South Africa: Have We Come Full Circle With The Procedural Rules Of Initiation, Investigation And Referral Of Competition Complaints?

Last Updated: 30 September 2013
Article by Lee Mendelsohn, Lizel Blignaut and John Seth

Most Read Contributor in South Africa, September 2018

A judgment just handed down by the Supreme Court of Appeal appears to have opened the door to a somewhat more permissive approach regarding the initiation, investigation and referral of complaint proceedings by the Competition Commission.

In the case of Competition Commission v Yara (South Africa) (Pty) Ltd, an appeal of a decision of the Competition Appeal Court, the SCA unanimously affirmed not only that the Commission is entitled to informally initiate a complaint in terms of section 49B(1) of the Competition Act, but that an initiation made by the Commission can also be made tacitly.

In terms of the Competition Act, a formal complaint can be initiated either by the Commission or a private complainant by way of the completion of a statutory Form CC1, detailing the alleged anti-competitive conduct as well as the parties alleged to have engaged in such conduct. The court's decision in Yara confirmed, however, that where the anti-competitive conduct alleged in a private complainant's complaint has been expanded upon by the Commission to include allegations of additional anti-competitive conduct in its subsequent referral to the Tribunal, the Commission can be understood to have initiated further informal or tacit complaints, incorporating the additional anti-competitive conduct not initially contemplated in the original complaint. The determination as to whether a tacit or informal initiation has taken place would, according to the court, be a question of the most likely inference drawn from all of the facts presented.

During the infancy of competition law enforcement in South Africa, the Commission and private complainants initiated complaints in respect of alleged prohibited practices in broad terms, often without specifically naming or detailing the firms suspected of involvement and/or without specifying their alleged contraventions. However, a number of decisions in both the CAC and SCA handed down prior to the SCA's decision in Yara, (including the Glaxo, Woodlands and Loungefoam cases, as well as the previous CAC decision concerning Yara), appeared to have taken a more formalistic approach to the procedural requirements to which the Commission must adhere in order to validly initiate and refer complaints, effectively requiring initiating documents to conform to prescribed standards not dissimilar to those applicable to formal pleadings.

The Yara judgment would appear, therefore, to reflect something of a reversion by the SCA towards the handling and interpretation of initiation and complaint proceedings in terms of section 49B of the Competition Act. The SCA's judgement allows far greater flexibility to the Commission to add to complaints new causes of action through the initiation (informally or tacitly) of additional complaints, and looks to a far more nuanced interpretation of the Competition Act.  This, we presume, is designed to better give effect to the purpose of the Competition Act, although, in our view, this same outcome could well have been achieved if the Commission had followed the very simple formal initiation procedures.

So we find ourselves flung back into a rather more uncertain world.  What will be sufficient to comprise an 'informal' or 'tacit' complaint initiation?  Will the Commissioner lying in the bath thinking about a potential contravention be enough?  Or will something more be required? And what evidence will be needed to prove the fact of such informal or tacit initiation and the date on which it occurred?  What effect will this have on prescription (which is calculated with reference to the effluxion of time between the cessation of contravening conduct and the date of initiation of a complaint)?

The door is certainly now wide open to the continuation of the saga of the complaint initiation and referral process litigation which has become so much a part of our competition law jurisprudence.

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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