4.
Old Mutual documentation or research that formed the basis of the leasing policy and tenant mix strategy of the Gateway Shopping Mall,
including, but not limited to cinemas and other entertainment-related tenants. (Item 18 of Annexure “A” of Robert Legh’s affidavit)
As Videovision did the motivation for the discovery of these four source documents thematically I will adopt the same approach. Videovision
argue that Old Mutual has discovered certain documents items 197, 198, and 264, but not the source material from which the documents
are constituted. In response to Old Mutual’s contention that no basis has been laid for their discovery, Videovision argues
that it is entitled to the information itself in order to test the process of “distillation” and “encapsulation”.
In argument at the hearing counsel for Videovision likened the request for source material to cases where the working papers for
an audit opinion or a medical opinion are requested to supply the foundational documents on which they based their conclusions in
order to test their veracity.
Yet it is not suggested why the documents already discovered constitute opinions on Old Mutual’s alleged market power which
needs to be tested. There is no attempt to peruse these documents, all of which are wide ranging in terms of the issues they cover,
to identify information relevant to Old Mutual’s market power that express an opinion whose foundations can or indeed need
to be tested. It is difficult on an admittedly superficial examination to see any. It is easy however to see how this sweeping claim
could lead to the requirement to discover the most peripheral of documents unconnected and unrelated to this dispute. The same point
can be made in respect of the documents referred to in item 18 in Schedule A of Legh’s affidavit which as I understand Videovision
is again sought as source documentation to distil and evaluate the other documents that were discovered. (See par. 10 in Legh’s
replying affidavit, dated 21 June 2002, where he deals with item 18 together with the other four ‘source’ documents.)
Even if it was intended as a self-standing request it still suffers from being overbroad.
Absent a more focussed and better motivated request I am not persuaded that the complaint is entitled to this class of material. Indeed
it is not even certain that these further documents exist. I agree with the respondent that the request is so sweeping that it cannot
be accepted as reasonable.
The request for discovery of these items is denied.
5.
All Ster-Kinekor documents relating to marketing and market research in respect of its cinemas in KwaZulu Natal ---- (item 14 of Annexure “C” of Robert Legh’s affidavit of 22 May 2002.)
Videovision alleges that this item is relevant because it relates to the dominance of both Old Mutual in the market for the provision
of suitable space to exhibit movies in the KwaZulu Natal region and the dominance of Ster-Kinekor in the market for the exhibition
of movies in that region. This request is made of Ster-Kinekor who resist it and echoing the approach of Old Mutual accuse Videovision
of embarking on a fishing trip saying the documents are unconnected to the reasons for which they are sought. During argument counsel
for Ster-Kinekor pointed out that the request is confined to documentation concerning the KwaZuluNatal market whilst in its papers
Videovision has made out a case for a South African market. In its replying affidavit Videovision does not take the matter any further
beyond refuting the allegation that the request amounts to a fishing expedition.
Ster-Kinekor goes further to assert that the documents “ to the extent that they exist, are entirely irrelevant to the relief (if any) against Ster-Kinekor.”
I cannot agree with this latter contention. Ster-Kinekor has an interest in the relief sought in respect of section 5 for which Videovision
seeks an order to void the lease between Old Mutual and Ster-Kinekor in respect of the Gateway Cinema complex. One of the allegations
made by Videovision in respect of its section 5 claim is that the lease entrenches Ster-Kinekor’s dominance of the relevant
market
“ on whatever geographic basis is determined, because the third respondent is overwhelmingly the biggest owner of screens in SA and
the third respondent is the biggest owner of screens in the Durban area. The third respondent is the only owner of screens in the
Durban North/ Umhlanga area, at the La Lucia Mall, and its total dominance of this area will be perpetuated through the further award
of the cinemas in the Gateway complex.” (See founding affidavit of Sudhir Pragjee paragraph 22.3.2)
It is thus relevant to the relief sought against the third respondent as well. It remains to consider whether the marketing information
is again wide off the mark in terms of its relevance to the allegations made in the Pragjee’s affidavit. In my view they may
well be pertinent. Marketing information may well contain information about the firm’s perceptions of its own market position
and that of its rivals. Although the request is made for a class of documents, it is specific in its nature. It is not clear of course
from Dominguez’s affidavit if any of these documents are in existence because he has not denied this. Accordingly Videovison
is entitled to further and better discovery on this point.
COSTS
As the remainder of this application is still to be heard it would be premature to make an assessment of the respective parties success
and failure and accordingly the costs are reserved.
ORDER
Old Mutual and /or Ster-Kinekor must make discovery of the following items subject to any claim for confidentiality:
1.
Item 10 – in Annexure “A”– to Legh’s affidavit
Ster-Kinekor must make discovery of the following items subject to any claim for confidentiality:
2.
Item 14 in Annexure “C” to Legh’s affidavit.
Videovision’s application for further and better discovery in respect of the following items is refused:
3.
Items 14, and 15 –18 of Annexure ” A” to Legh’s affidavit.
PART B
Postponement of argument on points in limine
I have also been asked to give reasons for my decision not to grant the request of Old Mutual to have the pre-hearing conference adjourned
to allow certain points of law to be argued first, by way of in limine points.
The application was supported by Ster-Kinekor, but was opposed by Avalon and Videovision.
Old Mutual in motivating its request argues that they can be resolved as exceptions i.e. on the basis of assuming the correctness
of the complainant’s case and thus there would be no need for any further evidence.
