(2)
A consent order does not preclude a complainant from applying for—
(a)
a declaration in terms of section 58(1)(a)(v) or (vi); or
(b)
an award of civil damages in terms of section 65, unless the consent order includes an award of
damages to the complainant.
It was accepted by the Tribunal and all other parties that the twelve month period referred to on Section 50(2) of the Act expired
on the first anniversary of the AHF complaint which was investigated together with the earlier TAC complaint. It is not clear whether
the TAC agreed to an extension pursuant to the terms of section 50(4)(a). However, in view of this acceptance, I too shall accept
that date.
Just prior to the expiry of the twelve month period by which the Commission would have had to either refer the complaint to the Tribunal,
or issue a notice of non-referral, it entered into a settlement agreement with Applicant in terms whereof the Commission agreed not
to refer the complaints to the Tribunal, in return for Applicant agreeing to grant licences to various generic manufacturers to manufacture
it’s antiretroviral drugs. This settlement agreement was concluded on 3 December 2003.
The AHF complainants, unlike the TAC, were not a party to the settlement agreement and alleged that they were never consulted about
its terms. They alleged that they were only made aware that it had taken place when they read about it in the media.
Pursuant to the settlement agreement, the Commission did not refer the complaints to the Tribunal. Nor did it issue a notice of non-referral.
The AHF complainants then decided to refer their complaint to the Tribunal themselves in terms of section 51(1) of the Act. They
were entitled to do so, as in terms of section 50(5) of the Act as the Commission is deemed to have issued a notice of non-referral.
In terms of section 51 of the Act:
Referral to Competition Tribunal
If the Competition Commission issues a notice of non-referral in response to a complaint, the complainant may refer the complaint directly to the Competition Tribunal, subject to its rules of procedure.
A referral to the Competition Tribunal, whether by the Competition Commission in terms of section 50(1), or by a complainant in terms of subsection (1), must be in the prescribed form.
The Chairperson of the Competition Tribunal must, by notice in the Gazette, publish each referral made to the Tribunal.
The notice published in terms of subsection (3) must include -
(a)
the name of the respondent; and
(b)
the nature of the conduct that is the subject of the referral.
In terms of the applicable procedural rules the complainant may, within twenty business days, refer the complaint directly to the
Tribunal.
AHF was not able to file its complaint referral timeously and applied for condonation. Despite opposition by Applicant, the Tribunal
granted the condonation application on 23 July 2004. During the condonation proceedings, First Respondent, the chairperson of the
Tribunal, raised a concern as to whether it was appropriate that the settlement agreement had not been referred to the Tribunal for
confirmation in terms of section 49D of the Act.
Thereafter, on 22 November 2004 Applicant applied to have the settlement agreement of December 2003 confirmed and made a consent order
in terms of section 49D(2)(a) of the Act. The AHF complainants, acting in an apparent effort to protect their right to pursue their
complaint before the Tribunal, opposed the granting of the order. The basis of their opposition is, however, no longer relevant,
in view of the fact that on 2 March 2006 - and whilst the application was being argued - they withdrew both their complaint referral
and their opposition to the granting of the consent order.
While the application was still being argued as an opposed matter before the Tribunal at its hearing on the 2nd of March 2005, the Tribunal, mero motu raised an issue which it has consistently characterised as a point of jurisdiction. Applicant then filed additional heads of argument
on this point and the Tribunal heard oral submissions from the applicant at a subsequent hearing exactly a year later to the day.
The Tribunal found that the December 2003 agreement was entered into at time when the one-year period for referral to it by the Commission
had not yet expired. However, the application in terms of section 49D was brought after the expiry of the one year period, at a time
after the Commission was deemed to have non-referred the complaint. In its “Reasons” for refusing the application, the
Tribunal states that the question “asked of the Applicant was whether the Commission may be party to an application for a consent
order at a point in time when it is no longer legally entitled to bring a complaint referral in respect of the complaint that forms
the subject matter of the consent order”.
The Commission was cited as a respondent in the application for a consent order. Not surprisingly, as it was a party to the agreement,
it did not oppose the application. Nor was it present when the point raised was argued. The Tribunal notes that “we do not
have the benefit of its view on the point of law”.
