South Africa: How To Appeal Or Not To Appeal – The Procedural Conundrum

Last Updated: 19 July 2012
Article by Stephen Langbridge

The Constitutional Court recently handed down judgments in two competition law matters on Tuesday 26 June 2012. First, in the matter of Competition Commission v Loungefoam (Pty) Ltd and Others and a second decision in the Competition Commission v Yara South Africa (Pty) Ltd and Others matter – dismissing, in both instances, the Competition Commission's applications for leave to appeal.

Competition Commission v Loungefoam (Pty) Ltd and Others

The Competition Commission lodged a formal complaint against Loungefoam (Pty) Ltd and Vitafoam (Pty) Ltd on 3 September 2007. The formal complaint was lodged following an initial complaint of anti-competitive conduct by a former employee of Loungefoam who had subsequently become a competitor of Loungefoam and Vitafoam. Loungefoam, Gommagomma (Pty) Ltd, Vitafoam and Feltex are manufacturers and retailers of flexible polyurethane foam.

The Commission expanded its formal complaint by initiating a further complaint on 27 November 2007, which also included Feltex Holdings (Pty) Ltd in allegations of the same conduct.  On 26 May 2008, the investigation was expanded yet again to include Steinhoff Africa Holdings (Pty) Ltd, Steinhoff International Holdings (Pty) Ltd, and Kap International Holdings (Pty) Ltd.

On 16 February 2010 the Commission applied to the Competition Tribunal to amend its complaint referral following further investigation into the matter, to which the Respondents objected.  The Tribunal allowed the amendments.  The Respondents appealed to the Competition Appeal Court ("CAC") to have the Tribunal's decision reviewed and set aside.  That appeal was upheld by the CAC on 6 May 2011.

The Commission applied to the Constitutional Court ("CC") for leave to appeal against the CAC's judgment (which overturned the Tribunal's decision to permit the Commission's amendment of its complaint referral to include new parties and allegations not listed in the original complaint).

In the majority judgment of the CC, the Commission should have followed one of two approaches:

  • Either to seek leave to appeal from the CAC and only if refused, may leave be requested to appeal to the Supreme Court of Appeal ("SCA") or the CC; or
  • Appeal directly to the CC on constitutional matters raised, but only if the interests of justice permit such direct access.

No decision was made on which approach is the correct one to follow and the Commission's application for leave to appeal was dismissed by the majority of the court on the basis that the Commission had, in any event not satisfied the requirements for either of the two approaches.

A minority judgment which was much more sympathetic to the Commission's case, set out that there is nothing stopping a litigant from seeking leave to appeal directly from the CC.  Emphasis was placed on the fact that the pending application for leave to appeal to the SCA in the CAC should have been made conditional to the application for leave to appeal being refused by the CC.  The minority judgment highlights the following as important reasons why the Commission may apply for direct leave to appeal to the CC:

  • The Commission's important public role;
  • The significance of the issues to be determined in the appeal;
  • The prospects of success of the appeal; and
  • The fact that this matter is not at the  "complex intersection of law and economics, but somewhat removed from it".

Because it would have been of no practical use, the minority did not consider the merits, as these will be decided by another court.

Competition Commission v Yara South Africa (Pty) Ltd and Others

The Commission received a complaint from Nutri-Flo CC and Nutri-Fertilizer CC regarding anti-competitive conduct by Yara South Africa (Pty) Ltd, Omnia Fertilizer Ltd and Sasol Chemical Industries Ltd.

As in the Loungefoam matter, the Commission applied directly to the CC for leave to appeal against the CAC's judgment overturning the Tribunal's decision to allow the Commission to amend its complaint referral against the Respondents. 

The Commission simultaneously lodged an application for leave to appeal with the SCA and the CC.  The Commission's application to the CAC for leave to appeal to the SCA is still pending before the CAC.

Similar to the CC's decision in the Loungefoam matter, two possible approaches to the procedure to be followed in applications for leave to appeal are prescribed, and once again no correct approach was decided on.  What is highlighted by the majority is that if leave to appeal were to have been granted in the CC, the constitutional issues would be whether the Tribunal has the power to grant leave to the Commission to amend its complaint as the Tribunal is a creature of statute. The majority held that the interests of justice do not dictate that the CC should entertain the application for leave to appeal. 

The minority judgment held that the Commission must not only raise a constitutional issue for approaching the CC for application for leave to appeal, but it must also show that it is in the interests of justice to do so.  The view is that the Commission should be permitted to seek access directly to the CC as a first port of call as the Act envisages appeals directly from the CAC to the CC. 

Implications for other cases

As a consequence of the Yara and Loungefoam decisions, it appears that the approach that will be taken by the Commission in regard to the dozen or so applications to the Tribunal which are based upon procedural points, will be to suspend further action until the Yara / Loungefoam matters proceed before the CAC, the SCA and possibly the CC.  This could take at least another year before these processes are finalised.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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