nature of their case. The deliberations before the Tribunal were predicated
upon this form of relief and there was no opportunity given to applicants to provide their views on any alternative approach or alternate
relief of the kind which was granted by the Tribunal in terms of its order. Were the Tribunal to have granted the relief sought in
paragraph 8 of the Notice of Motion, the relief which should have been granted by the Tribunal was to order that applicants were
to continue to supply products to respondents on terms identical to those given by applicants to DD.
In his response, Mr Nelson submitted that applicants were attempting to place imaginary jurisprudential obstacles in respondents way
by presenting certain words as ambiguous rather than conceding that they admitted of some surmountable interpretive difficulty. As
Young J said in R v deKock 1965(2)SA380(SR) at 384 C “the fact that the true interpretation of an Order is a matter of difficulty and even great difficulty
does not necessarily imply that the Order is ambiguous for the purposes of the ambiguity rule. If I am driven to a particular conclusion
then for me there is no ambiguity”.
For this reason Mr Nelson submitted that the word ‘wholesalers’ could only constitute a reference to wholesalers with
whom the manufacturers have engaged previously in business. Accordingly it would include both full and short line wholesalers. There
was evidence before the Tribunal that the respondents were the only remaining full line wholesalers. There was therefore no need
to make reference to other wholesalers if the order was intended to refer only to full line wholesalers. On the assumption that the
order incorrectly referred to other wholesalers this should not be a basis for setting aside of the order and in particular depriving
the wholesalers, to whom it correctly referred, from obtaining interim relief.
In terms of the Concise Oxford Dictionary the word similar is defined as “of the same kind, nature, or amount; having a resemblance
(your house is similar to mine; we have similar tastes)”. Mr Nelson thus submitted that in the context of the order, the word
could be given its dictionary meaning. In short the Tribunal had made it clear that what was meant was that applicants must sell
on the same terms and conditions as applied before the 29th of May 2000.
Relying upon a purposive interpretation to the order, Mr Nelson submitted that the Tribunal intended to restore the status quo to
the fair competitive environment that existed prior to the 29th of May 2000. This meant that manufacturers competed in setting blue book prices at certain levels and wholesalers competed by passing
on a portion of the wholesaler margin. To ensure that competition was restored manufacturers were directed to restore the wholesalers’
ability to compete with one another on an equal footing. The decision of the Tribunal thus recognized that the complaint that the
manufacturers had bandied together and tampered with existing price structures in a manner that was uncompetitive. This conclusion
was justified on the evidence presented to the Tribunal and accordingly the order granted was designed to restore the status quo ante.
Given these competing arguments the test to be applied in granting such an order becomes critical. While Mr Nelson correctly contended
that it would be improper to grant a stay in circumstances whether the review application was without substance or formed part of
dilatory tactics which amounted to an abuse of the court process, most cases have more distinct shades of gray. The essential question,
within this factual context, has less to do with these considerations and more with the determination of how substantial the prospects
of success in the review application must be before a court will make an interim decision of this nature. Clearly the more substantial
the prospects of success may be in the review application, the greater the degree of substantial injustice which would follow were
the stay not to be granted.
In my view, applicants must show that they have a justifiable case, that is a case which, on their papers, justifies a conclusion
that a successful review may be prosecuted. Expressed differently, the question that arises is whether the court on the papers can
reasonably come to the conclusion that the application for review before another court may be successful. In my view such a conclusion
is justified in the present case.
The order was made by the Tribunal and not a court. Thus the reliance by Mr Nelson on dicta of Trollip JA in the Genticuro case cannot simply be applied to the order of a tribunal. Although Mr Nelson also cited Frankel Max Pollak Vinderine Inc v Menell Jack Hyman Rosenberg and Co Inc 1996(3)SA 355(A) at 362-363 as support for his argument , this case(as with the others cited) dealt with the award of an arbitrator
which was to be made an order of court. In the present case, the problem is not only about ambiguity in that the order granted not
by a court employs a different formulation to the relief sought in the notice of motion. In addition the order employs different
language from the very explanation given by the Tribunal as to reasons for the order which it granted.
The case law cited above reveals that it is a legitimate argument to contend that the word ‘similar’ is ambiguous. Such
a conclusion does not require a process of creative lawyering to renders the word uncertain. The phrase “other wholesalers”
may be interpreted in the manner contended for by respondents but there is a legitimate argument regarding the ambiguity of the phrase
which renders this part of the order itself vague and ambiguous.
