(b)
a collective agreement, as defined in section 213 of the Labour Relations Act, 1995;
…
(e) concerted conduct designed to achieve a non-commercial socio-economic objective or similar purpose.
The formulation of s 3(1) is simple and uncomplicated. The Act applies to “all economic activity within, or having an effect
within, the Republic”. The appeal concerns the meaning of the words “an effect within, the Republic”. This apparently
straightforward expression disguises the true issue involved, viz that of the extra-territorial operation of the Act.
[8] The “economic activity” in this case includes the conclusion of the Ansac agreement, admittedly in the United States
of America. Exception was taken by Ansac on the basis that, since neither the Commission nor Botash made the allegation of deleterious
or negative effects within the Republic in their pleadings, the pleadings are excipiable. The wording of the exception is as follows:
“Upon a proper construction of the Act, in order for economic activity occurring outside South Africa to have an ‘effect’
within South Africa for purposes of s 3, it must be alleged and proved that such activity has had [a] negative or … deleterious
effect on competition within South Africa”. In the heads of argument “deleterious” is equated with “anti-competitive”
so that the question before the Tribunal was whether the section should be construed so as to mean that only “economic activity
having an anti-competitive effect within the Republic” was included.
[9] The Tribunal rejected the contentions presented on behalf of Ansac in their decision of 30 November 2001 holding as follows:
“Not only is there no basis in international law to support Ansac’s reading, but also there is no practical foundation for it
either. In effect it leads to a double inquiry. First, one will have to inquire into whether the Tribunal has jurisdiction. This
entails a net balancing of pro- and anti-competitive effects. Then if a net harm is shown one proceeds with the substantive enquiry,
which might in a rule of reason case involve extensive duplication of the evidence. In a per se contravention it would mean the leading
of evidence in the jurisdiction enquiry, which is then inadmissible in the substantive enquiry …” (pages 29-30).
“The word ‘effect’ is used in our legislation in conjunction with the words ‘economic activity’. This language
is itself neutral and indicated that what the legislature sought to distinguish by the distinction between activity within and effects
within was the distinction between conduct of an economic nature that took place within the Republic and conduct that took place
outside the Republic and which has an ‘effect’ within the Republic such as a boycott” (page 30).
The Tribunal found:
“We find that on an ordinary interpretation the word effect in section 3(1) is not limited to adverse effects. Whilst the language
may require some qualification it is not a qualification related to the nature of the ‘effects’ but their extent. What
that extent should be we do not need to decide in this case save to suggest they should not be trivial.
“We further find that the interpretation contended for by Ansac is not predicated upon a sound policy approach and that even if we
felt inclined to interpret the statute purposively that purpose contended for subverts rather than enhances the legislative intent.
“We further find, that in any event, that Ansac has failed to establish a rule of customary law that [it] supports its contentions
as a matter of ‘constant and uniform usage’” (at pages 30-1).
[10] Ansac’s argument calling for a restrictive or limited interpretation of s 3(1) is based on two grounds: one, a presumption
against the curtailment of the jurisdiction of the courts (cf Special Investigating Unit v Nadasen 2002 1 SA 605 (SCA) 610AC); and two, s 1(2) which calls for a purposive interpretation of the Act.
[11] ”Ouster clauses”, says Baxter Administrative Law (1984) at 727, “have no absolute meaning: they must be construed within the context of the legislation in which they are enacted,
as must the acts to which they refer”. The Act contains provisions limiting the jurisdiction of the ordinary courts or reserving
exclusive jurisdiction to the Tribunal and the Competition Appeal Court (ss 62 and 65) . However, before the presumption calling
for a strict construction can be relied upon the context of the legislation must be considered. This was done in Seagram Africa (Pty) Ltd v Stellenbosch Farmers’ Winery Group Ltd and Others 2001 2 SA 1129 (C) where at 1138F- 11341E the following was said:
“[T]he jurisdiction conferred upon the tribunal and the Court is clear and unambiguous. Whatever kind of approach one adopts in interpreting
a statute, one must bear in mind that the actual language of the statute cannot be ignored …
…
I am mindful of the fact that there is a strong presumption against the ouster or curtailment of the jurisdiction of the High Court
… . However, although such presumption applies, it is in every case necessary to consider all the circumstances and then determine
whether a necessary implication arises that the Court’s jurisdiction is either wholly excluded or at least deferred until the
domestic or extra-judicial remedies have been exhausted…
…
The subject-matter of the Act is actually or potentially monopolistic or anti-competitive agreements, practices or acts which are
grouped under the headings restrictive horizontal practices, restrictive vertical practices, abuse of dominant position and mergers
… . Furthermore, if one considers the scope and language of the Act, it is apparent that the intention of the Legislature was that competition
matters should be administered by structures other than courts of law. To that end ‘independent institutions’ were established
to ‘monitor economic competition’(own italics)”.
Given the purpose of the Act or the “intention” of the legislature referred to, and mindful of the statutory command calling
for a purposive interpretation (s1(2)(a)), the scope for the application of the presumption against the curtailment of the jurisdiction
of the courts is very limited. It is not a matter of the Competition Tribunal “trespassing” on the sphere of the ordinary
courts of the land. Rather, the Tribunal is given exclusive jurisdiction to adjudicate on any conduct prohibited in terms of Chapter
2 of the Act (ss 62(1)(b) read with 27(1)). Section 65(2) requires a civil court, when a party raises an issue concerning conduct
prohibited by the Act, to decline from considering it and to refer it to the relevant competition authority. A hierarchy of institutions
or fora, including the Competition Appeal Court is provided to administer and adjudicate upon the subject matter of the Act (see Seagram 1141F – 1142C). Effect must be given to this clear expression of the intention of the legislature. Whatever theory of interpretation
is used, the words of the legislation cannot be ignored and is the starting point for any construction (S v Zuma and Others 1995 2 SA 642 (CC) 652H – 653A). The word “effect” is not ambiguous and its ordinary, grammatical meaning is in
accordance with the purposes of the Act.
[12] The Act itself contains some guidelines for its interpretation. Its purpose is ”to promote and maintain competition in the
Republic” in order inter alia “(a) to promote the efficiency, adaptability and development of the economy”; “(b)
to provide consumers with competitive prices and product choices”; (d) “to expand opportunities for South African participation
in world markets and recognize the role of foreign competition in the Republic” (s 2). Section 1(2) requires the Act to be
interpreted “(a) in a manner that is consistent with the Constitution and gives effect to the purposes set out in section 2;
and (b) in compliance with the international law obligations of the Republic”.
[13] To return to the word “effect” used. The appellants have argued that only “anti-competitive economic activity”
should be comprehended within it so that the word “effect’ should be read as meaning “an anti-competitive effect”
within the Republic. This interpretation is unsustainable. Not only does the clear wording of s 3 not support it but the following
sections explicitly require an assessment whether the agreement or conduct complained of has the effect of substantially preventing
or lessening competition. For example, s 4(1)(a) contains a prohibition against anti-competitive agreements between parties, ie competitors,
in a horizontal relationship. Any agreement between them which has the effect of substantially preventing or lessening competition
in a market will be prohibited unless a party can show some technological, efficiency or other pro-competitive gain, resulting from
the agreement, that outweighs its anti-competitive effect. A firm may, therefore, on the appellant’s argument, justify an agreement and avoid the prohibition, by showing that some pro-competitive benefit in the Republic flows from the agreement and that this benefit outweighs the anti-competitive effects of the agreement. The same reasoning applies
to s 5(1) dealing with restrictive vertical practices. In other sections the word “effect” is used neutrally with the
addition of the words “anti-competitive” (s 8(c) and (d)) or “of substantially preventing or lessening competition”
(eg ss 9(1)(a), s 4(1)(a) and 12A(1)(a)(i)). This tends to show that “effect” is used in s 3(1) in the same neutral sense.
This conclusion is strengthened when chapter 3 of the Act is considered. The Commission would have to consider whether a foreign
merger has an anti-competitive effect in South Africa in order to establish whether the Act is applicable and before it could consider
its anti-competitive effect under s 12A. It is highly unlikely that the legislature intended to adopt so uncertain a criterion for
jurisdiction.
My conclusion is that the word “effect” in s 3(1) should be given its ordinary, grammatical, meaning. To import the words
“anti-competitive” into the section is not justified by the wording of the Act.
[14] Sections 1(2)(a) and (b) require the Act to be interpreted in a manner that is consistent with the Constitution and gives effect
to the purposes set out in s 2 as well as being in compliance with the international law obligations of the Republic. Submitting
that a purposive approach be followed, the appellants argue that s 3(1) should be interpreted in such a way that only anti-competitive
economic activity is brought within its purview. This would then permit an examination of the effect of the Ansac agreement and its
by-laws in South Africa.
In Standard Bank Investment Corporation Ltd v Competition Commission and Others; Liberty Life Association of Africa Ltd v Competition
Commission and Others 2000 2 SA 797 (SCA) where the same s 3(1) had to be construed (as it read before its amendment by The Competition Second Amendment
Act, 2000). Schutz JA said at 811H – 812A:
“[21] Having regard to the authority and persuasiveness of what has gone before, I think the submission in Standard Bank’s heads
of argument that the ‘semantic or literalist approach enjoys ever less support in modern legal theory’ is cast rather
high. However, as I have endeavoured to show, our law is an enthusiastic supporter of ‘purposive construction’ in the
sense stated by Smalberger JA in Public Carriers Association and Others v Toll Road Concessionaries (Pty) Ltd and Others 1 SA 925(A) at 943G-H:
‘Mindful of the fact that the primary aim of statutory interpretation is to arrive at the intention of the Legislature, the purpose
of the statutory provision can provide a reliable pointer to such intention where there is an ambiguity.’”
In South African Raisins (Pty) Ltd and Another v SAD Holdings Ltd and Another 2001 2 SA 877 (SCA) at 886BC Melunsky AJA paraphrased the approach adopted by Schutz JA thus: “That it is permissible to give
effect to the policy or object or purpose of the legislation, where there is an ambiguity, is clear… “.
The meaning of the word “effect” is that of “something caused or produced; a result or consequence” (The Oxford Universal Dictionary). There is no ambiguity in its use in s 3(1). Nor is there any reason why it should not be given its ordinary, unqualified meaning
in s 3(1). As Harms JA said in Abrahamse v East London Municipality and Another; East London Municipality v Abrahamse 1997 4 SA 613 (SCA) at 632GH: “Interpretation concerns the meaning of words used by the Legislature and it therefore useful
to approach the task by referring to the words used, and to leave extraneous considerations for later” (cited by Schutz JA
in Standard Bank Investment Corporation Ltd v Competition Commission and Others; Liberty Life Association of Africa Ltd v Competition
Commission and Others supra at 811H and see the other authorities referred to at 810-2).
[15] The appellants made a further attack on s 3(1) by invoking s 1(3) which allows a person interpreting or applying the Act to consider
appropriate foreign and international law. Moreover, the provisions of s 1(2)(a) which calls for an interpretation in a manner that
is consistent with the Constitution, refer to the provisions of s 232 of the Constitution:
“Customary international law is the law in the Republic unless it is inconsistent with the Constitution or an Act of Parliament.”
This provision enshrines the common-law position that international law forms part of the municipal law. Dugard International Law. A South African Perspective (1964) at 46-7 observed:
“Since customary international law is a species of common law, it must give way to legislation in the case of conflict. However, where
there is an ambiguity as to whether or not there is a conflict, an attempt should be made to reconcile the statute with the customary
rule, since there is a statutory presumption that the legislature does not intend to violate international law.”
See Azapo and Others v Truth and Reconciliation Commission and Others 1996 4 SA 562 (CPD) 574BC; Alexander v Pfau 1902 TS 155 159 and 164. Moreover, s 233 of the Constitution provides that
“[w]hen interpreting any legislation, every court must prefer any reasonable interpretation of the legislation that is consistent with
international law over any alternative interpretation that is inconsistent with international law.”
See Dawood and Another v Minister of Home Affairs and Others 2000 1 SA 997 (C) 1033H – 1034A; Azanian Peoples Organisation & others v President of the Republic of South Africa & Others 1996 4 671 (CC) 688-9 and s 1(2)(b).
[16] In most cases the exercise of the functions of a state by legislation, executive and enforcement action and judicial decrees is limited
to the territory of the state. However, as Dugard 116 explained, “[i]nternational trade, migration, travel, and crime ensure
that states will have an interest in extending their jurisdiction beyond their territorial limits to cover persons and property in
other countries”. The extra-territorial application of domestic competition laws is one of the ways to combat the operation
of international cartels (see Klein “The War against International Cartels: Lessons from the Battlefront” paper presented
at the Fordham Corporate Law Institute 14 October 1999 at page 9-10).
In the United States the “effects doctrine” was developed to deal with practices outside the country but having “effects”
within it. The “effects doctrine” was first applied in the context of the extra-territorial violation of the Sherman
Act of 1890 (15 USC §§ 1-7) in the case of United States v Aluminum Company of America (Alcoa) 148 F 2d 416 (2d Cir 1945) where Judge Hand asserted jurisdiction over cartel arrangements made abroad by foreign companies and held
them to be unlawful because “they were intended to affect imports and did affect them” and because “any State may
impose liabilities even upon persons not within its allegiance, for conduct outside its borders that has consequences within its
borders which the State reprehends” (at 443 cited by Cartoon “The Westinghouse Case: Collective Response to the Extra-territorial
Enforcement of United States Antitrust Laws” (1983) 100 SALJ 731 at 733).
The wording of article 81 of the EC Treaty specifically prohibits agreements, decisions or concerted practices “which have as
their object or effect the prevention, restriction or distortion of competition within the common market”.
[17] The appellants have to show that an interpretation giving the words “an effect” their ordinary grammatical meaning violates
international customary law. It is not disputed that the Competition Act has extra-territorial application and it is not disputed
that a state may, in certain cases, extend its jurisdiction beyond its territorial borders. In The Lotus Case (1927) PCIJ Reports Series A, No 110 it was said that
“[t]he first and foremost restriction imposed by international law upon a State is that – failing the existence of a permissive
rule to the contrary – it may not exercise its power in any form in the territory of another State. In this sense jurisdiction
is certainly territorial; it cannot be exercised by a State outside its territory except by virtue of a permissive rule derived from
international custom or from a convention.
“It does not, however, follow that international law prohibits a State from exercising jurisdiction in its own territory, in respect
of any case which relates to acts which have taken place abroad, and in which it cannot rely on a permissive rule of international
law. … Far from laying down a general prohibition to the effect that States may not extend the application of their laws and
the jurisdiction of their courts to persons, property and acts outside their territory, it leaves them in this respect a wide measure
of discretion ….
“[I]t is certain that the courts of many countries, even of countries which have given their criminal legislation a strictly territorial
character, interpret criminal law in the sense that offences, the authors of which at the moment of commission are in the territory
of another State, are nevertheless to be regarded as having been committed in the national territory, if one of the constituent elements
of the offence, and more especially its effects, have taken place there.”
And in Barcelona Traction, Light and Power Company Limited Case1970 ICJ 3 (February 5, 1970) it was said in § 70 :
“It is true that, under present conditions, international law does not impose hard and fast rules on States delimiting spheres of national
jurisdiction in such matters (and there are of course others-for instance in the fields of shipping, 'anti-trust' legislation, etc.),
but leaves to States a wide discretion in the matter. It does however (a) postulate the existence of limits-though in any given case
it may be for the tribunal to indicate what these are for the purposes of that case; and (b) involve for every State an obligation
to exercise moderation and restraint as to the extent of the jurisdiction assumed by its courts in cases having a foreign element,
and to avoid undue encroachment on a jurisdiction more properly appertaining to, or more appropriately exercisable by, another State.”
