(a)
refer the matter to the Competition Tribunal, if it determines, that a prohibited practice has been established; or
(b) in any other case issue a notice of non-referral to the complainant in the prescribed form.”
Ansac identifies two jurisdictional preconditions in this section. The first is the Commission must have completed its investigation.
The second is that the Commission must have determined that a prohibited practice has been established. Ansac argues that neither
of these preconditions has been fulfilled.
Ansac firstly relies for these propositions on a statement made by the Commission’s counsel, Mr. Pretorius, at a pre-hearing
conference on 14 December 2000 during which it alleges he had stated that the Commission had been unable to complete its investigation
due to the time constraint imposed by this Tribunal on the referral of the complaint. Ansac says that it thought nothing of this statement at the time considering that it had been made in the heat of the moment. Its
attitude changed when on receipt of the Commission’s answering affidavit in these objection proceedings Ms Singh, according to Ansac’s reading of her affidavit, effectively reiterated that the matter had been referred before the investigation
was complete and before the Commission had established a prohibited practice.
The chronology is important here. At the time of the last pre-hearing on the 14th of December 2000 Ansac had not yet filed its founding papers in this objection application and when it subsequently did this point
was not taken. Nor was any contemporaneous comment made at the time of the pre-hearing on 14 December on the supposedly surprising
admission of Mr. Pretorius. Presumably Ansac would say this was because at the time it was not alert to the fact. The first time
this issue was raised by Ansac as a ground for objection was in its replying affidavit in this application. Thus when Ms Singh is
deposing to her answering affidavit in these objection proceedings, the one on which Ansac places such reliance, she is not alive
to this point indeed she is responding apparently to a complaint about discovery. Not surprisingly having seen the replying affidavit
from the respondents in which this point is first raised the Commission filed a second affidavit from Ms Singh dealing with this
aspect. In paragraph 3 of this affidavit Ms Singh states:
“The Commission at the time of the Referral, was in possession of sufficient evidence to determine that a prohibited practice had occurred.
The Commission, however, would have preferred further time for investigation in order to put before the Tribunal the full extent
of the effects of the alleged ANSAC cartel in the Republic of South Africa.”
Ansac uses Mr. Pretorius’s alleged concession to establish its contention that the Commission had not completed its investigation.
Whilst conceding that Ms Singh has never herself said so, they say the necessary implication of her failure to rebut Mr. Pretorius
amounts to an admission of the correctness of his remarks at the pre-hearing. In the elegant phrase of Ansac’s counsel “Ms
Singh’s silence on this point was clamant”. Thus Ansac says the first jurisdictional prerequisite viz. a completed investigation has been shown to be absent. This prerequisite
they submit is objectively reviewable.
They then argue that they have established the second leg as well, notwithstanding Ms Singh’s supplementary affidavit. Their
reading of the affidavit is that Ms Singh concedes that the prohibited practice determination was based on an invalid assumption.
By this we understand Ansac to be referring to her statement that she did not expect Ansac to put in issue that it had:
“entered into no agreements with any customer in South Africa during the relevant period”. (See Singh answering affidavit 4.2 Record C 71).
This failure they say makes the decision irrational and hence notwithstanding the subjective nature of this discretion renders it
a nullity. (See Transcript pg 118 lines 5 – 20)
To arrive at this conclusion Ansac needed to do some extraordinary reading of the record and to place the most subjective gloss on
the history of this litigation.
Let us consider what Ms Singh says and see if it offers a basis for attack on either of the two grounds mentioned above. What Ms Singh
is explaining in paragraphs 4 and 5 of her answering affidavit is why the Commission had not anticipated the defence being mounted
by Ansac and secondly the background to the dispute between the parties over discovery of Ansac’s customer contracts. Ansac’s
reluctance to make discovery was frustrating the Commission who perceived that they could no longer rely on their investigative powers
to compel the production of documents, but had to rely on an application to the Tribunal to effect discovery.
The fact that the Commission did not anticipate the present defence at the time it referred the dispute does not justify a conclusion
of irrationality. A glance at Ansac’s answer in the erstwhile interim relief application indicates that Ansac did not rely on the current objections, which relate to the post –enactment nature of the transactions
alleged, for its defence. Its principal defence and the one that Ms Singh anticipates relates to the issue of the extra- territorial
application of this Act. Interestingly this point has not been pursued in this application. This shift in defensive posture, which
Ansac is perfectly within its rights to assert, illustrates the fundamental problem of this review. Is the Commission supposed to
anticipate every line of defence before referring a case? The answer is no. This proposition is followed in criminal law as the English
case of Herniman v Smith illustrates:
“It is not the duty of the prosecutor to ascertain whether there is a defence, but whether there is a reasonable and probable cause
for prosecution”.
The Commission, having at the time and on an examination of the pleadings in the interim relief application assessed the likely issues
in dispute, concluded its investigation and considered it had established a prohibitive practice existed. This Ms Singh states in
paragraph 4.7 of her affidavit (Record page C 72) where she states:
“The Applicant (i.e. the Commission) was and remain convinced that a proper discovery of these documents will show that the respondents
did enter into agreements during the relevant period, in addition to giving effect to the agreements referred to above….”
She goes on at paragraph 5 of the same affidavit to say:
“The Applicant verily believes that proper discovery will show that other agreements were entered into between the commencement of
the Act and the filing of referral”
These paragraphs clearly indicate that the Commission believes it has established the existence of a prohibited practice and that
discovery of the documents will provide evidence to supplement the correctness of its belief as opposed to evidence required to establish the existence of its belief.
Do the suggestions made then in paragraph 6 of her affidavit coupled with Mr. Pretorius’s remarks suggest that the Commission’s
investigation was incomplete? In this paragraph Ms Singh goes on to state:
“In the circumstances the Applicant would have preferred withdrawing the matter in toto in order to restore its investigative powers
in terms of the Act. The Applicant is, however concerned that the provision of Section 67(2) may render the Respondents immune from
further action should they do so. The Respondents were requested by the Commission to waive any rights in terms of Section 67(2),
but they refused to do so. In the Commission’s view the issue relating to the exception is an opportunistic attempt to render
themselves immune from the provisions of the Act.”
What the Commission is saying is this. We concluded our investigation. We did not anticipate a new defence made out by Ansac until
we received their plea. At that stage we considered our investigative powers were terminated. Ansac refuses to provide us with the
relevant documentation because they say no case to impugn them has been pleaded. Had we known all this before we filed the complaint
referral we might have used our investigative powers to require their production. At most this is an expression of regret with the
benefit of hindsight. It is not an admission that their investigation was not completed.
The structure of Ms Singh’s affidavit attached to the April complaint referral suggests that the Commission after receipt of
a complaint (paragraph 5) undertook an investigation in terms of which they made “findings”. Ms Singh in paragraph 6.1
for instance uses the language:
“The Applicant investigated the complaint and found that…” (Our emphasis)
She goes on in paragraph 9 to identify their legal conclusions in a paragraph headed contraventions of the Act.
On a proper reading of this affidavit one comes to the conclusion that the Commission has prima facie -
1.
Conducted an investigation;
2.
Come to a finding, which suggests that the investigation has been concluded for the purposes of section 50; and
3.
Established the existence of a prohibited practice.
Section 50 must be read as a whole. The purpose of the Commission’s investigation is to determine whether a prohibited practice
has been established in which case they must refer the matter to the Tribunal or if not to issue a notice of non-referral in terms
of section 50(b). Thus the completion of the investigation must be read conjunctively with these two subsequent steps - it informs
a decision to refer or not to refer. Completion of the investigation does not mean that the Commission must be ready to go to trial
with every document in its docket at the moment of referral. Nor does it mean that it must exhaustively investigate each anticipated
line of defence. Indeed at the time of referral the respondent will not have been required to indicate its defence and the Commission
may be in the dark. While the Commission has powers to elicit information it cannot compel a party to reveal its defence. The first time it is confronted with that defence as a matter of procedure, unless
a respondent voluntarily indicates it earlier, is when the respondent files its answering affidavit to the complaint referral –
a post section 50 event. Placed in its proper context completion of the investigation means completion for the purposes of a decision
to refer or not to refer.
Ansac concedes that the prohibited practice determination entails a subjective discretion. Although they contend that the completion
of the investigation is an objective fact they do concede its subjective aspect.
Despite the language of the section a proper analysis of section 50 suggests that the determination of whether an investigation is
complete is more subjective than objective in character. The completion of an investigation is inextricably bound up with the consideration
of the existence of a prohibited practice. As many investigators would have as many different views as to completeness. Part of this
assessment depends on the individual predilections of investigators, part on consideration of what one needs to establish as a matter
of law in a given case. Indeed this case is illustrative of the latter. On Botash and the Commission’s argument far less extensive
evidence of post enactment activity would be necessary to establish a violation. Following such an approach this investigator would
come to the conclusion that an investigation had been completed while an investigator who would share Ansac’s view of the law
would not.
This illustrates the dangers of this type of review of the Commission’s powers under section 50. One would be second-guessing
the Commission’s exercise of its discretion before a matter even came to a hearing before the Tribunal. Setting the standard
for what constitutes a completed investigation too high would mean that investigations would take an enormous amount of time to conclude
which cannot be in the interests of either complainants or respondents who have a defence. Perversely it is only the respondent likely
to be found to have contravened the Act who would benefit by a protracted investigation as they would enjoy the fruits of their market
power that much longer. It would also serve as an inducement to opportunistic respondents to force the Commission into a preliminary
enquiry into their case prior to the commencement of a hearing.
Our courts have recognised these dangers in reviewing the power of the Attorney General to prosecute in criminal cases.
As the authors of the Commentary on the Criminal Procedure Act observe:
“Courts accept the prerogative of the Attorney General to institute criminal proceedings on charges he deems proper, and are reluctant
to interfere. This is no doubt desirable, since the Attorney General is vested with the power and discretion in this regard. He has
in front of him facts and material which are not available to the court, or the defence.”
The authors go on to cite authority for the proposition that without proof of mala fides or gross unreasonableness a court of law will not interfere with the discretion of the Attorney General. Even if this approach is subject to criticism of being overly deferent to officialdom when viewed in the context of our more heightened
sensitivity to administrative review since the adoption of the Constitution, the facts of this case do not suggest that even a court
more animated by an expansive view of administrative rights than its forebears would come to the conclusion that this decision is
reviewable.
This does not lead to unfairness for Ansac. The Commission’s decisions to complete an investigation and to refer a complaint
are merely acts preparatory to a hearing before the Tribunal. The respondent retains its rights to defend itself including through
the filing of pleadings, the right to raise preliminary objections on points of law and a full right of audience before the Tribunal
during its proceedings. In a fair contest if the Commission is unprepared or has a flawed case it will lose, but we cannot stop it
from entering the contest because we are asked a priori to form an opinion that it is not ready to win.
Botash argued that we do not have powers to review the Commission in these circumstances because our powers are confined to our statute.
In terms of section 27(1) (c) the Tribunal may “….review any decision of the Competition Commission that may in terms of this Act be referred to it.” The Act they point out makes no provision for us to review a decision of the Commission in terms of section 50. Ansac has relied
on cases, which suggest that an administrative tribunal has a general power to consider issues of jurisdiction. We do not need to decide this point as we have approached the issue by first making the assumption that we have the review powers
Ansac contends we have and then asking whether the Commission’s decision is reviewable. Since our answer to that question is
in the negative we do not need to go on to decide whether we have such powers.
The objection to our jurisdiction to hear this complaint on the basis that the prerequisites of section 50 have not been established
is accordingly dismissed.
EXCEPTIONS
We must now consider the various exceptions raised by Ansac.
Ansac argues that the case made out against it cannot extend beyond the ambit of the Commission’s complaint referral. With this
as its premise it goes on to argue that in the referral the Commission has based its case on the Ansac membership agreement and its
agency agreement with CHC and since both these agreements predate the Act, which cannot be interpreted retrospectively to unsettle
vested rights, the Commission’s case must fail and cannot be resurrected by amendment. Ansac describes the interveners’ claim as being “parasitic” upon the complaint referral and if the latter is bad
in law, the same fate must befall the interveners, even if a different construction is placed on the interveners’ pleadings.
Ansac concede that if we find that the Commission, and of course by extension the interveners, are not bound by the parameters of
the complaint referral and that some post enactment discretionary transactions other than the membership agreement and agency agreement
could be inferred these would not be immunised by the presumption against retrospectivity. But here they add another bow to their
quiver, for they argue as their fall back position that if such agreements are impugnable, they are not impugnable under section
4(1)(b). This is because section 4(1)(b) only impugns price fixing agreements not agreements between buyers and sellers. Ansac declines
to identify the section of the Act under which they could be impugned, but since only section 4(1)(b) is relied on it does not need
to traverse this.
Finally as the third leg to its objections it states that if post enactment transactions may be relied on then these transactions
must be juristic acts and they must be pleaded with proper particularity. This it asserts the Commission and Botash have failed to
do and the amendments have not cured this problem.
The Commission and Botash vehemently opposed all these criticisms. Whilst both concede the Act cannot be interpreted retroactively
(in the sense that term has been understood in the case of National Director of Public Prosecutions v Carolus & Others 2000 (1) SA 1127 SCA) the ambit of retrospectivity is contested as well as the nature of the post enactment conduct required to establish a contravention
of section 4(1)(b) and the Ansac reading of what section 4(1)(b) impugns. They further assert that Ansac has been provided with sufficient
particularity to enable it to plead.
At the risk of over simplifying the respective approaches of the parties we would say that the Ansac analysis is premised on formal
notions of contract and vested rights – that of the Commission and Botash on performance and effects.
We have decided that these issues would be more usefully decided after we have heard the evidence. The rationale for this conclusion
is illustrated by the nature of the debate between the parties over the exception. For example on the retrospectivity point the parties
have widely divergent views of what post enactment evidence suffices to establish a contravention. On this point as between Ansac
and the Commission we have a continuum that ranges from the conclusion of a juristic act of price fixing, to the solicitation of
an order. Absent proof of the nature of the act that took place post enactment and indeed whether any are proved at all we see no
useful purpose in making a determination now that can lead to imprecision and misinterpretation.
Similarly some of the other issues raised in the exception are also in our view more appropriately resolved once we have heard the
evidence. Fundamental to all is the nature of the post enactment activity. We feel we need clarity on what these transactions are
i.e. to consider the evidence before we can determine their legal significance. Important issues of law are involved here and we
are reluctant to make a decision on the law prematurely based on speculation of what facts may finally be established at the hearing.
Courts of law retain the discretion to order an exception to stand over to trial on the basis of convenience. In Herbstein and Van
Winsen, two instances of when a court may exercise such a discretion are described. One is where the exception raises a point of law that may not arise at trial and thus proves academic and the second when a proper
decision on the exception is bound up in the merits of the dispute. Both these features characterise aspects of the present exception
and we therefore leave the following objections of Ansac to stand over for a decision at the hearing of this matter viz:
1.
Whether the transactions sought to be impugned pre-date the enactment of the statute – the retrospectivity argument
2.
If post enactment transactions are impugnable they are nevertheless not covered by section 4(1)(b), because they are not acts of price
fixing
3.
If post enactment transaction are impugnable they must be juristic acts
Exception Issues to be determined
.RTF of original document