When the Tribunal grants an order which is different from that contained in a notice of motion great care should be given to its meaning
and purport and further there should be no inherent linguistic difficulty for the parties being able to comply therewith. The consequence
of non-compliance with such an order can be serious in that non compliance can be visited with severe penalties.
For these reasons I find that on the ground of review for vagueness and ambiguity, these is a clear basis for applicants to approach
this Court for a stay.
6.
Balance of Convenience
In Olympic Passenger Service (Pty) Ltd Ramlagan 1957(2)SA382(D) at 383F, Holmes J (as he then was) said “by balance of convenience is meant the prejudice to the applicant
if the interdict be refused, weighed against prejudice the respondents that it be granted. In clarifying the scope of this dictum
Magid J said in Verstappen v Port Edward Town Board & Others 1994(3)SA569(D and CLD) at 576 H “I do not believe that the learned judge intended to suggest that the manner in which the
grant or refusal of an interdict would affect the immediate parties to the litigation was the only matter relevant to a determination
of the balance of convenience. Where, as in this case, the wider general public is affected, the convenience of the public must be
taken into account in any assessment of the balance of convenience” see also Corium (Pty) Ltd & Others in Myburgh Park Langebaan (Pty) Ltd & Others 1993(1)SA853(C) at 858F.
This latter dictum supports the principle contained in the submission of Mr Nelson, namely that in competition law the weighing up of the balance of
convenience does not depend only upon a consideration of the interests of the immediate parties. In considering the balance of convenience,
attention must also be given to the broader objective sought to be achieved by the Act and whether there is clear evidence that the
conduct with which an applicant for such a stay wishes to persist will be contrary to the purposes of the Act. This consideration
must weigh heavily against such applicant irrespective of the adverse financial consequences that the initial order of the Tribunal
may entail. Consequently Mr Nelson referred to the reasons given by the Tribunal for the interim order, namely “if we did 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 would have been so skewed in favour of DD 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”.
Were the prohibited practice allowed to continue the pattern of competitive prices for the distribution of respondents’ products
could be so skewed that the final order may not be able to correct the position.
For this reason Mr Nelson submitted that it was clear that the Tribunal was mindful of the fact that the anti-competitive arrangement
that the applicants set up resulted in a significant financial benefit to the applicants that was derived directly from a reduced
competition for the distribution of their products and which rents, but for their concerted action would in the ordinary course of
business have accrued to wholesalers.
Mr Loxton submitted that the applicants would suffer a severe and irrecoverable loss if the order was not suspended pending review
and applicants were in due course successful in the application. The order was, in his view, so vague that despite its best efforts
applicants were unable to comply therewith. Accordingly they ran a risk of being found subject to contempt of court proceedings and
fined in terms of section 61 of the Act. Mr Loxton contended that applicants expended approximately R39m in converting DD into a
distribution agent and upgrading its infrastructure in distribution services with an additional project cost of R51m being budgeted.
When the matter came before the Court, Mr Nelson applied, at the proverbial eleventh hour and somewhat tentatively, for leave to cross-examine
certain representatives of the applicants on the contents of certain confidential affidavits setting out potential loss. The confidential
affidavit, setting out respective financial positions of the parties, provided competing versions of the financial loss which may
be suffered by the parties respectively were the Tribunal order to continue in force on the one hand or be suspended on the other.
These competing versions notwithstanding, it is clear that, were the Tribunal’s order to continue to operate, applicants would
suffer significant financial loss (although Mr Nelson did attempt, without clear evidence to suggest that being part of multi-national
giants applicants loss was insignificant in relative terms). The Tribunal found that ‘the manufacturers joint control of the
distribution agency ensures that rents derived from the reduced competition for the distribution of their products accrue to them
and not to some independent third party. It thus effectively ensures a transfer of these rents from the wholesalers to the manufacturers’.
Viewed in these terms, this dispute turns on competing claims to the rents derived from the distribution of pharmaceutical products.
No compelling case was made out before the Tribunal (if its decision is any guide) or in the papers before this Court as to the broader
societal interest particularly those of consumers whose interests may be affected by the outcome of this dispute. The Tribunal was
also not able to arrive at a conclusion as to whether respondents would suffer serious, irreparable damage were the order not to
be granted.
It is likely that there will be prejudice to both parties depending on the outcome of this decision. In the light of the clear case
which applicants have made out to justify an application for review to set aside the order of the Tribunal and the further evidence
which is available as to the financial loss which could be suffered in the event that the order continues, I am satisfied that the
balance of convenience in the specific context of this case sufficiently favours a granting of the order as sought
7.
Order
For the reasons set out: