Competition Commission of South Africa and Others and United South African Pharmacies and Others (04/CR/Jan02) [2003] ZACT 4 (22 January 2003)

Key Facts

Issues

• USAP challenged both the Commission and AACMED for vague assertions about a boycott and insufficient details on what conduct violated Section 4. The Tribunal dismissed these exceptions, finding the referrals provided adequate factual information for respondents to plead and that vagueness alone did not justify dismissal.
• The Competition Commission initiated proceedings against respondents, and AACMED was granted leave to intervene. USAP argued that AACMED could not pursue relief not included in the Commission's original referral. The Tribunal dismissed this exception, noting that AACMED's intervention required a separate cause of action and that they had not exceeded the bounds of the order.
• USAP argued both referrals failed to define a relevant geographic market, essential for establishing competition under Section 4. The Tribunal rejected this, stating that while market definition is important, it is not a jurisdictional prerequisite for pleadings. The referrals sufficiently described local and intermittent national competition to meet pleading requirements.
• The Commission's referral referenced unnamed USAP members perpetrating conduct but did not identify them. USAP argued this prevented verification of the claim. The Tribunal acknowledged this issue, noting the Commission should either identify members or explain the basis for their allegations, and granted time to provide this information.
• Both the Commission and AACMED referred to USAP's 1600 members as second/further respondents. USAP claimed these members were not properly joined or served. The Tribunal agreed, stating the members were not adequately cited but allowed the Commission and AACMED to rectify the issue by deciding whether to cite all members or only those involved in the boycott.
• USAP objected to the Commission's referral for not specifying the timeframe of the alleged prohibited practices. The Tribunal ruled this information was necessary and gave the Commission an opportunity to file an additional affidavit with precise averments about the timing.

Holdings

• The Tribunal dismissed USAP's exception regarding the failure to identify specific wrongdoers in the Commission's referral, noting that the Commission must provide an additional affidavit to address this issue.
• The Tribunal dismissed USAP's exception against AACMED's limitation argument, finding it without foundation and noting that the intervention's referral was already decided. AACMED's cause of action is not beyond the Commission's complaint referral.
• The Tribunal dismissed exceptions regarding vague pleadings in both the Commission's and AACMED's referrals, stating the pleadings provided sufficient information for USAP to understand and respond to the allegations.
• The Tribunal found that the Commission and AACMED did not properly join USAP's members as respondents, requiring them to rectify the issue by citing either all members or only those alleged to have participated in the boycott.
• USAP's complaint that the Commission failed to allege when the prohibited practices occurred was upheld. The Commission must file an additional affidavit to specify the timing of the alleged conduct.
• The Tribunal rejected USAP's market definition objection, finding both referrals adequately pleaded a relevant geographic market (local and intermittent national competition) for the purpose of establishing competitors under Section 4.

Legal Principles

• The Tribunal rejected USAP's argument that market definitions must strictly adhere to formal requirements, prioritizing the substance of the case (alleged boycott and anticompetitive effects) over procedural formalism. This principle was applied to dismiss exceptions based on incomplete geographic market pleadings.
• The Tribunal clarified that USAP's exceptions failed because they did not demonstrate serious prejudice from the alleged vagueness in pleadings. The burden of proof for exception applications requires showing that the respondent cannot adequately plead the case, which USAP did not meet.
• The Competition Tribunal applied a purposive approach to the interpretation of the Act, emphasizing that market definition is a tool for estimating market power rather than a strict jurisdictional requirement. The court held that sufficient factual allegations in the referrals enabled respondents to plead, even without precise geographic market definitions, aligning with the Act's objective to address anticompetitive effects.

Precedent Name

• Natal Wholesale Chemists (Pty) Ltd v Astra Pharmaceuticals (Pty) Ltd and others
• Levitan v New Haven Holiday Enterprises
• Botswana Ash (Pty) Ltd et al
• Jowell v Bramwell
• National Association of Pharmaceutical Wholesalers & Others vs Glaxo Wellcome & Others
• Glaxo Wellcome (Pty) Ltd & Others and National Association of Pharmaceutical Wholesalers & Others

Cited Statute

• Tribunal Rules
• Competition Act

Judge Name

• M. Holden
• D. Lewis
• N. Manoim

Passage Text

• This exception is dismissed both in respect of the Commission and AACMED.
• The first respondent, whom we shall refer to as USAP, has raised a number of exceptions to both referrals which we consider in this decision. Since some of the issues raised in the exceptions are similar, we have dealt with them thematically, rather than separately, in respect of each referral.
• We do not share the respondent's view that a formal market definition is a necessary precursor to an enquiry into an alleged restrictive practice. We concur with the claimant that the purpose of defining a relevant market is to identify the exercise of market power... not a scientific test.