The first issue addressed by Applicant before the Tribunal was whether it, rather than the Commission, may make the application as
had happened in this instance. The Tribunal recorded that “[i]t has been normal practice for the Commission to bring this type
of application. We need not decide this issue, although we will assume in the applicant’s favour that it is entitled to do
so”. I will revert to that issue later in this judgment.
Applicant conceded that at the time when the application in terms of section 49D was brought, the Commission no longer had the power
to refer a complaint. However it argued that this does not mean that the Commission did not retain the power to “ agree on
the terms of an appropriate order”. The main thrust of Applicant’s argument both before the Tribunal and this Court relies
on the language of the section 49D(1) which states:
”If, during, on or after completion of the investigation of a complaint, the Competition Commission and the respondent agree on the
terms of an appropriate order, the Competition Tribunal, without hearing any evidence, may confirm that agreement as a consent order
in terms of section 58(1) (b).”
Applicant submits that the plain meaning of section 49D(1) is that the agreement has to be reached “during, on or after”
the investigation but that neither that section, nor any other states when the application to confirm has to be made. Applicant argues
that there is no warrant to “read in” words which limited the time by which the application to confirm has to be made
and that there are safeguards in the Act to ensure that the complainants are not prejudiced.
The Tribunal after analysing the scheme of the Act - and in particular, sections 49D and 50 - concluded that the word “after”
as it appears in section 49D(1) did include the power to reach and agreement after the investigation was completed, but that the
section did “not contemplate any situation after the investigation, but only one where the Commission has retained its title
to prosecute, by referring the complaint.”
The basis of the Tribunal’s decision is that:
“the Commission must retain its title to prosecute at the time a consent order application has been launched to avoid it facing prosecutorial
impotence if the Tribunal does not sanction its bargain with the respondent. It can retain this title to prosecute either (a) by
having the consent application considered during the one year period or an extended period or (b) after this period, provided it
has referred the complaint to the Tribunal during the period thus preserving that right. The legislature intended that once a matter
had been non-referred by the Commission it washed its hands of the matter and had no further right or interest in the complaint including
the right to settle it by way of a consent order.”
The Tribunal expressed the view that:
“Thus, the power to prosecute and the power to settle are coextensive; once the former is lost so is the latter.
Thus, the power to prosecute and the power to settle are coextensive; once the former is lost so is the latter. This is not a case
of having to read in language into section 49D(1). If one follows the procedural evolution of a complaint - how the Commission enjoys
the monopoly power to prosecute and how it can lose this right to a complainant – then one need not read in words to the section,
one simply follows the schema and logic of the Act to appreciate that the legislature never contemplated conferring the power to
settle to exist independently of the power to prosecute. It is precisely for this reason that the Commission is given such a long
period to investigate a complaint and to apply to extend it. It must during this period of investigation decide whether to refer
or settle a complaint. If it refers it can of course settle it later. What it may not do is to investigate, decide not to refer or
settle and then at some later time decide it should enter into a settlement agreement for a consent order. Nor should it, as happened
in this case, enter into some contract (as opposed to a consent agreement contemplated in section 49D) with a respondent not to prosecute
further, in return for some quid pro quo, unless it fully appreciates the legal implications of doing this.”
In support of its finding the Tribunal pointed to what it considered to be the undesirable results of accepting Applicant’s
interpretation of the Act.
“One can easily see what absurdities would result if the title to prosecute and settle were not coextensive. In the first place there
is the fact that the Commission is left in a position of a contracting party not a prosecuting party in approaching settlement negotiations
with the respondent, which cannot be in the public interest. The ability to approach a settlement negotiation with the threat of
proceeding is vital to a proper bargaining process. A further concern is that the only time a consent order would be likely, after
the title to prosecute has lapsed, is when a respondent faces a complainant in a non-referral situation or a new complaint based
on a previous complaint that was not prosecuted. The respondent, anxious to constrain the complainant’s range of remedies,
then enters into a consent order with the Commission, the effect of which is to limit the private complainant’s remedies to
those contemplated in section 49D(4). Now of course that presupposes that the Commission will allow itself to be used to those ends.