I agree with Old Mutual that I have a discretion in terms of Rule 21(2) of the Tribunal Rules as to whether to set down a point of
law to be determined if it is practical to resolve that before proceeding with the pre-hearing conference. That also accords with
the past practice of the Tribunal where we have taken such an approach. It is obvious that if a point of law can be argued on the
papers, that if decided in the applicants favour would obviate the necessity to go to trial on the issue or part of the trial, that
it should be resolved upfront. The question for me to decide is whether Old Mutual has made a persuasive case for this approach.
Old Mutual classified its objections in three groups.
Two relate to the respective dominance cases and as they are similar I will deal with them together.
Avalon’s first claim is based on section 8(b) which states that it is “prohibited for a dominant firm to give a competitor access to an essential facility when it is economically feasible to do
so.” Old Mutual contends that according to Avalon’s papers it is dominant in the market for the letting of retail shopping. Avalon,
however, competes in the market known as the day and date cinema exhibition market. There is no allegation that Old Mutual competes
in this market. For this reason Avalon have relied on the allegation that Old Mutual has effectively made itself part of one economic
unit with Ster-Kinekor in relation to the operation and occupation of cinema premises in prestigious shopping centres developed by
it.
According to Old Mutual what Avalon seek to argue is that they constitute one firm by virtue of the alleged closeness of their relationship.
For the purpose of determining what a dominant firm means we must have regard to the definition of ‘firm’ in the Act, which states “a firm includes a person, partnership or trust.” However say Old Mutual in terms of this definition separate juristic persons cannot constitute a ‘firm’ for the purpose of the Act even if they have some form of vertical relationship or the one has an interest in the other.
Avalon argued that we should not decide this point without hearing further evidence about the relationship between Ster-Kinekor and
Old Mutual, which will emerge both through the discovery process and at the trial itself. To argue this point on the papers now would
prejudice it in arguing the law point raised, as on a complete record, more may be revealed about the nature of this relationship,
which may lead to factual and hence legal conclusions that differ from those than that can be made on the present record. Avalon
argues that the initial discovery has already yielded documents that are in point and throw a different light on the relationship
between the respondents. I understand Avalon to be arguing that Old Mutual’s financial relationship with Ster-Kinekor and thus
its role in the exhibition market may be more extensive than the present papers suggest and hence we should be wary of deciding prematurely
what constitutes a firm for the purpose of the Act. On the definition of firm counsel for Avalon makes the point that the definition is an inclusive rather than an exhaustive one.
I am of the view that it would be undesirable to decide a point of law that goes to the exact nature of the economic relationship
between two firms without giving the complainant the opportunity to fully develop the record before the point is argued. To do so
would be seriously prejudicial to Avalon.
The second and related point of law effects Avalon and Videovision’s dominance claim in terms of section 8(c).
Section 8(c) provides that a dominant firm may not engage in exclusionary acts in certain circumstances. An exclusionary act is defined
in the Act as “an act that impedes or prevents a firm entering into, or expanding within, a market”. Old Mutual’s argument is that the market referred to must mean the market in which the dominant firm itself operates. Since
on both Avalon and Videovision's papers Old Mutual does not operate in the market where the exclusionary act is being perpetrated,
viz. the cinema exhibition market, it cannot be dominant in that market and a fortiori it cannot be liable in terms of section 8(c).
Avalon again make the same point that they do in relation to 8(b) that the factual record needs to be developed in order to understand
Old Mutual ‘s relationship to the exhibition market before we can decide the point of law. I am again persuaded by this argument
that it would be unwise to determine this point of law prematurely.
The final point of law relates to Videovision’s claim that the lease in respect of Gateway constitutes a restrictive vertical
practice in terms of section 5(1). Old Mutual argues that as the complaint was lodged with the Commission on 24 November 1999 and
the lease was concluded only in March 2000, the complaint preceded and therefore could not relate to the agreement. Videovision points
out that the concept of agreement for the purposes of section 5(1) is broader than its notion in common law. Again we would need evidence to establish what agreement is contemplated; is it the mere signing of the March lease or a process
of events that led up to it. Do we not need to hear evidence of the factual context which led to the complaint preceding the signing
of the lease.
However, even if this point of law is good one as against Videovison, I am not persuaded that it can have any practical effect on
curtailing proceedings,as Avalon will still be before us with their section 5(1) claim to which there has been no objection.
This remaining section 5(1) claim of Avalon is also in another reason why I am not persuaded that the disposal of the two dominance
claims by way of the points in limine would meaningfully curtail proceedings. In a section 5(1) claim by Avalon, which is all we
would be left with if all the three points of law were resolved in favour of Old Mutual, there would still need to be evidence that
there has been a substantial lessening of competition or ‘foreclosure’ of the market to use the jargon of competition
lawyers. Typically that evidence would relate to the market positions of the respective parties to the agreement – evidence
not dissimilar to that which would be led in a dominance case. I am thus not persuaded of the practicality of Old Mutual ‘s
proposal and indeed mindful of the prejudice it may give to the complainants.
Counsel for Videovision cautions against us deciding a novel law point by way of exception at this early stage of our jurisprudence.
I agree with this approach and indeed it informed our approach in the Botash matter where although we heard certain argument on exceptions we decided not to rule upon them at that stage.
The application for the pre-trial hearing to be postponed in order to set down the first and second respondents points of law for
determination is refused. The costs of the application are reserved for later argument.
N. Manoim
Date 8July 02
Presiding Member
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