Picture source: Gallo Images/Getty
In the case of Competition Commission of South Africa v Beefcor (Pty) Ltd and Another [2020] 2 CPLR 507 (CAC), the Competition Appeal Court of South Africa (CAC) considered the question whether the withdrawal of a complaint by the Competition Tribunal (the Tribunal) initiated in terms of s 49B(1) of the Competition Act 89 of 1998 (the Act) serves to put an end to the proceedings before the Tribunal, on the basis that the complaint cannot be reinstated.
The complaint in question was initiated against the respondents, Beefcor (Pty) Ltd (Beefcor) and Cape Fruit Processors (Pty) Ltd (CFP). The respondents were alleged to have entered into a contract not to compete in the market for the processing of wet peels and citrus pulp used in the production of livestock feed. It was contended that such conduct amounted to a division of markets or an allocation of customers in contravention of s 4(1)(b)(ii) of the Act. The respondents denied contravening the Act and they both separately opposed the referral.
The case was set down to be heard by the Tribunal for three days, commencing Monday 2 July 2018. On 26 June 2018 the Competition Commission (the Commission) informed the respondents, of its desire to engage in settlement negotiations. That same day the Commission advised the respondents that the Commission had taken the decision to ‘withdraw the matter in order to give the negotiations a fair chance’ and served them with the notice of withdrawal (Competition Commission v Beefcor (Pty) Ltd and Another [2019] 2 CPLR 574 (CT)). Immediately thereafter, CFP advised the Commission to ‘hold off’ from serving the withdrawal notice as the discussions between them had not progressed to the point where a settlement had been reached. Thereafter and within minutes, the Commission accordingly filed its notice of withdrawal. Beefcor accepted the Commission’s withdrawal. It, however, expressed no intention of entering into settlement negotiations with the Commission save in so far as it related to costs. At 7:19 pm, the Commission further expressed the view that it was entitled to take the decision to withdraw the case on the basis that it could be reinstated at a later stage if settlement negotiations did not bear fruit. It explained that it had opted for withdrawal rather than postponement as it believed that this would provide a better platform for the settlement negotiations.
CFP, on the other hand, advised the Commission that if it wanted more time to engage in settlement discussions, it should have applied for a postponement of the matter in terms of r 50(2) of the Rules for the Conduct of Proceedings in the Competition Tribunal rather than withdraw it. It advised the Commission that it did not find the settlement terms proposed by the Commission acceptable and invited the Commission to recall its withdrawal of the matter in order for the hearing to proceed on the Monday. The Commission refused this invitation and remained adamant that the Commission could reinstate a withdrawn referral.
The parties’ legal practitioners requested urgent clarity from the Tribunal on the situation. Faced with these circumstances, on Friday 29 June 2018, the Tribunal’s Head of Case Management –
The contemplated settlement negotiations never took place. Instead, some two months later, the Commission referred a fresh complaint to the Tribunal, under a different case number but dealing with the same conduct complained of in the withdrawn referral. In these new proceedings, the respondents raised the point that s 67(2) of the Act precluded the Commission from doing so. The Tribunal then issued a directive that the Commission should bring an application for reinstatement.
The Commission sought to comply with the directive and brought the reinstatement application, which was dismissed by the Tribunal. The Commission appealed to the CAC against such a refusal. Central to the inquiry is the meaning of the word ‘completed’ in s 67(2) of the Act.
In SAPPI Fine Paper (Pty) Ltd v Competition Commission of South Africa and Another [2003] 2 CPLR 272 (CAC) the CAC identified the mischief to be addressed by s 67(2) as double jeopardy. An analogy was thus drawn between the statutory scheme created by the Act and the criminal procedure. The court held as follows: ‘The legislature enacted the relevant provisions to avoid a firm being “tried” twice for the same or substantially the same conduct. Put differently, the aim of the legislature in introducing s 67(2) was to avoid “double jeopardy”’.
In a defining case in relation to the constitutional values underlying the protection against double jeopardy, the Supreme Court of the United States in Green v United States 355 US 184 (1957) famously said the following: ‘The State with all its resources and power should not be allowed to make repeated attempts to convict an individual for an alleged offense, thereby subjecting him to embarrassment, expense and ordeal and compelling him to live in a continuing state of anxiety and insecurity, as well as enhancing the possibility that even though innocent he may be found guilty’.
In South African law as per s 35(3)(m) of the Constitution, it is specifically enacted to allow the state to bring another prosecution on the same charge after an accused has pleaded would be unconstitutional. The inquiry in this case is whether the same constitutional protections are deserved in relation to the procedures under the scheme, which are sui generis in nature.
It is widely accepted that certain processes under the scheme resemble criminal procedures. The CAC aptly expressed the position in Competition Commission v Pioneer Foods (Pty) Ltd [2010] 2 CPLR 195 (CAC) at para 11. A comparative examination of the process of withdrawal in criminal procedure and under the scheme, with a view to understanding whether similar constitutional protections, which are accorded to an accused as part of the right to a fair trial were intended by the legislature to apply to the withdrawal under the scheme as part of the right to fair administrative process should be undertaken.