However, the expedient motive of a respondent may not always be that transparent to the Commission, especially if it was not a complaint
that it referred, and it may be persuaded that the complainant is unreasonably pursuing the respondent and that a good settlement
is available to the Commission even in this case it had not sought to prosecute. The legislature never contemplated placing the Commission
in this sort of situation as a settler of last resort – once it lost its title to prosecute the fate of the litigation is left
to the private complainant and the respondent to resolve. Nor as a matter of public policy is it desirable that a body charged with
policing legislation be left with a residual power to settle when its primary power to prosecute is lost.
The applicant’s interpretation would also be extremely unfair to the private complainant. The latter is entitled to proceed
with a complaint referral on the assumption that the field is now open to it and that the Commission had not entertained the possibility
of entering into a consent agreement with the respondent, otherwise it would have done so before non–referring the complaint.
It might spend vast resources on prosecuting its complaint only to find that it is robbed at the post by a subsequent deal between
the Commission and the respondent. On our interpretation this would not arise because the settlement would have had to occur during
the time that the Commission retained its prerogative to prosecute.”
The Tribunal concluded its reasons as follows:
“For this reason we find that although the settlement in this matter was concluded during the period when the Commission had retained
its title to prosecute the complaint, the application for the consent order was made after this period – a time when we find
that the Commission no longer retains the right to prosecute and hence no right to conclude, revise or amend a consent agreement.
Without the Commission retaining this power, we have no jurisdiction to make the agreement that was entered into in December 2003
into a consent order. The application accordingly fails.
Given the considerable public interest there has been in the settlement between the Commission and the respondent we need to stress
that our decision not to grant the consent order is a technical one, based on the timing of the application. Were this consent application
to have been made at a time when the Commission retained its title to prosecute, we would have seen no bar to granting it. It would
seem that the reason the December 2003 agreement was not made a consent order at the relevant time of its conclusion was that there
was a difference of legal opinion between the applicant and the Commission about whether it was required to state the section of
the Act it had contravened. The Commission it appears has changed its view on this matter and now no longer as a matter of policy
requires such an admission to be made. We are not called upon to determine whether such a policy is correct in law, but we mention
this only to indicate that it may well be that technical concerns of the Commission, as opposed to tactical machinations on the part
of the applicant, explain the absence of an application for a consent order at the relevant time.”
In his argument before this Court, Mr Unterhalter SC (who appeared for Applicant together with Mr Cockrell and Mr Gotz) emphasised three points.
Firstly, he contended that the provisions of section 49D(1) are clear and unequivocal. The Commission can enter into a settlement
agreement “during, on or after completion of the investigation of a compliant.” The plain meaning of these words does not limit the time during which the Commission can conclude a settlement agreement.
Indeed, it can do so after a referral to the Tribunal and right up until the Tribunal announces its findings.
Section 49D has two jurisdictional requirements that must be satisfied before the Tribunal may grant an order in terms of the section.
They are:
-
the Commission and the respondent must have agreed the terms of an appropriate order;
-
the agreement must have been reached “during, on or after the completion of the investigation of a complaint”.
It was submitted that both requirements had been met and that the Tribunal had the necessary jurisdiction to grant an order confirming
the settlement agreement.
Secondly, there was no warrant, in law, to read in words that limited the clear meaning of section 49D(1) of the Act.
Thirdly, the anomalies relied upon by the Tribunal were more apparent than real. Even where the complainant pursued the complaint,
the Commission had the right to appear and participate in the hearing (Section 53(1)(a). It was, therefore, not rendered impotent.
The legislature granted the right to the complainant to pursue its complain where there is a non-referral to ensure that it is not
prejudiced.
Recognising that the Commission has a role to represent the public interest in cases of an alleged prohibited practice, Mr Unterhalter submitted that the complainant who pursues a complain after a non-referral, has both a private and a public role.
In order to determine the questions raised in the review and appeal - which are in both cases the same questions - it is necessary
to examine the provisions of the Act.