See Dugard 117-8 and Oppenheim’s International Law 9ed (1996) §140 at 478-9. In a sense territoriality also underlies the kind of case, such as the present, where foreign conduct
has an effect at home (Oppenheim §137 at 460 and see Barcelona Traction 1970 ICJ 65 at 105). International law thus permits states to exercise their jurisdiction to promulgate rules, whether it be legislation or
administrative decrees, prohibiting conduct elsewhere having an “effect” within the state.
[18] In relying on United States cases the appellants have argued that jurisdiction required that there be an intended and substantial
anti-competitive effect in South Africa. I have not been persuaded that this is correct. The appellants rely on the Restatement (Third) of the Foreign Relations Law of the United States (1987) where the basic principles of extra-territorial jurisdiction are set out:
“(1) The conduct and its effect must be generally recognized as constituent elements of a crime or tort under the laws of states with
reasonably developed legal systems (objective territoriality); or
(2) The consequences within the territory must be substantial and occur as a direct and foreseeable result of conduct outside the
territory; and
(3) The law proscribing the effect must not be inconsistent with the principles of justice generally recognized by states with reasonably
developed legal systems.”
The question is not whether the consequences of the conduct is criminal or, for that matter, anti-competitive, but whether the conduct
complained of has “direct and foreseeable” substantial consequences within the regulating country. In other words, the
“effects” in the present case must be such that they fall within the regulatory framework of the Act, whether they are
anti-competitive or not. This seems to be expressed by Oppenheim 468 where it is said that “[i]t is a matter for determination
in each case to whether a direct and substantial connection exists which is sufficient to justify a state treating as criminal the
conduct of aliens taking place within the area of another state’s sovereign authority”. In Hartford Fire Insurance Company v California 509 US 764 (1993) the court held that “[i]t is well established by now that the Sherman Act applies to foreign conduct that
was meant to produce some substantial effect on the United States”.
This inquiry does not involve a consideration of the positive or negative effects on competition in the regulating country but merely
whether there are sufficient jurisdictional links between the conduct and the consequences. The appellants have relied on numerous
cases, inter alia, American Banana Co v United Fruit Co 213 US 347 (1909); United States v Aluminum Company of America (Alcoa) 148 F 2d 416 (2d Cir 1945); Timberlane Lumber Company v Bank of America 549 F 2d 597 (9th Cir 1976); Mannington Mills Inc v Congoleum Corp 595 F 2d 1287 (3d Cir 1979); Hartford Fire Insurance Company v California 509 US 764 (1993); Matsushita v Zenith Radio 475 US 574 (1986); Continental Co v Union Carbide 370 US 690 (1962); Metro Industries Inc v Sammi Corporation 82 F 3d 893 (9th Cir 1996). I am not convinced that they support the contention that only anti-competitive or deleterious effects would suffice to
bring the conduct complained of within the jurisdiction of the regulating state. The question is rather one relating to the ambit
of the legislation: the Act in the matter under consideration, its regulatory “net”, concerns not only anti-competitive
conduct but also conduct the import of which still has to be determined.
[19] Nor do I think will any of the principles of international comity will be infringed by the rejection of the interpretation contended
for by the appellants. This elusive concept, “more an aspiration than a fixed rule, more a matter of grace than a matter of
obligation” (United States v Nippon Paper Industries Co Limited 109 F 3d 1 (1997)), takes the matter no further. Ulrik Huber, writing on conflict of laws, based his system on three pillars of public
international law: the first
“dat de wetten van yder vry Landschap kracht moeten hebben binnen de palen des selven Landts, ende verbinden alle de onderdanen desselfs,
sonder wijders”; secondly, “dat voor onderdanenen moeten gehouden alle Persoonen die in dat Landtschap worden bevonden,
soo lange hun aldaer onthouden, het sy voor een tijdt of voor altoos”; and, thirdly, “de Hooge machten van yder Landt
bieden elkander de handt, ten einde , de Rechten van yder, op elk zijn onderdanen, schoon elders zynde, zoo verre gelden, als het
niet is strydig met de Macht of het Recht des anderen in syn bedryf” (cited by Van Rooyen Die Kontrak in die Suid-Afrikaanse Internasionale Privaatreg(1972) 19).