Section 49B of the Act provides for the initiation of a complaint by the Commission and the submission of a complaint by any person. The Commission may, at any time ‘after initiating a complaint’, refer it to the Tribunal. In terms of the form prescribed (Form CC 1) a concise statement of the conduct, as well as the dates on which the conduct occurred are required. A complaint is, therefore, defined by the facts relied on. This has similarities to the drawing of a charge against an accused person. On initiating or receiving a complaint, the Commissioner must direct an inspector to investigate the complaint as quickly as practicable. If the investigation reveals that no prohibited practice or abuse has occurred, the Commission may not refer the complaint to the Tribunal. It may then issue a notice of non-referral if the complaint was submitted to it by a third party, in which case the third party may refer the complaint to the Tribunal. This notice of non-referral has similarities to the nolle prosequi, which may be issued in a criminal proceeding so as to allow for private prosecution.
The investigation process under the Commission is unilateral. It requires neither the Tribunal’s involvement nor any judicial oversight. In Loungefoam (Pty) Ltd and Others v Competition Commission South Africa and Others, Feltex Holdings (Pty) Ltd v Competition Commission South Africa and Others (CAC) (unreported case no 102/CAC/Jun10, 6-5-2011) (Wallis J (Davis JP and Ndita AJA concurring)) the Commission’s powers of investigation were aptly described as ‘inextricably linked to the Act’s referral system in respect of complaints of anti-competitive conduct’ and the court explicitly compared an investigation by the Commission to a criminal investigation. Part B of the Act provides the Commission with a number of powers that are couched in the language of criminal procedure. In fact, the wording of s 47(2) of the Act is almost identical to the wording of s 22(b) of the Criminal Procedure Act 51 of 1977 (CPA). Accordingly, it is clear that the Commission’s investigative powers, especially the power to enter and search premises without a warrant, bear a strong resemblance to criminal procedures.
The referral of the complaint to the Tribunal triggers the exercise of the Tribunal’s adjudicative powers. The rules allow the Commission to engage the jurisdiction of the Tribunal by referral of the complaint and to disengage such referral from such jurisdiction by means of withdrawal. This is the Commission’s prerogative and is a power, which is analogous to the powers of the Director of Public Prosecutions (DPP), which may under s 6 of the CPA withdraw a criminal matter. Central to the inquiry as to the meaning of s 67(2) is whether the consequences of a withdrawal under s 67(2) should, on the basis of the respondents’ right to fair administrative process, be commensurate with the operation of withdrawal in the criminal sphere.
On the Commission’s interpretation, the scope for the abuse of power is manifest. Such an interpretation allows the Commission unilaterally to ‘postpone’ cases, which it has referred to the Tribunal at a time of its choosing and for a period of its choosing, irrespective of the prejudice which may be occasioned to the respondent. The Commission argued, however, that on its interpretation of s 67(2), a respondent would not be without a remedy in that the courts could be approached for relief under the doctrine of abuse of power. It seems that this would be of little comfort to a respondent who contends that he is being subjected to harassment and abuse by repeated prosecutions. After all, were it accepted that the Commission is allowed the facility of withdrawal with impunity, a respondent would be hard pressed to prevent its use by the Commission. The broad nature of the powers, which the Commission already has militates against the construction contended for by it. Such powers have now also been considerably extended by the decision in Competition Commission of South Africa v Pickfords Removals SA (Pty) Limited 2020 (10) BCLR 1204 (CC).
The concept of seeking a postponement from an adjudicative body is well-known. If one of the parties, in complaint proceedings before the Tribunal, requires further time, it can apply to the Tribunal for an extension of time or, in the case of proceeding set down for a specified date, a postponement. Applications for postponements are common in the Tribunal’s proceedings. Familiar considerations apply. If the Commission for any reason considers that it should not be required to proceed with a case on a specified date, it is right and proper that it should satisfy the Tribunal that there is a case for postponement. A respondent in the proceedings is similarly placed. If the postponement is justified, it will be granted; if it is not justified, it will be refused, and this is as it should be, because the Tribunal is entitled to regulate its own processes. It is not only unnecessary, but amounts to irrational differentiation, that one party (a powerful state organ) should have the unilateral alternative of a withdrawal and reinstatement while the other party (a private entity) does not.
The double jeopardy protection in s 67(2) would be of limited value to a respondent if it allowed for repeated harassment in the context of all that the process entails. A further consideration militating against the Commission’s interpretation is that the notion of ‘reinstating’ a withdrawn complaint referral finds no mention in the Act or the Tribunal’s rules. The Tribunal did not explain the source of its power to reinstate withdrawn proceedings. One would have expected such a procedure to have been expressly regulated if it was envisaged. Section 67(2) must be interpreted broadly and as a constitutional protection, which is analogous to that created under s 106(4) of the CPA. The word ‘completed’ in its ordinary and natural meaning can be applied to proceedings which have come to an end in one way or another – whether following a trial on the merits, a consent order or an abandonment of the proceedings by way of withdrawal.
Tshepo Mashile LLB (University of Limpopo) is a legal practitioner at Mkhonto and Ngwenya Inc in Pretoria.
This article was first published in De Rebus in 2021 (April) DR 24.
