Waco Africa (Pty) Ltd and Others v Competition Commission (CR277Feb18/STR301Mar18; CR277Feb18/EXC300Mar18; CR277Feb18/DSC078May18) [2018] ZACT 120 (8 August 2018)

Key Facts

Issues

• The court addressed whether the Competition Commission's continuation of a complaint against respondents (1-4) was valid after Eskom withdrew its initial complaint. The respondents argued that once a complainant withdraws, the Commissioner must initiate a new complaint. The Commission countered that rule 16(2) allows continuation of a withdrawn complaint as if initiated by the Commissioner. The court found that the Commissioner's decision to pursue the complaint after its withdrawal constituted a tacit initiation, rendering the complaint valid.
• Respondents applied for access to the Commission's investigation record under Rule 15, which allows access to non-restricted information. The Commission opposed on procedural grounds, arguing access should await discovery. The court cited precedents (Group Five and Standard Bank) requiring timely record production, ordering the Commission to provide the record within 10 business days, as the record was not likely extensive.
• Respondents sought to strike out paragraphs 33 and 34, which alleged Waco's interdicted Eskom from disqualifying it and its benefit as an incumbent supplier if the tender failed. The court rejected this, finding the allegations relevant to establishing a theory of harm. These paragraphs provided context for Waco's commercial motive in colluding, linking its conduct to plausible competitive harm.
• Respondents objected that the Commission failed to allege material facts, such as horizontal arrangement, agreement, price fixing, and harm. The Commission alleged that the first respondent (Waco) colluded with junior partners in joint ventures to fix prices in tender bids. The court determined that the Commission's use of section 4(2)'s presumption of agreement based on shared ownership/direction and restrictive practices sufficed for a cause of action at this stage, but ordered additional particulars regarding joint venture incorporation and factual basis for liability.

Holdings

• The Applicants' exception application is upheld in part. The Commission must file a supplementary affidavit within 10 business days providing details on joint venture incorporation and factual basis for collusive agreement allegations against the fifth to seventh respondents.
• The Applicant's contention that there was no valid initiation of the complaint is dismissed. The court affirmed the Commissioner's tacit initiation of the complaint under rule 16(2) after Eskom's withdrawal, citing prior case law (e.g., Omnia, Power Construction) that allows informal or tacit initiation.
• The Rule 15 application is upheld. The Commission must produce non-privileged, non-restricted portions of its investigation record and an index of restricted content within 10 business days, as access is permitted under the Commission's rules post-referral.
• No order as to costs is given, following the Tribunal's standard practice in Commission-initiated proceedings.
• The application to strike out is dismissed. The court found that the allegations in paragraphs 33 and 34 of the complaint referral are relevant to the issue of harm and do not constitute scandalous, irrelevant, or vexatious content.

Remedies

• The application to strike out is dismissed. Clauses 33 and 34 of the complaint referral are deemed relevant to the issue of harm and are not scandalous, irrelevant, or vexatious.
• The Commission must produce non-privileged and unrestricted portions of its investigation record (including all documents received during the investigation) and an index of restricted portions for CT Case No. CR277Feb18 and CC Case Nos. 2016Mar0115 and 2017Mar0033 within 10 business days.
• There is no order as to costs in this matter, consistent with the Tribunal's normal practice in Commission-initiated complaints.
• The Commission must file a supplementary affidavit within 10 business days, providing details on: (1) whether the joint ventures were incorporated; (2) whether it relies solely on section 4(2) to presume the junior partners' involvement in collusion; and (3) if not, what other facts support their alleged participation in collusive tendering and price fixing.

Legal Principles

• The Commission relied on the presumption in section 4(2) of the Competition Act to argue that the first respondent's collusive conduct extended to the junior partners in the joint ventures. This presumption applies when firms share significant ownership or common directors and engage in restrictive practices. The court acknowledged the Commission's use of this presumption but ordered additional particulars to determine whether the junior partners were aware of the conduct, highlighting the legal principle that presumptions can establish liability but may require factual verification in certain contexts.
• The Tribunal held that the Commissioner's decision to continue the complaint against the respondents, three days after the complainant (Eskom) withdrew its complaint, constituted a tacit initiation under the Competition Act. This decision emphasized that formalities such as completing a form CC1 are not required for a valid initiation, as the substance of the Commissioner's decision to pursue the complaint suffices. The court referenced precedents (e.g., Omnia and Power Construction cases) to support this approach, which prioritizes the practical effect of the decision over procedural formalism.

Precedent Name

• Eyeway
• Omnia
• Power

Cited Statute

• Promotion of Access to Information Act, 2 of 2000
• Competition Act, 89 of 1998

Judge Name

• Norman Manoim
• Fiona Tregenna
• Andiswa Ndoni

Passage Text

• By deciding to pursue the complaint after Eskom had withdrawn it, this decision constituted, an overt, albeit not formalised, act of initiation, or at the very least, an act of tacit initiation, in respect of the first four respondents. On the present case law that suffices to constitute a valid initiation of a complaint against the first to fourth respondents.
• An agreement to engage in a restrictive horizontal practice referred to in subsection (1)(b) is presumed to exist between two or more firms if – (a) any one of those firms owns a significant interest in the other, or they have at least one director or substantial shareholder in common; and (b) any combination of those firms engages in that restrictive horizontal practice.
• The application for a strike out is dismissed.