No concerns of comity or of the untoward assumption of jurisdiction over foreign territory arises in this case. The issue is simply
one of “an effect within the Republic”. There can be no question of comity defeating the exercise of jurisdiction since
no conflict between US and South African law has been demonstrated. Ansac does not operate in the United States for it prohibited
from doing so by s 1 of the Sherman Act. It may, however, operate outside of the United States under the Webb-Pomerene Act 15 USC
61-65 which provides a limited anti-trust exemption for the formation and operation of competitors for the purposes of engaging in
collective export sales.
[20] The Webb-Pomerene Act, according to the Anti-trust Enforcement Guidelines for International Operations issued by the US Department of Justice and Federal Trade Commission, “does not apply to conduct that has an anti-competitive
effect in the United States, or that injures domestic competitors of the members of the export association. Nor does it provide any
immunity from prosecution under foreign anti-trust laws.” It follows that no consideration of comity precludes South African
competition authorities from exercising their jurisdiction in terms of the Act. The symbolic, “de Hooge machten van yder Landt
bieden elkander de handt”, allowing for the operation of foreign law in a country, does not exclude the exercise over the effects
of foreign conduct within its own territory of its own laws which, in any event, are not forbidden by the foreign state (see further
the reasoning in Ahlstrom Osakeyhtio and others v Commission of the European Communities [1988] CMLR 901 (ECJ) (the Wood Pulp Case) par 19 and 20).
[21] Article 81 of the European Community Treaty prohibits those agreements, decisions and concerted practices “which may affect
trade between Member States and which have as their object or effect the prevention, restriction or distortion of competition within
the common market”. The reason for this formula is explained in the Wood Pulp Case: “If the applicability of prohibitions laid down under competition law were made to depend on the place where the agreement,
decision or concerted practice was formed, the result would obviously be to give undertakings an easy means of evading those prohibitions”
(par 16). The “implementation test” does not involve a consideration of the positive and negative consequences of the
agreement, decision or practice. Gencor v Commission of the European Communities Case T-102/96, 25 March is summarized as follows: “Application of Regulation No 4064/89 is justified under public international
law when it is foreseeable that a proposed concentration between undertakings established outside the community will have an immediate
and substantial effect within the Community” (par 3 and par 90ff of the judgment). The decisions of the European Court of Justice
do not support the contentions of the appellants.
C Condonation and Section 4(1)(b)
[22] The appellants seek to appeal against the decision of the Tribunal dated 27 March 2001 relating to the interpretation of s 4(1)(b).
Various grounds of appeal are set out in the notice of appeal. Essentially, the ruling of the Tribunal is that “evidence concerning
any technological, efficiency, or other pro-competitive gain that might be admissible in terms of section 4(1)(a) is inadmissible
in terms of section 4(1)(b)”. The question is whether this ruling, which is interlocutory, may be appealed against.
Section 61 grants a right of appeal against a “decision by the Competition Tribunal” if, in terms of s 37, the Court has
jurisdiction the appeal or review in the matter. Section 37 empowers the Competition Appeal Court to (a) review any decision of the
Tribunal; or (b) consider an appeal arising from the Tribunal in respect of (i) any of its final decisions … or (b) any of
its interim or interlocutory decisions that may, in terms of the Act, be taken on appeal. The question then is whether the decision
referred to have a final effect. In Van Streepen & Germs v Transvaal Provincial Administration 1987 4 SA 569 (AD) Corbett JA, as he then was, said that an interlocutory order which has final and definitive effect on the main
action must be viewed as an appealable judgment or order (at 583 HJ). He continued that, where
“the decision relates to a question of law or fact, which if decided in a particular way would be decisive of the case as a whole or
of a substantial portion of the relief claimed, then a somewhat different position arises, and indeed in that event the advantages
of expense and convenience may favour a final determination of the question on appeal even though the proceedings in the Court a
quo may not have been concluded.”
In a sense the answer has been given by the Tribunal itself (compare Steytler NO v Fitzgerald 1911 AD 295 at 313; Beinart v Wixley 1997 3 SA 721 (SCA 729H-730A)): in motivating its decision the Tribunal said that its
“finding on the nature of Section 4(1)(b) will, like the other points in issue here, have an important bearing on the nature of the
future hearings in this matter. A finding in favour of the Commission and the interveners presupposes that if, indeed, we conclude
that their opponents have engaged in the conduct specified in 4(1)(b) – that is, if they have fixed prices or any other trading
condition, divided markets or tendered collusively – then the contravention is established and evidence concerned to demonstrate
any pro-competitive gains said to accrue as a result of the transgression will not be relevant. If, on the other hand, we accept
the view contended for by ANSAC, then, even in the event that we find a price fixing and/or market sharing arrangement as alleged
by the Commission and BOTASH, ANSAC will still be entitled to put up evidence purporting to show that the consequences of the anti-competitive
practice are countervailed by efficiency gains for which it is responsible.”
In the circumstances the appeal against the decision of the tribunal of 27 March 2001 on this issue should now be entertained.
D Section 4(1)(b)
[23] The appellants appeal against that part of the decision of the Tribunal of 27 March 2001 relating to the interpretation of s 4(1)(b)
of the Act. The grounds of appeal involve four aspects: holding that any setting of a resale price or assignment of responsibility
to supply material is contrary to s 4(1)(b); holding that a per se rule ought to be applied in applying s 4(1)(b); holding that a
contravention of s 4(1)(b) does not pre-suppose anti-competitive conduct; and holding that evidence may not be adduced to show that
the appellants’ alleged conduct resulted in efficiencies, cost savings, increased or more effective competition or was not
anti-competitive.
[24] Section 4 as it was then operative reads as follows:
“(1) An agreement between, or concerted practice by, firms, or a decision by an association of firms, is prohibited if
(a)
it is between parties in a horizontal relationship and it has the effect of substantially preventing or lessening competition in a
market, unless a party to the agreement, concerted practice, or decision can prove that any technological efficiency or other pro-competitive,
gain resulting from it outweighs that effect; or
(b)
it involves any of the following restrictive horizontal practices:
(i)
directly or indirectly fixing a purchase or selling price or any other trading condition;
(ii)
dividing markets by allocating customers, suppliers, territories, or specific types of goods or services; or
(iii)
collusive tendering.”
Section 4 has been amended to add to s 4(1) after the words “is prohibited if”, the following: “it is between parties
in a horizontal relationship and if” so as to make it clear that both subclauses (a) and (b) refer to agreements between parties
in a horizontal relationship. If the structure of the Act before its amendment is considered, particularly ss 4 and 5, it is clear
that there was an ambiguity in the legislation: s 4 deals with agreements between parties in a “horizontal relationship”
and s 5 with agreements between parties in a “vertical relationship”. The omission to qualify the word “it”
with words such as “is between parties in a horizontal relationship” was rectified by the amendment and must necessarily
be implied in the legislation as it stood before the amendment.
However, it not necessary to decide this issue since s 4(1)(b) refers to a “restrictive horizontal practice”. This is
defined as any practice listed in s 4. Although “horizontal practice” is not defined, a “horizontal relationship”
is intended to mean a “relationship between competitors” (s 1(xiii)). The implication seems clear that “it”
in s 4(1)(b), as it then read, refers the agreement, concerted practice or decision between competitors. “Competitors” are not defined but firms will be regarded as competitors if they compete in the same market in respect
of the same or interchangeable or substitutable goods or services. Compare JD Group Ltd v Ellerine Holdings Ltd (78/lm/ju100) par 4.2.
[25] Ansac is an association of America soda ash producers that operates under the United States Export Trade Act 1918 (the “Webb-Pomerene
Act”). The purpose of the Act is to exclude the operation of the Sherman Act to United States associations engaged solely in
export trade (“solely trade or commerce in goods, wares, or merchandise exported, or in the course of being exported from the
United States or any territory thereof to any foreign nation”) and whose activities do not restrain trade within the United
States. In United States v Concentrated Phosphate Export Association Inc et al 393 US 199 Mr Justice Marshall said at 206: “The Webb-Pomerene Act was p
